Looking more like a narrow debt limit deal 

Ezra Klein follows up on Michael Gerson’s debt limit negotiation reporting this morning adding:

The debt-ceiling deal looks like it’ll be almost entirely composed of cuts and caps. Whatever revenues are in it will be token contributions, at best. There won’t be structural reforms to Medicare, Medicaid and Social Security, and there won’t be a pass at tax reform. The budget caps will make automatic cuts to spending if we’re not on a path to primary balance by 2014. The big question with the cap is whether it just makes automatic cuts to spending or it also raises taxes. It’s not obvious to me why the Democrats would fold on that last point, but they might.

What this means is that Democrats and Republicans have agreed that the “grand bargain” isn’t spending cuts for tax revenues, but entitlement reforms for tax revenues. And since there’s no agreement on either entitlement reform or tax revenues, those decisions will be delayed.

This sounds much more likely than the tax-expenditures for Medicare-reform deal that Gerson outlined in his column. As I wrote this morning, I just don’t think any of the principals at the table have the buy in from their respective party’s to do anything on Medicare or taxes right now.

If Obama was able to pull off such a deal, he would significantly increase his re-election chances.

But a very narrow debt limit deal that just involves trillions in real spending cuts for a relatively small debt hike sounds much more likely. Any real agreement on entitlements and taxes will not come before November 2012.

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