The Launch of the 2012 Spin

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Here’s what we learned today: Whatever action Congress takes on the debt ceiling and deficit reduction will be the last significant work Washington does before all pretenses are abandoned and campaigning for 2012 begins in earnest.

In the next four to six weeks, Congress must pass a measure raising the debt ceiling as the Treasury Department approaches the nation’s legal borrowing limit. Think of it as reaching the limit on your Mastercard and asking for more credit. Republicans are insisting that to win their support, the debt ceiling must be coupled with cuts – perhaps even entitlement reform. “A serious and credible path forward, not only short term but long term, to reduce spending,” Senate Minority Leader Mitch McConnell warned this morning, “is the only thing, in my opinion, that will get the votes in the Senate to raise the debt ceiling.”

President Obama has different ideas for deficit reduction. Today, as my colleagues have noted, he gave a big speech unveiling his plan. An hour before Obama was even due to speak, Republican leaders were preemptively pooh-poohing his plan for allowing the Bush tax cuts for the wealthiest Americans to lapse. “I think the President heard us loud and clear,” House Speaker John Boehner said after a White House meeting with Obama. “If we’re going to resolve our differences and do something meaningful, raising taxes won’t be a part of that.”

Congressional Democrats, meanwhile, continued their demagoguery of House Budget Committee Chairman Paul Ryan’s plan. “What do you do when you’re scared that the centerpiece of your entire agenda is about to be exposed as a Trojan horse for your real goal of ending Medicare and Social Security to pay for tax breaks for millionaires and billionaires?” wrote Jon Summers, Senate Majority Leader Harry Reid’s spokesman, in an email blast to reporters. “You kick and scream and create a diversion, just like Republicans are doing now by criticizing a plan they haven’t even seen yet.”

A lot of lines are being drawn in the sand. Republicans are rejecting higher taxes. Democrats cannot stomach the idea of Medicare vouchers. Just as clear: there will be some kind of deal. Politicians on both sides of the aisle are not going to let the Treasury hit the debt ceiling; the consequences are too dire. The U.S. risks defaulting on its debt and having its credit rating downgraded, not to mention the turmoil it would create in financial markets, if that were to happen. Wall Street is already warning Republicans not to play politics on this dangerous issue.

And yet, even the most partisan folks believe this is a moment for a deal. “The American people are ready,” Senator Jeff Sessions of Alabama, the top Republican on the Budget Committee, told TIME. “Congress and the Senate are prepared to talk very seriously.” Session’s Democratic counterpart, Kent Conrad, told TIME that there are tax solutions recommended by Obama’s fiscal deficit commission that could make for a good compromise. “We’re clearly going to need more revenue. When revenue is the lowest it’s been in 60 years as a share of the economy and spending is the highest it’s been as a share of the economy, clearly you have to work both ends of that equation,” Conrad said. “But eliminating tax expenditures and closing loopholes, as the commission did, achieves much of the same thing… It’s often darkest just before dawn.”

The heated rhetoric from both sides stems in part from the last round of negotiations, in which both parties weathered less than ideal conditions (Boehner had his ante forced up by his freshmen and the Dems got caught with their pants down by Boehner’s first two week offer). Now, both ends of Pennsylvania Avenue want to lead with their strongest first offer. After all, it’s only down hill from here. Some of the bombast is a symptom of the upcoming campaign. The Democratic base loved Obama’s speech. And what Republican doesn’t like to hear their elected officials stand firm against taxes? As it often is in Washington, today’s deficit back-and-forth was a case of ‘watch what I do, not what I say.’