Economic Outlook: Selling compromise

It is clear that any tax hikes discussed in Washington have to sound like tax breaks and fiddling with Social Security has to sound like something else.

Be careful what you wish for; it might come true. In the nation's capital, a vote for a higher debt ceiling, which would allow the government to borrow and pay its bills beyond Aug. 2, has been held hostage first by Republicans and then, seemingly, by Democrats. After all, that is how chicken is played.

Currently, The Wall Street Journal reports, President Barack Obama and House Speaker John Boehner, R-Ohio, have suggested they could cross some party lines and House Majority Leader Eric Cantor has said some new business taxes are possible if others are reduced or removed. For businesses, that suggests keeping an eye on what the other hand is doing. Put another way, when the gardener reaches for a paint brush, beware the gilded lily.

Among the shockers from the Democratic Party, is the mere suggestion lawmakers are entertaining possible changes to Social Security. That move is made possible by AARP's board of directors altering its position on the program. Reportedly, Obama is also considering use of financial screening for Medicare, which would cut benefits to wealthier beneficiaries.

Then there's the worry that party leaders get it wrong and with so much emphasis on how to sell a policy shift, it's a wonder the policy shifts aren't more tainted or diluted than they already are. A White House official denied Social Security would even be part of the preliminary discussions. Tea Party members of congress would likely do more than just blanch at any taxes added to the package. They would vote no as well.

For some spending cuts, lawmakers are discussing the removal of cost-of-living adjustments. Call that the slow squeeze, punishable by economic success. In 10 years, that would save $300 billion, said the Moment of Truth Project, a watchdog group in Washington. But it would also mean a more successful economic recovery, which would spark inflation, would leave the programs -- and the poor -- further behind.

In international markets Thursday, the Nikkei 225 index fell 0.11 percent while the Shanghai composite index in China dropped 0.58 percent. The Hang Seng index in Hong Kong rose 0.06 percent while the Sensex in India rose 1.88 percent.

The S&P/ASX 200 in Australia was flat, rising 0.01 percent.

In midday trading in Europe, the FTSE 100 index in Britain added 0.36 percent while the DAX 30 in Germany rose 0.45 percent. The CAC 40 in France rose 0.5 percent while the Stoxx Europe 600 rose 0.45 percent.