–Vice President Holds 3 Rounds of Talks This Week, Maybe 4 Next Week
–Biden Group Pushes For Agreement By End of June, But Deadline Not Hard
–Senate Budget Committee Chair Concerned Biden Deal Won’t Do Enough
–Senate’s Gang of Six Continues To Work For Broader Plan

By John Shaw

WASHINGTON (MNI) – As the budget talks led by Vice President Joe
Biden move into an intense phase, a raft of profound and deeply
consequential questions remain to be answered.

Will the Biden-led talks yield a bipartisan agreement? If so, when?
How large would any agreement be? How substantial and concrete will the
spending cuts and budget reforms be? Will the agreement pave the way for
passing a debt ceiling increase that will allow Treasury to operate
normally until after the 2012 elections?

And as the Biden group works intensely for a budget agreement, why
is the Senate’s so-called “Gang of Six” signalling that it may offer its
own fiscal plan soon? And why has Senate Budget Committee Kent Conrad
begun to speak skeptically of any agreement that the Biden group might
secure?

The answers to these questions should become more clear in the next
several weeks, but may not be fully answered until the first week of
August.

After three days of meetings on Capitol Hill this week, Biden said
Thursday evening he remains hopeful that a substantial budget agreement
can be secured.

“Everyone wants an agreement. There’s no principal in that room
that doesn’t want to get an agreement that bends the curve on long-term
debt and that is sufficiently realistic to get us to $4 trillion over a
decade or so in terms of (deficit) reduction,” Biden said Thursday as he
left the budget negotiations.

Biden said the talks he has led will shift into an even higher gear
next week, with negotiators working “around the clock.”

Biden has said he wants a broad budget agreement reached by the end
of June so it can be presented to President Obama and congressional
leaders by the Fourth of July.

Biden has been elusive on the size of the deficit reduction
agreement that he is pushing for. Speaking to reporters Tuesday, Biden
said that he’s “convinced that we can come up with an agreement that
gets the debt limit passed and makes a real serious downpayment on a
committment to $4 trillion in the next 10 to 12 years.”

The Biden talks are seeking a deficit reduction package that can be
developed to coincide with this summer’s vote on debt ceiling
legislation.

The U.S. has already reached its $14.29 trillion debt ceiling.
Treasury Secretary Tim Geithner has said that Congress must pass
legislation increasing the debt ceiling by August 2.

If a deficit reduction agreement is reached in principle by late
June or early July, staffers would probably spend the next week or two
putting it into legislative language so the House and Senate could vote
on it by late July.

Biden’s interlocutors in the budget talks are House Majority Leader
Eric Cantor, Senate Minority Whip Jon Kyl, Senate Appropriations
Committee Chairman Dan Inouye, Senate Finance Committee Chairman Max
Baucus, Assistant House Minority Leader Jim Clyburn and Rep. Chris Van
Hollen, the top Democrat on the House Budget Committee.

The administration is represented by Biden, Geithner, White House
budget director Jack Lew and the director of the National Economic
Council Gene Sperling.

Also speaking Thursday evening to reporters, Cantor, the House
Majority Leader, said the goal of the Biden talks is to find “trillions
of dollars of savings” on the spending side of ledger. He has ruled out
any tax increases.

Cantor also said he expects the pace of the talks to continue to
intensify. He said the Biden group will meet at least three times next
week and possibly four.

“We’re continuing to push forward to the kind of goals set out by
the Speaker and others,” Cantor said. House Speaker John Boehner has
said that a package of spending savings should equal or exceed the size
of the debt ceiling increase.

Kyl, the Senate Minority Whip, told reporters last week that
Republicans want a package of more than $2.4 trillion in savings over a
decade or more as a condition for increasing the debt ceiling by that
same amount.

White House officials have signalled they would like a budget
package ready by the July 4th recess, so it could be approved by
Congress well before the August 2nd deadline for increasing the debt
ceiling that Geithner says is still binding.

While the Biden talks go forward, the Senate’s so-called “Gang of
Six” continues to work on a deficit reduction plan. One of the members
of the group, Sen. Mark Warner of Virginia, said Friday morning that the
group’s plan will be released very soon. “We’re down to the last few
points,” he said.

Warner said the bipartisan group of senators, which is now down to
five members after the departure of Sen. Tom Coburn, will release a ten
year plan to cut the deficit by about $4.5 trillion, with savings coming
from discretionary spending cuts, revenue increases and entitlement
reforms.

Warner said he believes the Biden talks will produce an “around the
edges plan that is not going to get us through this.”

Senate Budget Committee Chairman Kent Conrad, who is also part of
the Gang of Six, told Market News International Thursday that he is
“hopeful” the budget talks hosted by Biden may lead to a bipartisan
deficit reduction agreement, but is also “worried” the agreement will be
smaller and less detailed than the nation’s fiscal problems require.

“I’m very concerned that they might come out with a seemingly large
number (of deficit reduction) but it will prove to be far less
substantial than it is presented as. I’m afraid we might have the
appearance of an agreement, but what we get won’t really solve our
problems,” he said.

Conrad was a member of the Simpson-Bowles commission that
recommended $4 trillion in deficit cuts over about a decade. Conrad also
worked with the so-called Gang of Six in the Senate to produce a
bipartisan budget agreement that was based on the Simpson-Bowles report.

“To be honest, I get worried when people talk about making a
downpayment about cutting the deficit. We don’t need a downpayment. We
need a plan. This is the time to swing for the fences and solve the
problem,” Conrad said.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]