Mark Halperin’s answers this week in TIME.
Where’s the momentum for a deal on deficit reduction?
The floating summertime deadline for Congress to approve an increase in the U.S. debt limit (or else face default) is energizing both parties but not yet bringing them closer to a deal. A group of three Democratic and three Republican Senators is trying to hammer out a solution involving spending cuts, entitlement reform and tax increases. Meanwhile, a man who knows how to navigate the GOP back channels — Vice President Joe Biden — is now hip-deep in those waters.
What are the biggest obstacles?
As long as Republicans stick to their “No new taxes” mantra, a deal is impossible. And Speaker of the House John Boehner’s demand for trillions in spending cuts to match any increase in the debt ceiling is unhelpful in the extreme. Even if a compromise can be found, White House officials worry that rank-and-file House GOP hard-liners could well vote down the package anyway, creating the kind of political disarray and global anxiety that Obama, most Republican leaders and the financial markets want to avoid.
What happens if there is no deal?
Unfathomable. But it is equally difficult to imagine how a deal might be reached, given the current divide. Republicans are sticking to the debatable notion that the business world would rather see Washington achieve significant deficit reduction than meet the deadline for default. If there is no way to reach an agreement that gives both sides something to brag about, the two parties will have to find a face-saving way to keep the Treasury from defaulting on its securities — and fight it out again later this year.