cial section on the budget. In this space, I want to try and get a handle on what comes next.

House Republicans will vote on Paul Ryan's budget on Friday. It's expected to pass, and then get laughed at in the Senate -- and that's if Democrats are feeling friendly. The other option is "burned in effigy," as Democrats are seeing polling showing the seniors in the GOP coalition are actively hostile to major changes to Medicare.

But Obama's budget -- which is, at this point, a proposal, not a piece of legislation -- also doesn't have a clear path forward. The White House is discussing a bipartisan negotiation process with congressional leadership, but no agreement has been reached, and there's no certainty that such a process would actually yield a useful result.

The forcing event could be the need to raise the debt ceiling, which many Republicans are saying they'll tie to action on deficit reduction. But the debt ceiling is coming up quick: we reach our limit in May, and then we have about eight weeks of fancy accounting before we hit a hard stop and the economy cracks in half. Wall Street, however, is trying very hard to make it clear that taking the full eight weeks would not be a good idea, as once the market begins to think default is a real possibility, all hell can break loose, even if we have another four days to go.

Whether you assume we have till mid-May or early June, that's not enough time for Republicans to rethink their position on taxes and nor for Democrats to come around to privatizing Medicare. So there's going to have to be some placeholder attached to the debt ceiling vote. The 'trigger' attached to Obama's budget is a likely candidate. If we're not on a better fiscal path come 2014, it begins indiscriminately slicing away at a large swath of the federal budget and, importantly, at tax expenditures. So, in theory at least, it puts us on the path to deficit reduction without requiring us to make the hard decisions of deficit reduction right this minute. That's probably the likeliest immediate outcome of all of these plans and proposals.

Five in the morning

1) Obama laid out his deficit reduction plan in a speech yesterday, report Lori Montgomery and Zachary Goldfarb: President Obama entered the debate about the national debt on Wednesday after months on the sidelines, offering a plan to trim borrowing by $4 trillion over the next 12 years by combining deep cuts in military and domestic spending with higher taxes on the wealthy. In a stinging rebuke to Republican budget-cutters, Obama acknowledged that the debt must be tackled faster than he has previously proposed, but he rejected GOP calls to make fundamental changes to Medicare and Medicaid and to scale back his initiative to expand health-care coverage to the uninsured...Obama announced his framework for deficit reduction in a speech that at times employed the highly partisan words he used on the campaign trail."

Read the speech: http://1.usa.gov/hU0PwT

Read Obama's deficit reduction outline: http://1.usa.gov/ehCJ82

Read a roundup of Congressional reactions (hint: Dems liked it, Republicans didn't): http://wapo.st/i9qqZN

2) Obama's deficit plan involves much stricter Medicare cost controls, reports Amy Goldstein: "President Obama proposed Wednesday tighter curbs on Medicare spending and a new way of sharing Medicaid and children’s health-care costs with states as he laid out a path to rein in the entitlement programs that pose the single largest threat to the nation’s fiscal future. The White House said that over the next decade, these recommendations, plus more modest measures to slow the nation’s rampant medical spending, would save $290 billion beyond the steps already envisioned in the president’s budget and the year-old law to overhaul the health-care system... A central aspect of the president’s Medicare proposal relies on a controversial board, to be created by 2013 under the 2010 Affordable Care Act, that will be empowered to devise ways to slow spending in the program if costs rise faster than specific limits."

3) The plan raises revenue by cutting tax breaks, not by raising rates, reports John McKinnon: "In calling for limiting tax breaks for high earners Wednesday, President Barack Obama sought to shift the tax-policy debate from rates to what Washington calls 'tax expenditures.' More commonly known as tax breaks or deductions, tax expenditures include incentives for investment, home ownership, health care and local governments. The shift suggests a political debate ahead that is different from the fight on rates but equally bruising. Each break likely to be targeted has powerful supporters, from Wall Street to city hall to real-estate and other industries. Mr. Obama called for roughly $1 trillion in higher tax revenues over the next 12 years to help cut the deficit, largely by reducing tax expenditures."

4) The House will vote on the 2011 budget deal and Paul Ryan's 2012 budget this week, report Philip Rucker and Paul Kane: "The first of the two votes is to come Thursday, on whether to affirm the hard-fought budget deal reached last week that averted a government shutdown. The six-month spending bill appears headed for passage with support on both sides of the political aisle. If that happens, it would indicate a bipartisan bloc of lawmakers who might be willing to compromise again later on acrimonious spending issues. The second vote will come Friday over the GOP’s 2012 budget blueprint, crafted by Budget Committee Chairman Paul Ryan (R-Wis.), which would lower the nation’s long-term deficit by reining in spending and fundamentally overhauling Medicare and Medicaid."

