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Budget and debt talks begin, but a deal remains elusive

WASHINGTON — Democratic and Republican lawmakers apparently left a closed-door meeting Thursday with Vice President Joe Biden on budgets, deficits and debt the same way they walked in: deeply divided on tax policy.

Biden presided at the meeting of two Republican and four Democratic lawmakers across Pennsylvania Avenue from the White House at Blair House. It wasn't expected to produce immediate results, and it didn't.

Both sides agreed on the need to find common ground to improve the nation's fiscal condition and to reach consensus on how to raise the nation's debt limit of $14.3 trillion. If they don't reach a deal before Aug. 2, Treasury Secretary Tim Geithner has said the government may go into default, which could panic global financial markets and put the still-fragile economy at risk.

But the negotiators differed dramatically on how to do it. House Majority Leader Eric Cantor, R-Va., said any plan that contained tax increases would go nowhere in the Republican-controlled House of Representatives.

"The House has taken a firm position against anything having to do with increasing taxes or tax rates," Cantor said after the two-hour meeting. "We are not interested in having any discussion about tax increases. I said that."

Rep. Chris Van Hollen of Maryland, the House Budget Committee's ranking Democrat, said that any credible discussion must include raising tax revenues and eliminating some corporate tax breaks.

"...You have to look at both revenue, getting rid of some of the big tax breaks for the oil companies," Van Hollen told Bloomberg TV before the meeting. "I mean, come on. Profits are going through the roof, they don't need taxpayer giveaways."

In a brief interview with McClatchy, he elaborated: "Our approach clearly follows dealing with revenues. The Republican plan does not."

House Republicans also appear to disagree among themselves over whether to proceed with their plan to dramatically revamp Medicare, a major component of the GOP budget plan the House approved last month with no Democratic votes. That plan would privatize Medicare and give federal subsidies for insurance, a proposal opposed by the Democratic-controlled Senate and the White House.

Rep. Dave Camp, R-Mich., the chairman of the tax-writing House Ways and Means Committee, told a health forum in Washington Thursday that he's in no hurry to draft the Medicare proposal into formal legislation.

"I'm not really interested in just laying down more markers," Camp said. "I'd rather have the committee working with the Senate and the president, focusing on savings and reforms that can be signed into law."

Cantor, however, insisted that Republicans are proceeding with their Medicare plan.

"I have not taken Medicare off the table," he insisted. "The reality is this president has excoriated our budget plan and the Medicare proposal in the plan. I certainly would like to see what their proposals are."

Sen. Sherrod Brown, D-Ohio, sent a letter to Cantor Thursday signed by 48 other Democratic senators, urging House Republicans to leave Medicare alone.

"The two parties can and must work together to reduce the deficit, but not if Republicans maintain their demand to end Medicare as we know it," Brown wrote.

Following the meeting, Biden issued a two-sentence statement proclaiming the session "a good, productive first meeting" and said the group would meet again on Tuesday.

The negotiating group also includes Senate Minority Whip Jon Kyl, R-Ariz. Senate Finance Committee Chair Max Baucus, D-Mont., Senate Appropriations Committee Chair Daniel Inouye, D-Hawaii, and Assistant House Minority Leader Jim Clyburn, D-S.C.

Some analysts called the Blair House meeting a positive step.

"The tone is starting off constructively in that everyone agrees something must be done," said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget. "I believe that there is agreement we need to raise the debt ceiling in a responsible way rather than running down the clock on this."

The Biden group is one of several efforts seeking budget solutions. On Capitol Hill, Senate Budget Committee Chair Kent Conrad, D-N.D. is preparing to unveil his own budget plan. In addition, the "Gang of Six" — three Democratic and three Republican senators — is close to presenting its proposal after months of private talks.


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