Biden seeks to cut deal on deficit reduction

WASHINGTON (Reuters) - Vice President Joe Biden, the administration’s high-stakes negotiator, is about to dive into U.S. deficit-reduction talks -- facing skepticism about what, if anything, he will be able to accomplish.

President Barack Obama hopes his vice president can build on last December’s feat when Biden and Senate Republican leader Mitch McConnell held secret talks that led to an agreement to extend tax cuts for millions of Americans -- and burnished Biden’s credentials as his top deal-maker.

Biden will be tested again starting on Thursday when he hosts the first meeting of a bipartisan congressional group aimed at developing a sweeping framework for U.S. deficit reduction.

“I have no idea if this group can deliver. But if Joe can’t do it, nobody can,” said Republican Alan Simpson, who served with Democrat Biden in the Senate for 18 years before retiring in 1997.

“Joe knows exactly what’s going on and what needs to be done. He has a lot of common sense and a lot of savvy. He can work with Democrats and Republicans,” said Simpson, who co-chaired a presidential deficit commission last year that failed to reach needed consensus to force a vote in Congress.

Republicans along with some Democrats have voiced doubt about Biden’s seven-member group, which includes senior members of Congress, but excludes some key players on budget issues.

Some have dismissed it as a “side show” to other efforts in Congress to tackle the deficit, including one by the bipartisan “Gang of Six” in the Senate.

But others say Biden’s group may be key to crafting a deficit-reduction agreement that could attract enough votes to pass legislation to increase the debt limit and avert economic turmoil.

If the debt limit is not raised by August 2, the United States will face harsh choices on which of its obligations -- from interest payments on its debt to Social Security payments to the elderly -- that it will fail to meet.

A default on any obligation could roil financial markets, raise interest rates and imperil the economic recovery, but the issue is political dynamite as recent polls show two-thirds of the Americans do not want the borrowing cap raised.

Asked on Tuesday what he expected the Biden group to do, Senator Orrin Hatch, top Republican on the Finance Committee, said, “Nothing.” Then he added, “The president needs to show more leadership.”


Pressing Obama to show his cards in the debt ceiling talks, two Republican members of Biden’s group -- Assistant Senate Minority Leader Jon Kyl and House of Representatives Majority Leader Eric Cantor -- wrote the vice president to ask that Obama specify how high the ceiling should go. That information, they argued, would be “key to the success” of Biden’s group.

The White House, wary of setting out a figure that would refocus attention on how quickly the debt is climbing, has said Congress should determine the debt ceiling figure.

U.S. Treasury Department officials have told lawmakers that a roughly $2 trillion increase in the legal limit on federal debt will be needed to ensure the government can keep borrowing through the 2012 presidential election, sources told Reuters.

A chief reason Obama picked Biden as his running mate is Biden’s 36 years as a senator who was well-liked, accomplished and could cut deals with colleagues.

James Thurber, of American University’s Center for Congressional and Presidential Studies, sees Biden as key in the administration’s dealings with Congress.

“Joe Biden is critical,” Thurber said. “I don’t think Obama likes Congress very much. He doesn’t know the people very well. Biden does. He loves the institution, and he has friends like McConnell who he can try to pull together compromises with.”

But Biden has also been hit with criticism from Republicans and some fellow Democrats.

He drew Republican fire in March when he left on a five-day international trip after being named by Obama to head budget talks aimed at averting a government shutdown. Negotiators reached a deal in early April to keep the government open.

Late last year, he was criticized by members of his own party for not conferring with them before getting Obama to back away from his refusal to extend tax cuts for the wealthy.

“I don’t think there’s any remaining hard feelings, but there is hard determination that there needs to be more consultations with us this time,” said Democratic Representative Sandy Levin.

Editing by Vicki Allen