Obama, Republicans cooperate on spending ? for now

WASHINGTON (AP) ? The Obama administration and congressional Republicans are quietly working in tandem to blunt the impact of short-term spending cuts that kicked in with dire White House warnings a few days ago, with both sides eager to pocket the full savings for deficit reduction as they pivot to a new clash over Medicare.

The overall size of the cuts remains in place: $85 billion in reductions through the end of the budget year on Sept. 30, half from defense and half from domestic programs as diverse as education, parks and payments to doctors and hospitals treating Medicare patients.

But legislation drafted by House Republicans to prevent a government shutdown on March 27 also gives the Pentagon and the Veterans Affairs Department flexibility to allocate cuts that no agency currently has. A vote on the measure was arranged for Wednesday.

Senate Democrats seem likely to agree to the flexibility if it can be expanded to include other agencies, according to several officials who described closed-door talks that also involved the White House. Among the candidates are the departments of Homeland Security, Transportation, Justice and State. The officials spoke on condition of anonymity, saying they were not authorized to disclose details.

The move marks a reversal for President Barack Obama and Senate Majority Leader Harry Reid, D-Nev., both of whom spoke dismissively in recent days of Republican plans for flexibility in administering the cuts.

"The problem is when you're cutting $85 billion in seven months, which represents over a 10 percent cut in the defense budget in seven months, there's no smart way to do that," the president said Feb. 26 in Newport News, Va.

"You don't want to have to choose between, Let's see, do I close funding for the disabled kid or the poor kid? Do I close this Navy shipyard or some other one?"

Asked last week whether he would agree to flexibility, Reid said: "No, why would I? I don't have a reason to do so."

Pentagon officials embraced flexibility even before the measure came to a vote in the House.

The difference for the Navy is "almost night and day," the service's top uniformed officer told Congress on Tuesday. With flexibility, said Adm. Jonathan Greenert, the chief of naval operations, work could proceed on the overhaul of two aircraft carriers and construction on a third, all projects that the Pentagon had said would be curtailed without any changes.

The Pentagon did not immediately say whether it also would be able to order the USS Harry S. Truman to the Persian Gulf region, a mission it announced earlier would fall victim to the cuts.

Whatever the eventual impact of the spending cuts, the long-running struggle between the parties over deficits soon will shift to rival budgets under preparation by House Republicans and Senate Democrats.

Republican officials said Tuesday that Rep. Paul Ryan, R-Wis., the chairman of the House Budget Committee, had decided against accelerating plans for a highly controversial overhaul of Medicare, the program that provides health care for people aged 65 and older. Several members of the rank and file have said in recent days Ryan was considering a budget that would implement far-reaching changes beginning in less than a decade.

The Republican proposal would give future retirees a choice between the existing program and one that provides beneficiaries a voucher for their care. In its previous forms, it also capped the overall cost of the program.

Republicans say their approach would help ensure the survival of Medicare for future retirees.

Democrats say it would end the guarantee of health care coverage for seniors that has existed since the 1960s by imposing steadily higher costs on beneficiaries.

Ryan's suggestion to accelerate the overhaul drew objections from some Republicans because it would have meant reversing a pledge the party has made to leave Medicare generally unchanged for anyone currently aged 55 and older.

The switch had few if any supporters at a closed-door leadership meeting earlier in the week, according to Republicans who spoke on condition of anonymity because they were not authorized to discuss the session.

One lawmaker not at the session, Rep. Mike Simpson of Idaho, told reporters on Tuesday there was concern among some Republicans that incumbents and candidates in swing seats could be harmed in the 2014 elections. "You've told people you'd be doing one thing" and then changing the pledge, he said.

Democrats are poised to attack Republicans over their plans regardless.

Even before reports first surfaced of a possible change in the Republican timetable, Reid told reporters, "Republicans plan to make more extreme cuts to Medicare and Medicaid, education, medical research. They are in an untenable position."

Obama has proposed cuts totaling $400 billion or more to Medicare and other health care benefit programs but has refused to accept the type of change that Republicans seek.

In his State of the Union address last month, the president said he wants to reduce taxpayer subsidies to prescription drug companies, impose higher costs on wealthier seniors and make payments to providers based on "the quality of care seniors receive" rather than the number of tests.

"I am open to additional reforms from both parties, so long as they don't violate the guarantee of a secure retirement," he said.

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Associated Press writers Donna Cassata and Andrew Taylor contributed to this report.

Source: http://news.yahoo.com/obama-republicans-cooperate-spending-now-080849680--finance.html

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