- Associated Press - Thursday, May 5, 2011

WASHINGTON (AP) — The GOP plan to replace Medicare with vouchers probably will have to wait, party leaders acknowledged Thursday, as lawmakers and the White House bowed to political realities in pursuing a deal to allow more government borrowing in exchange for big spending cuts.

Both sides hinted at movement, and Vice President Joseph R. Biden Jr. reported progress from an initial negotiating session.

Spending cuts and increasing the amount of money the government can keep borrowing to pay its bills are “practically and politically connected,” Mr. Biden said at the start of budget meetings with lawmakers at Blair House, the guest residence across Pennsylvania Avenue Northwest from the White House.

The House Republican whose committee oversees Medicare said he’s open to other approaches besides the voucher plan that recently passed in the House after a contentious debate that appears to have hurt the party with older voters.

Rep. Dave Camp, Michigan Republican, who is House Ways and Means Committee chairman, said he supports the GOP approach but isn’t willing to go to the mat for legislation that has no prospects of becoming law.

“I’m not interested in laying down more markers,” Mr. Camp said. “I’m interested in solutions. … Let’s figure out where there is common ground, and let’s get there as soon as we can.”

Asked about Mr. Camp’s comments, House Speaker John A. Boehner, Ohio Republican, said they are “a recognition of the political realities that we face.” Nonetheless, Mr. Boehner said, the GOP Medicare remake remains on the table.

Mr. Obama and lawmakers of both parties face an Aug. 2 deadline to enact legislation that permits the government to increase its borrowing authority and meet its obligations to lenders. Failure to raise the debt limit beyond the current $14.3 trillion would call into question the creditworthiness of the U.S. government and trigger an economic crisis.

“All of us understand we have got to achieve results,” House Majority Leader Eric Cantor, Virginia Republican, said after the meeting. The two sides agreed “to find commonality,” and there was “general agreement things have to change,” he added.

With the government borrowing more than 40 cents of every dollar it spends, Republicans see the need to increase the debt limit as an opportunity to make deep spending cuts. Benefit programs such as Medicare and Medicaid could face some cuts, but not the overhaul called for in the House GOP budget plan.

Mr. Cantor came to the talks with $715 billion in proposed savings from other benefit programs, including cuts to farm subsidies and food stamps, according to an aide.

Mr. Camp said Mr. Obama’s debt commission pointed to cuts that can be made in Medicare. One big item would involve revamping Medicare’s rules so beneficiaries pay a greater share of everyday medical expenses but gain more protection from catastrophic costs. The bipartisan plan also would squeeze savings from drug manufacturers, hospitals and home health agencies.

The deficit could reach $1.6 trillion this year, so both sides are setting modest expectations. But they said the meeting offered a chance to identify even small cuts that can build toward a broader agreement.

Treasury Secretary Timothy F. Geithner took some pressure off the talks when he told Congress this week that the government can meet its obligations through Aug. 2 by using a series of bookkeeping maneuvers. That’s nearly a month longer than the July 8 deadline Mr. Geithner had cited previously.

The government is borrowing an average of $125 billion a month.

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