For debt dozen, power comes with price tag

WASHINGTON - The nation's bills are being paid and Congress has bolted the hothouse of Washington, one debt limit deadline beaten and another ahead for a dozen yet-to-be-named lawmakers.

They might want to hold off making Thanksgiving and Christmas plans.

For the six Republicans and six Democrats, the toughest-to-swallow items on the deficit-cutting menu await. This group, to be named from the House and Senate in two weeks, must find at least $1.2 trillion in budget cuts by Thanksgiving and Congress must approve them by year's end — or take the blame for deep and broad spending cuts that would strike GOP priorities like defense and Democratic favorites like programs for the poor.

And then lawmakers would have to explain the cuts to their constituents — up close and personally, on the campaign trail next year.

CBSNews.com special report: America's debt battle

Facing the select group are a lot of the same "peas" that a frustrated President Barack Obama suggested Congress "eat" earlier in the difficult debate. Then as now, Democrats insist on balancing tax revenues with spending cuts. Republicans say taxes are off the table. That alone is a recipe for the same sort of staring contest that kept the sides from agreeing to raise the nation's $14.3 trillion borrowing limit until hours before the money was to run out Tuesday.

On Sunday night, the combatants agreed to raise the debt ceiling in exchange for $2.1 trillion in deficit cuts over a decade. The House overcame objections from conservatives Monday and passed the agreement with bipartisan support, 269-161. The Senate followed on Tuesday, 74-26. Mr. Obama signed the bill less than two hours later.

Talk immediately turned to the 12 House and Senate lawmakers and how the task awaiting them looks much like the ideological divide that was bridged only by the debt ceiling deadline and the threat of economic disaster.

A summary of the debt ceiling compromise
Boehner: Debt committee could recommend tax hikes
Deal sets up December showdown, despite talk otherwise

The new panel's target is to find $1.2 trillion to $1.5 trillion in budget cuts over the next decade, including interest savings. Congress will have until Christmas to vote on the recommendations.

As an incentive for Congress to act, failure to do so would trigger $1.2 trillion in automatic spending cuts, affecting the Pentagon as well as domestic programs.

In the afterglow of the deal's passage Tuesday, Senate leaders were optimistic.

"Hanging over the head of the joint committee is this trigger that is pretty drastic," Senate Majority Leader Harry Reid, D-Nev., said.

"The joint committee is not going to gridlock," said the Senate Republican leader, Mitch McConnell of Kentucky. The panel is "designed to function and to tackle some of the very difficult problems that we have been unwilling or unable to deal with."

The agreement enacted Tuesday calls for $917 billion in discretionary spending to be cut over a decade from Cabinet-level agencies and the thousands of programs they administer.

The new committee will scour the so-called mandatory side of the budget — programs whose spending levels run on autopilot. They include Medicare and Medicaid, the government's health care for seniors and the poor, as well as Social Security and veterans' retirement benefits.

This panel could proceed from the work of others. A group led by Vice President Joe Biden that tried to find savings for the debt limit bill broke apart over Democratic demands on taxes but had made some progress in developing a consensus package of cuts to programs like farm subsidies, federal pensions and military health benefits. Cuts to Medicare providers like skilled nursing facilities and home health care also were discussed.

There's no doubt presidential politics will loom over the new negotiations.

Even before the president signed the legislation, he and Republicans were maneuvering for political position on the next stage.

"We can't balance the budget on the backs of people who have borne the biggest brunt of this recession," the president said, renewing his call for higher taxes on the wealthy. "Everyone is going to have to chip in. It's only fair."

Senate Republicans said it won't happen.

"I'm comfortable we aren't going to raise taxes coming out of this joint committee," McConnell said in an interview with Fox on Monday.

In fact, in a presentation to House Republicans, Speaker John Boehner said it would be "impossible" for the panel to raise taxes - a claim the White House disputed, saying that the deal "100 percent" allows for revenue increases.

CBSNews.com's Brian Montopoli explains further:

The key factor in figuring that out is the notion of a "current law baseline." That sounds complicated, but it isn't: It just means that you are measuring the cost of spending against the existing law, not what might happen in the future if changes to that law are made.

The non-partisan Congressional Budget Office's current law baseline assumes two big things: That the Bush tax cuts will expire at the end of 2012, as the law now says they will, and that the government will not make any changes to the so-called Alternative Minimum Tax, which requires some taxpayers to pay at least some taxes even if they have many deductions that might otherwise exempt them from taxes. If the Bush tax cuts are allowed to expire and the AMT is not patched, the government will take in $3.5 trillion more than it would otherwise.

Here's where it gets a little tricky. Boehner says that the commission will have to follow the CBO's current law baseline. And he is arguing that unless the committee decides to increase revenues by more than that $3.5 trillion - which won't happen in a deal where you only need $1.5 trillion - its efforts won't be considered deficit reduction.

Montopoli notes there could be room to maneuver around the constraints, but the White House rejected as "absolutely false" the GOP's claims that the panel was handcuffed from pursuing revenue increases. Boehner's office countered that using the current law baseline is required under the 1974 Budget Act.

The debt limit will have to be raised shortly after the 2012 election and McConnell predicted that no president of either party will be "allowed to raise the debt ceiling without ... having to engage in the kind of debate we've just been through."

He conceded that Republicans got only part of what they wanted in the deal, and he pointed to next year's elections — with control of the White House and Congress at stake — as a chance to gain greater clout.

"Republicans only control one half of one third of the federal government, but the American people agree with us," he said.

Reid said the period immediately ahead "is going to be painful."