An agreement to raise the debt ceiling in Congress appears to be linked increasingly to a deal to cut both taxes and Medicare spending.

The House overwhelmingly rejected a “clean” bill to raise the debt ceiling from $14.3 trillion to $16.7 trillion without any corresponding spending cuts on Tuesday, leaving the federal government with only about two months’ worth of “headroom” before it risks defaulting on its obligations. No Republicans voted for the bill, even though it had been introduced by the GOP chairman of the House Ways and Means Committee, Dave Camp, R-Mich. Democrats labeled it a sham, and most of them also voted against the measure, which failed on a 318-97 vote.

Negotiations are continuing over the debt ceiling, with President Obama set to meet with House Republicans on Wednesday to try to come to some agreement before August 2, the date when a default could occur. Vice President Biden has been leading the talks in recent weeks, but they seem to be at an impasse.

While there has been little visible sign of progress, the jockeying and accusations in Congress have only accelerated. The debt ceiling is now being linked to the budget proposal introduced by House Budget Committee Chairman Paul Ryan, R-Wis., which Republican lawmakers in the House voted to pass in April. The Ryan proposal, outlined in his Path to Prosperity plan, would cut the top tax rates for individuals and businesses from 35 to 25 percent, and change Medicare into a “premium support” system, much like vouchers. Instead of providing guaranteed government benefits like traditional Medicare, seniors would have a fixed amount of money with which to buy coverage from private insurers, starting in 2022.

However, the Ryan plan may prove to be a political liability to Republicans in the 2012 elections. Already, it appears to have cost them a House seat in the election last month for New York’s traditionally Republican 26th congressional district. Democrat Kathy Hochul won over Republican Jane Corwin by emphasizing the Republican plan to overhaul Medicare. To prevent Democrats from running on a similar campaign theme next year, Republicans would have to force them to vote for steep Medicare cuts like those in the Ryan plan. Democrats have vowed not to allow that to happen, but they may end up being outmaneuvered by the GOP, especially if Republicans are willing to risk a default on the government’s debt obligations. However, Republican leaders reportedly assured Wall Street that Tuesday’s vote to reject a raise in the debt limit was not to be taken seriously.

Still, it’s a risky political game that might yet spook the bond markets if an agreement isn’t hammered out soon. Democrats appear to be willing to agree to some cuts in Medicare spending, perhaps by accelerating the savings to be found in the health care reform bill through cuts in subsidies to Medicare Part D providers or by pressuring drug makers to cut the price of prescription drugs or even changing Medicare from the current fee-for-service model. However, it’s not likely the White House would agree to a privatization of the Medicare program along the lines of the Ryan plan, or to Ryan’s proposed tax cuts so soon after last December’s agreement to extend the Bush-era tax rates.

Meanwhile, the wrangling in Washington is likely to continue into this summer, with the debt ceiling getting ever closer like one of those old-time cliffhanger serials where the water keeps rising in the closed room until an escape hatch opens just in the nick of time.

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