Two parties start work to avoid repeat crisis

Even so, Republicans enter these new talks with one advantage: if the negotiations fail, the next round of across-the-board spending cuts known as sequestration will hit automatically, even deeper than the first. Democrats want to avoid that far more than Republicans do…

By definition, common ground suggests no grand bargain, which would require a much more difficult trade-off where they fundamentally differ — higher tax revenues that Republicans oppose, in exchange for reductions in Medicare, Medicaid and Social Security that Democrats vow they will not entertain without curbs on tax breaks for wealthy individuals and corporations…

To improve the prospects for some success, the negotiators largely agreed at a closed-door breakfast on Thursday that a deal involving significant new tax revenues and large-scale changes to Medicare, Medicaid and Social Security, whose growth in an aging population is driving long-term projections of growing debt, is not going to happen.

Instead, they agreed, the talks will aim at a more modest, confidence-building measure to replace the sequestration cuts in 2014. Negotiators could aim higher, for a deal saving at least $1 trillion over the next nine years to substitute completely for the arbitrary sequestration cuts. But neither side was hopeful of that.