WASHINGTON (AP) — Even as Vice President Joe Biden gave his most optimistic assessment yet of budget talks he's leading, President Barack Obama's Democratic allies in the Senate signaled Tuesday a harder line on Medicare. That stance is complicating any effort to produce a deal to cut the deficit by $2 trillion or more over the coming decade or so.
Biden said that he's confident that the talks will produce an agreement on cutting the deficit "well beyond" $1 trillion over 10 to 12 years. The talks are aimed at finding spending cuts to accompany must-do legislation allowing the government to continue to borrow to finance its operations and avoid defaulting on U.S. bonds.
Senate Democrats promised that any Medicare cuts in the measure would come from health care providers rather than cutting back benefits. The hard line came even as Republicans showed at least some willingness to kill special interest tax breaks this year with a vote on ending the annual $5 billion ethanol tax subsidy.
(Read more about debt-ceiling negotiations and agricultural subsidies at AdvisorOne.)
Leaving the Capitol after the group's seventh negotiating session, Biden said he's convinced that the group can come up with an agreement that increases the so-called debt limit and makes significant headway on Obama's promise to cut the deficit by $4 trillion over the next decade or so.
Republicans insist that increasing the nation's $14.3 trillion debt limit be matched with a commensurate level of spending cuts. But they also want the legislation to provide enough borrowing room so that there would only need to be one vote on the politically toxic topic before next year's elections.
However, it would take cuts in the $2.5 trillion range to meet both the GOP requirements and even Biden's rosy update seems to leave the group short of the goal.
The task wasn't made any easier with Tuesday's vow by top Senate Democrats that any deal this summer to cut the deficit won't cut benefits for people enrolled in Medicare.
"We will not allow cuts to seniors' benefits," said Sen. Chuck Schumer, D-N.Y.
Republicans are pressing for savings from the rapidly growing Medicare program, but Democrats stand adamantly against proposals to raise the eligibility age for the program, require wealthier seniors to pay more for Medicare or boosting copayments for visits to doctors and hospitals.
While Democrats are holding firm on Medicare cuts, Republicans maintain that tax increases are also "off the table." Unless either side shows flexibility, that makes it difficult, to say the least, to come up with deficit savings in the $2 trillion-plus range.
Ironically, the firmer Medicare stance came as Senate GOP conservatives rallied behind a move to cut off the $5 billion-a-year subsidy for ethanol blenders. The 45-cent-per-gallon subsidy comes in the form of a tax break, even though it's considered by budget gurus as a direct subsidy.
Tuesday's ethanol vote came on a failed attempt by Sen. Tom Coburn, R-Okla., to kill the subsidy for blenders of the fuel, which is mixed with gasoline. Coburn wants to use the money for deficit reduction, a view not shared by Republicans who say any savings from the ethanol cuts should be used to offset lowered tax rates.
While the vote fell well short of the 60 needed to break a filibuster, Coburn and 33 other Republicans took a position consistent with killing the ethanol subsidy, which is disliked by many policymakers but kept in place by farm state lawmakers. Democrats opposed Coburn because of the manner in which he sprung a forced vote on Senate leaders. But Majority Leader Harry Reid, D-Nev., said that he'll schedule votes next week.
"It is a waste of taxpayer money. It drives up the price of agricultural commodities needlessly. It does nothing constructive on the energy front," said tea party-backed GOP freshman Sen. Pat Toomey of Pennsylvania. "So by any measure it's a bad policy."
Democrats were encouraged by the Senate vote.
"A realistic conversation about deficit reduction must include both cuts and revenues," said Rep. Chris Van Hollen of Maryland, who's representing House Democrats in the talks. Coburn's willingness "to cut special interest tax breaks for the purpose of deficit reduction is encouraging."
Van Hollen said Tuesday's session focused on the amount of money available for the annual round of appropriations bills. One question at issue is how much savings to claim from the drawdown of troops from Iraq and Afghanistan.
Biden has scheduled a steady series of meetings this month in hopes of producing a blueprint that would then be fleshed out further by Obama and House Speaker John Boehner, R-Ohio, and translated into actual legislation.
"I think we we're going to be in a position, hopefully by the end of the month, by the Fourth of July recess, we have something to take to the leaders and actually begin to get down to the implementation piece of the kind of legislation," Biden said. "That's the goal."
Added Biden: "We're down to the tough stuff."