Welcome to the Grand Bargain

In just three hours, the White House will host the latest, and arguably the most important, round of debt-reduction talks, and the pre-meeting positioning has already raised enough eyebrows to make the entire political world appear to be in a perpetual state of surprise.

The so-called Gang of 10 — Obama, Biden, Boehner, Reid, McConnell, Pelosi, Cantor, Durbin, Kyl, and Hoyer — will meet with just 26 days before a rather-inflexible deadline, at which point the United States government will exhaust its ability to pay its debts. But before the leaders sit down at the table, the trial balloons are already flying pretty high.

Up until now, the projected goal has been a deal that would reduce the debt by (roughly) $2.4 trillion over (roughly) 10 years. But President Obama, who spoke Tuesday about “a unique opportunity to do something big,” apparently intends to go even further, eyeing a $4 trillion deal.

And on how on earth could policymakers reach such an agreement? By Republicans taking revenue seriously.

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….

And on how on earth could the White House get Republicans to consider $1 trillion in new revenues? By putting Medicare and Social Security on the table.

President Obama is pressing congressional leaders to consider a far-reaching debt-reduction plan that would force Democrats to accept major changes to Social Security and Medicare in exchange for Republican support for fresh tax revenue. […]

As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal.

This, in effect, is the Grand Bargain. In fact, it’s been the blueprint for the Grand Bargain (and the Gang of Six talks) since late last year: entitlements for revenue.

To state what’s painfully obvious, the details mean everything. We don’t know what kind of revenue, if any, Republicans would agree to, and we don’t know what kind of entitlement cuts the president is prepared to accept. There’s apparently some talk about means testing Medicare, but it’s hard to say whether that’s just scuttlebutt.

To be sure, if this is the deal that’s taking shape, it would serve as a stunning development, but at this point, I’d recommend caution and patience. Indeed, if I were a betting man, I’d say the most likely scenario is that these leaks are coming from the White House with the intention of making Republicans look even worse if the talks break down. “Democrats offered the GOP everything,” the argument will go, “and Republicans still said no.”

That said, if this is more than just posturing, and the basis for a $4 trillion deal really is coming together, it would be the sort of agreement that would “shake Washington to its foundation, raise howls from advocacy groups across the political spectrum, and, of course, mean real, difficult changes to peoples’ lives.”