The Big Break?

July 6, 2011 8:10 p.m.

There have been two late, but perhaps Earth-moving developments tonight in the debt fight that continues to dominate national politics. At a minimum, we’re watching the White House float the mother of all trial balloons. Alternatively, we’re seeing the first signs that the groundwork’s been laid, behind the scenes, for a huge tax and spending deal that includes big revenue raisers and significantly larger entitlement cuts.As detailed here, in an article by Lori Montgomery, Obama administration officials say they’ve prepared a major, $4 trillion deficit reduction package ,to lay out before Republican and Democratic leaders at the White House tomorrow. This would include significant, unspecified cuts to entitlement spending, but also real new tax revenues — including possibly a partial expiration of the Bush tax cuts.

So far that sounds like the White House negotiating through the press, calling John Boehner and Mitch McConnell’s big bluff in the Washington Post. But then check this out:

The president’s renewed efforts follow what knowledgeable officials said was an overture from Mr. Boehner, who met secretly with Mr. Obama last weekend, to consider as much as $1 trillion in unspecified new revenues as part of an overhaul of tax laws in exchange for an agreement that made substantial spending cuts, including in such social programs as Medicare and Medicaid and Social Security — programs that had been off the table.

If Boehner’s said he’ll accept real new tax revenues — eliminating expenditures, or raising rates, or a combination of the two, and not just selling off federal property and calling it “new revenue” — then we could be looking at an actual grand bargain. The kind of once-in-a-decade development that will shake Washington to its foundation, raise howls from advocacy groups across the political spectrum, and, of course, mean real, difficult changes to peoples’ lives. We’ll bring you much more tomorrow.

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