Obama, GOP in 'great conversation' on Capitol Hill

WASHINGTON (AP) — President Barack Obama said he had "a great conversation" with Senate Republicans on Thursday, the third

stop in his ice-breaking tour of the Capitol this week on the budget and other contentious topics.

The 90-minute meeting with GOP rivals, senators said, featured exchanges on the budget, the proposed Keystone XL oil pipeline,

tax reform and the regulatory burden on businesses.

"He was very candid. He certainly

understands that you can't fix the country without adjusting

entitlements to fit the demographics

of our country," said Minority Leader Mitch McConnell, R-Ky.,

referring to benefit programs like Social Security and Medicare.

"We'll see where we go from here, but it was a great meeting."

Obama then walked across the Capitol to meet with his House Democratic allies, capping visits this week to the Democratic

and GOP conferences of both House and Senate.

Thursday's meetings came as a key Senate panel moved toward party-line approval of a fiscal blueprint that would only modestly

trim the budget deficit while protecting safety net programs from slashing cuts proposed by Republicans.

The Senate budget plan, drafted by Sen.

Patty Murray, D-Wash., blends about $1 trillion in modest cuts to health

care providers,

the Pentagon, domestic agencies and interest payments on the debt

with an equal amount in new revenue claimed by ending some

tax breaks.

But because Democrats want to restore $1.2

trillion in automatic spending cuts over the same period — cuts imposed

by Washington's

failure to strike a broader budget pact — Murray's blueprint

increases spending slightly when compared with current policies.

And after realistic assumptions about war spending are factored

in, Murray's proposal would curb the deficit by only a few

hundred billion dollars over 10 years. Murray's plan allocates

just $50 billion for overseas military operations next year

and assumes no war spending whatsoever starting in 2016.

In the House, Budget Committee Republicans

approved a 2014 budget plan late Wednesday with an entirely opposite

approach.

It whacks spending by $4.6 trillion over the coming decade and

promises sweeping cuts to Medicaid and domestic agencies while

setting a path to balancing the government's books within 10

years. The party-line vote sent the measure to the full House

for a vote next week.

The partisan activity in the rival Budget

panels contrasts with Obama's charm offensive, which is aimed at

exploring the possibility

of bipartisan agreement over politically challenging budget issues

that have long gridlocked Washington.

Obama is signaling a willingness to adopt

some modest steps on Medicare and Social Security, even as many of his

Democratic

allies wince at the idea. He told House Democrats that he could

support a less generous inflation adjustment for Social Security

but only as part of a larger budget bargain that includes new

taxes.

He told senators to expect a decision on the keystone pipeline sometime this year though he didn't signal whether to expect

his administration to approve it, said Sen. John Hoeven, R-N.D.

"This will be hard, and it will have to go

against his own party to some extent as will some of us on the other

side, but

that we need to fix the debt for the country," said Sen. Lamar

Alexander, R-Tenn. "He was candid and open and direct and he

didn't sugar coat it. He recognizes that we have some pretty big

differences and we ought to keep expectations under control,

but he said he believes — and I think all of us believe — this is

the way we should be doing business together."

Separately, debate continues in the Senate

on a bipartisan spending measure wrapping up unfinished work on this

year's budget

— the annual spending bills funding the day-to-day operating

budgets of federal agencies. Leaders hope to finish that measure,

which is required to prevent a government shutdown at the end of

the month, on Thursday. Hopes were fading, however.

Senate passage would send the measure, with numerous changes, back to the House, which initially approved it last week.

The debate in the Senate Budget Committee is

the first time since 2009 that Democrats in charge of the Senate have

advanced

a budget blueprint, which opened to predictably poor reviews from

the panel's Republicans, who said it was heavy on tax increases

and light on cuts to rapidly growing benefit and safety-net

programs.

"Is it really possible that after four

years, the majority has failed to identify any reforms? That all we have

is just a

tax-and-spend budget that makes no alteration to our dangerous

debt course?" said the top Senate Budget Committee Republican,

Sen. Jeff Sessions of Alabama. "Does the majority believe the

government is perfect and requires no reform?"

At issue is the arcane and partisan

congressional budget process, which calls for a unique, nonbinding

measure called a budget

resolution. When the process works as designed — which is rarely —

budget resolutions have the potential to stake out parameters

for follow-up legislation specifying spending and rewriting the

complex U.S. tax code.

The House budget plan embraces tough new

spending levels required under the unpopular, across-the-board spending

cuts that

began to take effect this month. But in order to protect the

Pentagon, Republicans cut even more deeply into the day-to-day

operating budgets of domestic agencies next year, slashing them

from the $506 billion projected under the 2011 debt and budget

pact to $414 billion — an unprecedented 18 percent cut.

Murray's budget, meanwhile, not only preserves the spending caps set in the hard-fought 2011 deal but proposes $100 billion

in stimulus spending for road and bridge construction, school repairs and worker training.

House Budget Committee Chairman Rep. Paul Ryan, R-Wis., has revived his plan that, starting in 2024 for workers born in 1959

or after, would replace traditional Medicare with a voucher-like government subsidy for people to buy health insurance on

the open market. Murray proposes modest cuts to Medicare providers.

Ryan proposes slashing the Medicaid health

care program for the poor and disabled by more than $700 billion over 10

years,

while Murray would trim it by a negligible $10 billion. Ryan

promises to eliminate $1.8 trillion in subsidies in the president's

health care law; Murray doesn't touch them.