5) The CBO found the budget deal cuts spending by only $352 million, not $38 billion, reports Andrew Taylor: "A new budget estimate released Wednesday shows that the spending bill negotiated between President Barack Obama and House Speaker John Boehner would produce less than 1 percent of the $38 billion in promised savings by the end of this budget year. The Congressional Budget Office estimate shows that compared with current spending rates the spending bill due for a House vote Thursday would cut federal outlays from non-war accounts by just $352 million through Sept. 30. About $8 billion in immediate cuts to domestic programs and foreign aid are offset by nearly equal increases in defense spending. When war funding is factored in the legislation would actually increase total federal outlays by $3.3 billion relative to current levels."

Swedish pop cover interlude: The Mountain Goats cover "The Sign" by Ace of Base.

Got tips, additions, or comments? E-mail me.

Still to come: Reactions to Obama's budget plan; the Fed confirms the economy is growing in every region; the House voted to repeal a component of health care reform; a more modest Internet privacy bill has been introduced in the House; the GOP is resisting offshore drilling safety legislation; and a baby polar bear gets his head stuck in a bucket.

Wonkout: Obama's Speech

My take: "So are we finally getting the grand philosophical debate we wanted? Not quite...Obama’s budget is not philosophy. It is very similar to the Simpson-Bowles report, which attracted the votes of Republicans as far to the right as Tom Coburn. Few Democrats would say their vision of balancing the budget is one in which there was only one dollar of new taxes for every three dollars of spending cuts, but that’s what Obama’s proposal envisions. Obama’s budget, somewhat curiously, is what you’d expect at the end of a negotiation process, not the beginning. In fact, as it’s modeled off of Simpson-Bowles, it is the product of a negotiation process, as opposed to an opening bid. It is, in other words, policy. You could argue that this is a philosophy, and that philosophy is pragmatism, but I think that’s getting too cute. This is the sort of policy that night pass and might work."

The plan is a step in the right direction, write Erskine Bowles and Alan Simpson: "We are encouraged that the President has embraced a balanced, comprehensive approach to deficit reduction similar to that outlined in the Fiscal Commission report. We believe that only an approach which includes all areas of the budget can reach the broad bipartisan agreement necessary to enact a real and responsible deficit reduction plan. The framework he put forward today represents another step forward in the process. The President's framework reflects elements of the Commission plan that are essential to achieving the agreement necessary to enact real reform. While the President's proposal takes longer to get to the budget reductions we recommended, it does reduce our deficits by $4 trillion over the next 12 years."

The plan is riddled with errors and bitterly partisan, writes Paul Ryan: "When the President reached out to ask us to attend his speech, we were expecting an olive branch. Instead, his speech was excessively partisan, dramatically inaccurate, and hopelessly inadequate to address our fiscal crisis. What we heard today was not fiscal leadership from our commander-in-chief; we heard a political broadside from our campaigner-in-chief. Last year, in the absence of a serious budget, the President created a Fiscal Commission. He then ignored its recommendations and omitted any of its major proposals from his budget, and now he wants to delegate leadership to yet another commission to solve a problem he refuses to confront."

Obama's plan and Paul Ryan's finally put the big-ticket items on the table, reports Neil Irwin: "No longer is the debate about earmarks, as it was during the 2008 election -- the sometimes-wasteful projects that lawmakers add to spending bills together account for one-20th of 1 percent of federal spending...Now, after the release of plans from the White House and the House Budget Committee’s Republican chairman, the issues on the table are increasingly the ones that really matter for the nation’s economic and fiscal future: Medicare and Medicaid, the health programs that are the biggest drivers of the nation’s long-term funding shortfall; the George W. Bush-era tax cuts, which would increase the deficit by 55 percent over the coming decade if extended in their entirety; and military spending, which has been largely protected from previous efforts at deficit reduction."

Obama's plan fails to deal with the main drivers of long-term debt, writes Keith Hennessey: "There are three forces driving our long-run government spending and deficit problem: 1) demographics; 2) unsustainable growth in per capita health spending; and 3) unsustainable promises made by past elected officials, enshrined in entitlement benefit formulas. The President’s proposal addresses none of these forces. It instead spends most of its effort on everything but those factors. His proposed Medicare and Medicaid savings, while large in aggregate dollars, are quite small relative to the total amount to be spent on those programs, and he lets the largest program in the federal budget (Social Security) grow unchecked."

It's 'serious and balanced,' enthuses the Committee for a Responsible Federal Budget: "The Committee for a Responsible Federal Budget praises President Obama for joining the discussion on how to deal with the nation's mounting deficits and debt. Today, the President offered a broad framework that is both serious and balanced. Without presidential leadership, it would be impossible to have a serious national discussion about how to change our nation's fiscal course."

