July 22, 2011 09:09 PM UTC

Don't Panic, But They're Making Sausage

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• by: Colorado Pols

UPDATE: House Speaker John Boehner walked out of bipartisan budget talks today. Just in case you were still wondering about which party had the adults in the room…

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CNN:

[A]ttention continues to swirl around the prospects of the $3 trillion compromise. The possible deal remains in limbo over a disagreement on whether to extend Bush-era tax cuts for families earning more than $250,000 a year, according to congressional aides who spoke on condition of not being identified.

If enacted, the deal would include spending cuts expected to total $1 trillion or more agreed to in earlier negotiations led by Vice President Joe Biden, the sources said. It would reform entitlement programs by changing the eligibility age for Medicare over time, and using a more restrictive inflation index for Social Security benefits, according to the sources.

On taxes, it would permanently extend the Bush tax cuts for families earning less than $250,000 while allowing the cuts to expire at the end of 2012 for those with income above that, the aides said. At the same time, the deal would include a commitment to reform the tax code next year, which is expected to lower all tax rates and eliminate loopholes and subsidies, the sources said.

Politico:

The White House was clearly taken aback by the stampede of press reports Thursday – coupled with the angry reaction from lawmakers…

Democratic officials familiar with the negotiations wouldn’t discuss the president’s private talks with congressional leaders Thursday evening but pushed back against the criticism from lawmakers that the president was somehow backtracking on a perceived pledge that changes in taxes would be locked in up front.

In fact Obama has said publicly, the officials pointed out, that the tax changes would not take place until 2013 and the same sort of staggered timetable would apply to the entitlement changes as well.

Okay, so, communication between the Democratic White House and Democrats on Capitol Hill could be, uh, better. At the same time, the House “Cut, Cap and Balance” alternative cuts-only plan died in the Senate this morning. With the pushback from fellow Democrats yesterday, it seems unlikely that the President can agree to a deal that doesn’t include the authentic new revenue he’s advocated up to now. Not to mention that ending the Bush tax cuts after 2012 does have less meaning if the deal includes a plan to cut rates and close loopholes before then–more information about how much revenue would be raised is needed, and the offsetting impact of health care reform on raising Medicare eligibility ages, etc., needs to be better understood.

Above all, it’s important to recognize that these negotiations are highly fluid. The “plan,” or plans, are changing faster than reporters in the Capitol and the White House can report on them. It would be foolish to predict what the final debt-ceiling compromise that passes Congress will look like, except that it’s been clear for some time, and clearer today after the draconian House “alternative” failed, the the limit will be raised via compromise in time to avert default by the federal government. Politically, what will emerge on the other side are defining principles–or lack thereof–that everybody involved will take to the voters for their judgment next fall. And that is what they are all positioning themselves for as the inevitable end of playtime approaches.