Obama Calls Republicans in Latest Round of Spending Talks

By Kathleen Hunter 

President Barack Obama’s latest push for a bipartisan deficit-reduction accord that includes tax increases has a new focus: Rank-and-file congressional Republicans.

After saying March 1 at the White House that he would seek “a caucus of common sense onCapitol Hill,” Obama called about a half-dozen Republican senators to court their support for reducing the deficit through a mix of tax increases and changes to entitlement programs.

“What I see from the president is probably the most encouraging engagement on a big issue that I’ve seen since the early years of his presidency,” Senator Lindsey Graham, a South Carolina Republican, said yesterday after a 10-minute phone call with Obama. “He wants to do the big deal.”

The next short-term budget deadline is March 27, when government funding is set to expire. The House plans to vote as soon as today on a measure to finance the government through Sept. 30. The House proposal would keep in place $85 billion in spending cuts that began March 1 while giving the departments of Defense and Veterans Affairs more leeway to allocate funding.

Democratic and Republican leaders are predicting they will pass legislation to avert a government shutdown. With the full $1.2 trillion spending-cut plan still mandated for the next nine years, lawmakers say the coming months could offer one more opportunity for the type of deficit-reduction bargain that has eluded Congress and Obama.

‘Best Chance’

“This is the last, best chance to do the right thing,” said Senator Rob Portman, an Ohio Republican who spoke to Obama over the weekend. Portman was budget director in PresidentGeorge W. Bush’s administration.

Portman said he sees “a window of opportunity between now and the end of the summer,” when Congress is projected to need to raise the federal debt ceiling again.

If recent history is a guide, the chances of success for a so-called grand bargain are slim. A bipartisan commission in 2010, a congressional supercommittee in 2011, and recurring talks between Obama and House Speaker John Boehner of Ohio haven’t produced a fiscal policy accord.

Investors haven’t been deterred. The Dow Jones (INDU) Industrial Average climbed yesterday to a record, rising 125.95 points, or 0.9 percent, to close at 14,253.77 in New York. That surpassed its previous closing high of 14,164.53 as well as its intraday peak of 14,198.1 from Oct. 11, 2007.

Budget Resolutions

A new round of deficit talks would coincide with Senate Democrats and House Republicansspelling out vastly different budgetary visions in fiscal 2014 budget plans that each chamber is scheduled to adopt this month.

Senate Minority Leader Mitch McConnell, a Kentucky Republican, said yesterday that lawmakers learned that Obama won’t submit his fiscal 2014 budget plan before Congress leaves for a two-week recess that ends April 8. The president’s budget for the following fiscal year is typically released on the first Monday in February.

Meanwhile, House Republicans may propose in their budget plan protecting fewer Americans from changes in Medicare as part of an effort to balance the U.S. budget in 10 years, lawmakers said.

Budget Committee Chairman Paul Ryan, a Wisconsin Republican, promised in 2012 that people than age 55 and older would continue to be covered by the traditional Medicare program under his plan to partially privatize the health care plan for retirees. The panel is considering raising the age to 56 in this year’s House budget, committee member and New Jersey Republican Scott Garrett said yesterday.

The Medicare age change is in a “list of options” being studied as the panel drafts a 2014 budget proposal that Ryan plans to introduce next week, Garrett said.

Latest Efforts

Even with the divides, Republicans said they are encouraged by Obama’s latest efforts to talk with them.

Maine Senator Susan Collins said Obama left the impression “that he is sincere in wanting the two parties to come together.”

“He seems for the first time to be willing to exercise some political leadership on it,” said Collins, who spoke to Obama yesterday. Early in Obama’s first term, he “regularly” called her, though “then there was a real fall-off in communication,” Collins said.

Approach Shift

The calls represent a shift in approach for Obama, who in fiscal talks with Republicans since 2011 has negotiated mainly with Boehner and McConnell. Rank-and-file Republican lawmakers had complained that Obama didn’t try to engage with them.

Last week, Obama met privately at the White House with Graham and Arizona Senator John McCain, the 2008 Republican presidential nominee. Republican Representative Scott Rigell of Virginia traveled aboard Air Force One to appear with Obama at an event in Rigell’s Hampton Roads district.

“I’m very encouraged by what I see from the president in terms of substance and tone,” Graham told reporters. “He’s calling people - this is how you solve hard problems.”

Graham said Obama was trying to “get more people in the mix” to back a deal to curb the growth in entitlement spending and rewrite the tax code.

McConnell said he didn’t view Obama’s calls to lawmakers as an end-run around Republican congressional leaders.

‘Encourage Him’

“He certainly doesn’t have to go through me to call my members, and I’m sure he will, and I encourage him to do so,” McConnell told reporters. “I wish he’d done more of that over the years.”

White House press secretary Jay Carney told reporters that Obama would continue calling lawmakers to try to build support for a plan to trim the deficit. He wouldn’t provide details about individual conversations.

The White House is committed to “addressing entitlement reform in a very serious way” and rewriting the tax code, Carney said. He said both parties generally agree with those goals.

Republican Idaho Senator Mike Crapo said yesterday in an interview that White House officials contacted him to schedule a call with Obama. Crapo was part of a bipartisan group known as the Gang of Six that tried in 2011 and 2012 to craft an agreement for deficit reduction.

Crapo said he remains opposed to any revenue increase that doesn’t include a tax overhaul.

Greater Foundation

“We have to reform the tax code, rather than just look at some way to raise revenue in order to generate a greater foundation for more spending,” he said.

Oklahoma Senator Tom Coburn, another Republican member of the now-defunct bipartisan group, said he too received a call from Obama. While he remains open to working with Democrats on a deficit-reduction plan, the call “has not shaped” his perspective significantly, Coburn said.

Senator Bob Corker, a Tennessee Republican, called his conversation with the president “constructive.” He said it was unclear whether a renewed effort to strike an agreement stands much chance.

“I don’t know - that’s the bottom line,” Corker said.

To contact the reporter on this story: Kathleen Hunter in Washington atkhunter9@bloomberg.net

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