The plan is rather conservative, writes Robert Greenstein: "To be sure, the President’s plan represents an important step forward in the debate. But it should be recognized that this plan is a rather conservative one, significantly to the right of the Rivlin-Domenici plan. While we worry about some particular elements of the President’s plan, we worry much more that the deficit-reduction process that’s now starting could produce an outcome that is well to the right of the already centrist-to-moderately-conservative Obama proposal, by reducing its modest revenue increases and cutting more deeply into effective programs that are vital to millions of Americans."

Obama's proposal is serious, and hardly extreme, writes Fareed Zakaria: "I praised Paul Ryan for his courage in presenting a budget that takes risks and proposes painful cuts. It has also had the effect of spurring Barack Obama to present his own serious proposal. I prefer Obama’s approach — which is also closer to that of the Simpson-Bowles commission — with more cuts to entitlements. But what’s critical is that, finally, after years of kicking the can down the road, we are having the national debate about America’s future."

The plan doesn't retire the debt quickly enough, writes Matt Miller: "We can’t tell the precise debt numbers on Obama’s new plan from what was available Wednesday afternoon, but if deficits are still going to be well over 2 percent of gross domestic product in the last half of this decade (as a White House fact sheet says), I’m guessing Obama’s new framework will rack up $8 trillion or more in fresh debt over the next 12 years. Maybe more, unless some rosy assumptions come to pass. Why do neither Obama nor the Republicans propose to actually balance the budget much sooner? Because the president and the GOP don’t want to tell Americans that taxes on the middle class will have to rise, and benefits trimmed (starting soon, not a decade out, as the Ryan plan does), as the boomers age."

Obama should be commended for admitting America needs higher taxes, writes Nicholas Kristof: http://nyti.ms/f355tW

The speech was good, but Obama's plan shouldn't be the left flank, writes EJ Dionne: "For his allies, the president’s negotiating method has been, well, petrifying: concede, concede and concede again -- and then compromise from an already heavily compromised position. That’s why his promised cuts in domestic spending straight out of the box are worrying. This problem will be even worse if the Obama plan comes to be defined as the “left” pole in the negotiation. It’s not. A truly progressive budget would include more revenue raised in more progressive ways. And contrary to what you might hear on Fox News, the established media wisdom on budget issues is center-right, and Ryan’s extreme budget has pushed the perceived center still further right, aggravating the tendency to locate Obama’s plan far to the left of where it is."

The speech drew a line in the sand against future renewals of the Bush tax cuts, writes Jonathan Chait: http://bit.ly/hWLYW1

Obama's rhetoric isn't serious, writes Will Wilkinson: "Of the $4 trillion Obama pledged to reduce the deficit over the next 12 years, $1 trillion comes from a touchingly optimistic estimate of the savings and efficiencies of Obamacare; the president went out of his way to assure us that this savings does not require anyone to sacrifice anything. Precisely who would bear the brunt of $400 billion in proposed cuts in military spending was left indeterminate. As for 'discretionary' domestic spending, Obama conceded the necessity of 'tough cuts' to some 'programs I care about,' but again he was careful to leave these sacrifices unspecified...Sacrifice for the few; consoling untruths for the many. In the end, Obama's fiscal rescue plan isn't really serious."

Economy

The 2011 budget deal is a step in the right direction, writes John Boehner: "Six months ago, shortly before the election, the Democrats who run Washington were preparing an 'omnibus' spending bill loaded with earmarks and job-crushing tax hikes on small businesses. Today, the people’s House is due to vote on a bill that cuts $315 billion from the federal budget over the next 10 years -- the largest non-defense spending cut in our history, earmark-free and with zero tax hikes. These are real cuts. It isn’t cause for celebration or back-patting. It’s what happens when the American people speak out. It’s what government should be doing. This agreement isn’t perfect. But it is exactly what we need to pave the way for the 'Path to Prosperity' budget offered by Budget Committee Chairman Paul Ryan (R-Wis.)."

Wall Street executives are warning John Boehner to raise the debt limit, reports Ben White: "House Speaker John Boehner (R-Ohio) has had conversations with top Wall Street executives, asking how close Congress could push to the debt limit deadline without sending interests rates soaring and causing stock prices to go lower, people familiar with the matter said. ... The Wall Street executives say even pushing close to the deadline — or talking about it — could have grave consequences in the marketplace. 'They don’t seem to understand that you can’t put everything back in the box. Once that fear of default is in the markets, it doesn’t just go away. We’ll be paying the price for years in higher rates,' said one executive."

