Fireworks May Not Be Over as Congress Gets Back to Work on Debt

BY Kurtis Lee and Crispin Lopez III  July 5, 2011 at 8:38 AM EST

U.S. Capitol

Fireworks light up the sky behind the U.S. Capitol building on July 4. Photo by Eva HambachAFP/Getty Images.

The Morning Line

The debt/deficit problem facing the country didn’t go away over the Fourth of July holiday. As Aaron Sorkin’s fictional President Bartlet once said, “My point is this: Break’s over.”

The clock is ticking loudly toward the self-imposed July 22 deadline by which the Obama administration would like to see an agreement in principle on reducing the deficit and raising the debt ceiling.

On the cutting side of the ledger, the New York Times’ Robert Pear steers the conversation toward what President Obama and some congressional Democrats are willing to cut from Medicare and Medicaid:

“Obama administration officials are offering to cut tens of billions of dollars from Medicare and Medicaid in negotiations to reduce the federal budget deficit, but the depth of the cuts depends on whether Republicans are willing to accept any increases in tax revenues.

“Administration officials and Republican negotiators say the money can be taken from health care providers like hospitals and nursing homes without directly imposing new costs on needy beneficiaries or radically restructuring either program….

“Negotiators said they were seriously considering cuts in Medicare payments to hospitals for uncollectible patient debt and the training of doctors; steps to eliminate Medicare ‘overpayments’ to nursing homes; a reduction in the federal share of some Medicaid spending; and new restrictions on states’ ability to finance Medicaid by imposing taxes on hospitals and other health care providers.”

However, you can expect many House Democrats, perhaps including their leader Nancy Pelosi, to protest any cuts to Medicare since the Medicare-based attack against the House Republican budget plan is the single most effective electoral and fund-raising message Democrats have found since 2008.

But for a deal to emerge, both sides are going to have to swallow bitter pills.

As for the revenue side of the ledger, the Wall Street Journal’s John D. McKinnon and Carol E. Lee report that the partisan standoff over taxes remains the primary sticking point in the negotiations.

“[A]ccording to people from both parties familiar with the discussions, the administration’s plan would cap itemized deductions for families with adjusted gross income, or income after certain deductions and other breaks, of $250,000 and up, not just those earning $1 million or more. And it would eliminate a tax-accounting methodology employed by a broad swath of U.S. businesses, including many small firms….

“That proposal would raise about $290 billion over the next decade. Mr. Obama has made similar proposals before, but Republican aides term the idea a nonstarter. Some Democrats have floated the idea of raising the income threshold to $500,000 or $1 million instead.”

Republicans, including National Republican Senatorial Committee Chairman John Cornyn continue to remain open to tax reform but refuse to endorse a net tax increase.

The Senate is back in session Tuesday at 2 p.m. ET, but with the House out one more day negotiations are not expected to pick back up in earnest until Wednesday.

MARCHING TO THEIR OWN BEAT

The Fourth of July is a day reserved for parades, fireworks and backyard barbecues. And, if you’re in Iowa or New Hampshire the summer before an election year, there’s sure to be some campaigning as well.

Former Massachusetts Gov. Mitt Romney and former Utah Gov. Jon Huntsman spent their Independence Day holidays visiting New Hampshire, while Minnesota Rep. Michele Bachmann, former House Speaker Newt Gingrich and former Pennsylvania Sen. Rick Santorum marked the day in Iowa.

Jim Rutenberg of the New York Times was on hand to capture the brief exchange between Romney and Huntsman at a parade in Amherst.

“‘Welcome to New Hampshire,’ Mr. Romney said, giving Mr. Huntsman a hearty handshake and a pat on the shoulder. Mr. Romney noted that New Hampshire must be lovelier than Beijing, where Mr. Huntsman was until recently posted as President Obama’s ambassador to China. ‘The air is breathable,’ Mr. Huntsman answered politely.

“One can parse these sorts of candidate interactions to ridiculous degrees: Was Mr. Romney subtly digging at Mr. Huntsman for his service to Mr. Obama? (Relaying the Beijing comment later, Mr. Romney told a group of reporters, ‘You all can decipher that.’) What about that whole ‘Welcome to New Hampshire’ thing? Given that the state is a must-win for both men, was it a sort of ‘Welcome to the N.F.L.’ taunt?”

Rutenberg also filed individual reports on the two candidates, taking note of Romney’s preferred brand of running shoe (Reebok) and his need for a wardrobe change in between events. (“Maybe next time I won’t wear my long underwear,” Romney joked to his supporters.)

Rutenberg also took note of Huntsman’s reaction to receiving an ice scraper from a supporter at a house party and the juxtaposition of the gift with his pledge to run a civil campaign.

“He surveyed the sharp edge and said, ‘This may come in handy.’ But, perhaps remembering his pledge, he added: ‘It won’t be us, though; it won’t be us.’”

The Washington Post’s Nia-Malika Henderson and Rosalind Helderman had both early nominating states covered.

In the Hawkeye State, they focused on the reception Bachmann received compared to the welcome given to Gingrich.

“The contrast with Bachmann in Clear Lake was stark. As a former elected official, Gingrich was given the 30th spot in the parade — far back from the sitting congresswoman’s 10th-place start. He walked a meandering pace, trailing a turquoise convertible with a handwritten ‘Go Newt’ sign sign taped to the side.”

Jeff Zeleny of the New York Times, who also was on the ground in Iowa, reported that Bachmann outpaced her fellow parade participants “in a skirt and heels.”

Zeleny also noted Gingrich’s efforts to put his best face forward despite his campaign’s recent struggles.

“Mr. Gingrich, who has spent the last month trying to reassure supporters and donors that his campaign is alive and well, arrived at the annual Fourth of July parade here wearing a striped shirt and a smile.

“While he conceded that ‘the hardest thing is raising money,’ he declined to answer specific questions about his finances.

“‘I don’t feel any worse than Reagan felt in ’76 or McCain felt in ’07,’ Mr. Gingrich said. ‘It worked out just fine for them.’”

PAWLENTY LAUNCHES NEW IOWA AD

The latest installment in Tim Pawlenty’s “results, not rhetoric” campaign comes in a new 30-second TV ad in Iowa.

Team Pawlenty plays off the news out of Minnesota’s government shutdown by reminding GOP caucus-goers that Pawlenty shut down the government when he was governor there in a battle over taxes with the Democratic controlled legislature. The ad also highlights his 2004 battle with organized labor during a transit strike.

POLITICO’s Alex Burns and James Hohmann write up the ad release including the spot’s full script.

THE JEWISH VOTE

Gallup is out with a poll result Tuesday showing President Obama holding steady support among Jewish Americans.

Per the report: “Gallup finds no significant shift in Jewish Americans’ approval of Barack Obama following his May 19 Mideast policy speech. U.S. Jews gave President Obama a 60% job approval rating in June, down from 68% in May amid the rally following the death of Osama bin Laden, but statistically unchanged from 64% in April.”

The president’s support among Jewish Americans appears more volatile than his overall job approval numbers from the nation at large. Therefore, Sarah Silverman may want to think about producing a 2012 version of The Great Schlep.

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