Lawmakers Talk About Same Goals, Offer Starkly Different Suggestions for Debt Deal

Negotiators have set July 1 as a preliminary deadline for reaching an agreement on the debt ceiling, but to hear Capitol Hill lawmakers on Sunday offer grandiose ideas combined with large amounts of partisanship, it may be impossible to reach a deal in less than two weeks.

Vice President Joe Biden says an agreement is needed by the end of June so that party leaders can return to their caucuses and sell a compromise before the Aug. 2 deadline Treasury Secretary Tim Geithner says is the drop dead date to avoid default on America's debts.

While many Democrats say they favored a "clean" debt limit vote to raise the ceiling without conditions, Republicans said Washington can't allow unrestricted spending.

That means compromise, a word second only to sorry in degree of difficulty for Washington insiders.

Nonetheless, the formation of a compromise appears to be centralizing around a long-term plan for reducing the nation's debt by at least $4 trillion over the next decade.

Getting there is the tough part.

Republicans refuse to include tax increases to pare down the annual deficit, though they say they would be open to cutting out loopholes like ending the ethanol subsidies and simplifying the tax code to help corporations as well as individuals like small business owners.

Democratic Rep. Jim McDermott told Fox News on Sunday that "the best thing we saw last week" was Senate Republicans voting "in large numbers" to get rid of the ethanol subsidy.

But don't expect that to be the start of a trend, say Republicans.

"No one on the Republican side is going to vote to raise taxes, but I think many of us would look at flattening the tax code, do away with deductions and exemptions and take that revenue to help pay off the debt," said Sen. Lindsey Graham, R-S.C.

Graham as well as Senate Minority Leader Mitch McConnell, R-Ky., said Sunday that unless Congress tackles entitlement reform, there are few place to go on a debt deal.

"Everybody knows you have to tackle entitlement reform. If we can't do that, then we'll probably end up with a very short-term proposal over, you know, a few months. And we'll be back having the same discussion again in the fall," McConnell said.

But Sen. Chuck Schumer, D-N.Y., said Social Security is not part of any talks even if it needs a long-term fix.

"Why? First, it is not adding to the deficit. Social Security isn't. It has its own trust fund," he said. "But my view is we ought to first solve the deficit problem and get America working again. Once we do that, we should look at Social Security because it does have to be dealt with."

That's exactly the point, said Graham.

"There is no way on God's green earth you're going to balance the budget until you put entitlements on the table," Graham said.

Graham suggested that perhaps it is time to increase the age for entitlement eligibility for Social Security or Medicare, or perhaps means test it so that wealthier individuals don't receive the same level of benefits as lower income recipients.

"Why should you and I get 100 percent of our Medicare paid? Seventy-five cents of every dollar for our Medicare payments come out of the general treasury. We should be paying that ourselves because we can afford to," he said.

Illinois Sen. Dick Durbin, the No. 2 Democrat in the Senate, said he opposes Medicare cuts, "but there are ways to make savings in Medicare." They include competition in the prescription drug program, for instance.

Schumer said any talks about debt reduction need to be coupled with job creation.

"We're going to look at two things. One is deficit -- one is infrastructure, and one is some kind of encouraging of employment," he said. "When you build infrastructure, it creates new jobs. And we should be doing something like that ... a national power grid, making sure every home gets broadband."

Schumer also suggested other measures for increasing employment -- an infrastructure bank to leverage private capital against government spending, "Build America" bonds and a payroll tax holiday for employers who make new hires.

"There's a $14 trillion deficit. We should have as a goal, as a guidepost, for every trillion we cut in the deficit, we should seek to create a million jobs in the short term," he said.