Patrick Martin: Obama's "Sacrifice" Plan Targets Health Care and Social Security

Bipartisan talks between the Obama administration and congressional leaders of both the Democratic and Republican parties would have a deal "beyond $1 trillion" in budget cuts before the Fourth of July recess, Vice President Joseph Biden said Tuesday, after the first three scheduled meetings this week. "I"m convinced that we can come up with an agreement that gets the debt limit passed and makes some real serious down payment on the commitment to 4 trillion bucks over the next 10 to 12 years," he said, referring to the deficit reduction proposal made by Obama in April. The parameters for the talks were determined by the Obama administration's capitulation to the demand of House Speaker John Boehner, the top congressional Republican, that legislation to raise the federal debt ceiling should include spending cuts of an equal amount. Since the Treasury has forecast that about $2.4 trillion in new federal borrowing will be needed between now and the end of 2012, that would require $2.4 trillion in spending cuts. The Treasury stopped borrowing in mid-May, when it reached the current debt ceiling of $14.3 trillion. Treasury Secretary Timothy Geithner said that one-time financial maneuvers could sustain federal government operations through August 2, but there will be no funds to cover Social Security checks to be sent out August 3, unless the debt ceiling is raised. Biden indicated that the negotiators hoped to have a preliminary proposal by July 1, to give Boehner and Obama time for additional top-level talks to finalize the agreement and to persuade majorities in both the House and Senate to back the deal.