With one federal shutdown averted, attention turns to next fiscal standoff

By Karoun Demirjian

Tuesday, April 12, 2011 | 9:09 a.m.

Last week’s budget standoff was as mired in politics as it was in the policy matter of making cuts, with House Speaker John Boehner and Senate Majority Leader Harry Reid both struggling to strike a balance between the promises made in the last election cycle and what they’d be able to defend in the next one.

Since a shutdown was closely averted Friday night, even Democrats who despised the Republicans’ negotiating position have been tipping their hat to Boehner on a tactical victory. But in the eyes of the public, it appears that Reid and Democrats won.

According to a CNN poll, 48 percent of the country think Democrats are responsible for the budget agreement that helped avert a shutdown, compared to only 35 percent who think Republicans were responsible for pulling the country from the brink -- and 54 percent approve the way Democrats handled the whole budget process, as opposed to only 44 percent approval for the Republicans.

It’s a victory for Democrats -- but one that doesn’t come without its ominous undertones. There was also more than a bit of blame stored up in reserve: 72 percent of poll respondents said the Tea Party would deserve at least some of the blame had the government hit a shutdown. But 87 percent said that Democratic leaders would also have be responsible if the federal government hit the skids -- a spike from the 77 percent who had held that opinion in the days before a deal was struck.

Polls aside, the lessons of that whole debacle are still emerging around Washington, where everyone has been gearing up for the next rounds of fiscal standoff since slightly after midnight Saturday morning.

Reports are emerging from the White House that when the president takes to the podium this week to outline his deficit reduction plan for the coming fiscal year, he'll be endorsing the Simpson-Bowles debt commission recommendations that were drafted last year, but never moved anywhere legislatively. That report incorporates several debt-staving off measures, but focuses especially on two that are all but guaranteed to open up the floodgates to more vitriolic debate: raising taxes and lowering Social Security benefits.

The debt commission's report has been controversial since it was approved. While it's earned the support of some of the most fiscally conservative members of Congress, it also sparked a wave of protectionist activity from Democrats, including Reid, who has taken an over-my-dead-body position on reducing Social Security benefits or raising the retirement age, arguing that Social Security is paid for, and tinkering it would be tantamount to raiding the kitty to pay for government's other mistakes.

But Reid seemed resigned Monday that there would at least have to be a debate on the subject -- though not convinced that it would occur as part of the President's anti-deficit roll out.

"They’re not going to talk about Social Security," Reid said, "but that doesn’t mean we’re going to have to have that discussion," reiterating that he remained "totally opposed" to reducing program benefits.

But the resurgence of the debt commission recommendations is not necessarily going to result in a party-by-party fight, and not just because it's received the support of Republicans and the president. House Republicans have another option now when it comes to the fiscal 2012 budget, and that's in the documents released by Budget Chair Paul Ryan last week, that proposed privatizing Medicare and Medicaid to help draw down government spending.

Medicare privatization doesn't exist as a proposal in the Simpson-Bowles report, but the president is expected to discuss both programs Wednesday.

"I’m glad the president’s going to address those two issues," Reid said.

There's a lot of dispute about them, even within the Nevada delegation.

Republican House members Joe Heck and Dean Heller have both welcomed the Ryan budget idea of privatizing Medicare and converting Medicaid into block grants at least in concept.

"[It] allows states to design whatever type of programs they want to,” Heck said.

Meanwhile Democratic Rep. Shelley Berkley has expressed the same opposition as Reid, just more irately.

“The idea of cutting Medicare and Medicaid is so outrageous, so unreasonable, and so unacceptable that I can’t believe the Republicans have the nerve to suggest it,” she said.