David Weigel excerpts from GOP backbenchers' requests for tack-ons to the debt ceiling increase: "Rep. John Culberson, R-Tex.: I urge you to attach a full repeal of Obamacare to the debt ceiling increase legislation...Rep. Bob Goodlatte, R-Va.: Goodlatte said he hasn't decided on concessions for such a move, but said he might attach his support for a higher ceiling to his pet legislative project -- a Constitutional amendment to require balanced federal budgets, he said...Sen. Marco Rubio, R-Fla.: I will vote to defeat an increase in the debt limit unless it is the last one we ever authorize and is accompanied by a plan for fundamental tax reform, an overhaul of our regulatory structure, a cut to discretionary spending, a balanced-budget amendment, and reforms to save Social Security, Medicare and Medicaid."

House Democrats offered their own alternative budget, reports Erik Wasson: "House Budget Committee ranking member Rep. Chris Van Hollen (D-Md.) unveiled a House Democratic alternative to the GOP’s 2012 budget Wednesday, hours before President Obama was set to overshadow the proposal with one of his own. Democrats claim their budget cuts combined deficits over 10 years by $1.2 trillion more than President Obama’s 2012 budget proposal, which claimed $1.1 trillion in deficit savings...To achieve the cuts, Democrats look hard at the Pentagon. Part of the additional savings comes from spending $308 billion less on security and defense over 10 years. It also cuts $309 billion from overseas contingency spending, assuming that the U.S. is out of Iraq by the end of 2011 and Afghan forces are in charge of the war there by 2015...Like Obama, House Democrats extend Bush-era tax cuts for the middle class but end them for the wealthy.

Some Senate Democrats want Social Security reform now: http://bit.ly/fi7eFO

Tea Party Senators are considering filibustering an increase in the debt ceiling, reports Manu Raju: "The Senate’s Tea Party Caucus will face a tough decision when it comes time to vote to raise the national debt limit: Fall in line behind Republican leadership or go rogue. The founding members of the new caucus - freshman Sens. Mike Lee (R-Utah) and Rand Paul (R-Ky.) and second-term Sen. Jim DeMint (R-S.C.) - are each considering whether to mount a filibuster to block an increase of the $14.3 trillion national debt ceiling. But Senate Minority Leader Mitch McConnell (R-Ky.) and his leadership team are quietly voicing concerns about a filibuster, saying their preferred strategy is to force Democrats to find 51 votes among themselves, so they can be solely responsible for raising the national borrowing limit."

Federal agencies have come to an agreement with mortgage servicers: http://wapo.st/e5U0sU

Raising the Social Security payroll tax cap wouldn't eliminate its shortfall, writes Charles Blahous: http://bit.ly/h83nMb

Celebrity interview interlude: Aziz Ansari discusses his favorite foods.

Health Care

The House voted to repeal a section of health care reform, reports Felicia Sonmez: "The House on Wednesday approved a measure that would repeal the national health care law’s Prevention and Public Health Fund, an account that provides $15 billion over the next decade to state- and community-based preventive health care services. The measure, H.R. 1217, passed on a 236-to-183 vote, with four Democrats joining all Republicans present to vote in favor. The bill is not likely to progress much further, however. President Obama earlier Wednesday issued a threat to veto the measure. 'The bill neither advances the key objectives of the Affordable Care Act of better and more affordable care nor offers alternative solutions for meeting these important objectives,' the White House statement reads."

Domestic Policy

A group in the House is pushing a more modest privacy bill, reports Jennifer Valentino-Devries: "Congressman Cliff Stearns (R, Fla.) introduced privacy legislation in the House of Representatives that would encourage companies to offer more information to consumers about how they are being tracked. Wednesday's legislation comes amid increased scrutiny of the commercial data-gathering industry and joins a number of other proposals from lawmakers and regulators. In the past year, The Wall Street Journal's 'What They Know' series has revealed that popular websites install thousands of tracking technologies and feed a growing data industry...Unlike a bill introduced yesterday by Sens. John Kerry and John McCain, the House legislation doesn't call for a privacy 'bill of rights' for consumers. It also doesn't give as much authority to the FTC to regulate privacy."

Public broadcasting money is intact in the budget deal: http://politi.co/gSwQ16

Adorable animals getting stuck in things interlude: A baby polar bear gets his head caught in a blue bucket.

Energy

House Republicans are resisting drilling safety legislation, reports Darren Goode: "Rep. Doc Hastings says it’s too soon to enact safety-reform legislation in response to last year’s Gulf of Mexico spill -- but not too soon to push for an expansion of offshore drilling. 'Drilling is safe,' said the Washington state Republican, adding that the Obama administration has acknowledged as much by its actions. Otherwise, it 'wouldn’t have issued the permits down there.' The pro-drilling strategy is not new for Hastings or other Republicans, who continue to argue it is necessary for reducing U.S. dependence on foreign oil. But his reluctance on the reform front is giving Democrats more ammunition in the growing partisan rift on energy policy, as record gasoline prices and other pressures weigh on lawmakers."

The House will vote on a bill to speed up drilling next month: http://bit.ly/f3Mrpm

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.

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April 14, 2011