After shutdown, a long-term budget deal is possible, just not a big one

McClatchy Washington BureauOctober 17, 2013 


Senate leaders announced a deal to end the government shutdown in Washington, D.C.


— Prospects for a longer-term budget deal in Congress that eases some of the pain from steep spending cuts are good. Prospects for a grand bargain that gets America’s fiscal house in order, well, that’s another story.

Given how far apart the two parties are, the budget bills already passed by the Senate and the House of Representatives have little chance of passage in the other chamber as written. But for the first time since 2009, the committee leaders from each chamber will launch formal negotiations to reconcile the two spending plans. They face a December deadline to frame an agreement, and a Jan. 15 deadline to pass legislation before parts of the government run out of money again.

There, too, there’s little hope for a compromise budget to be agreed on in eight weeks. But there’s optimism that the two sides at least may come up with a smarter version of the austerity that’s already the law of the land.

The across-the-board federal spending cuts made earlier this year, shorthanded as the budget sequester, are hitting a key constituent for both parties: defense contractors and suppliers. Experts think that’s likely to drive some sort of compromise.

“We really don’t have time at this point to do anything like the grand bargain that people are talking about,” said Joe Minarik, the director of research for the Committee for Economic Development, a free-market research center. “It’s not realistic to think that there is going to be any kind of major progress on the big budget problems between now and then.”

A former chief economist for the House Budget Committee, Minarik noted that big legislative achievements such as revamping the tax code or changing the funding structure for Social Security took years of negotiation. Even modest tweaks such as changing the way cost-of-living adjustments are determined for Social Security benefits are likely to remain too heavy a lift for the new budget negotiations.

“There are individual pieces that could be enacted. The problem is that you have to achieve balance,” he said, meaning that each side would have to move off its dug-in positions. For Democrats, it might mean changing social welfare programs. For Republicans that would mean accepting higher taxes.

It’s a lot to ask in eight weeks, and Senate Budget Committee Chairman Patty Murray, D-Wash., said as much Thursday after meeting with her counterpart, Rep. Paul Ryan, R-Wis.

“Our job over the next eight weeks is to find out what we can agree on. And we have agreed that we are going to look at everything in front of us and know that it’s going to be a challenge but we believe we can find common ground,” she said.

The former GOP vice-presidential candidate was equally sanguine about prospects.

“We haven’t had a budget conference since 2009. And so we think it’s high time that we started working together to try to reconcile our differences, and it’s premature to get into how exactly we’re going to do that, because we’re just beginning these conversations,” Ryan said.

A budget conference is the formal name for meetings to reconcile competing House and Senate bills. The first meeting is planned for the week of Oct. 28, and conferees must issue a report by Dec. 13. Absent a deal, the next round of sequester cuts begins Jan. 15, reducing defense spending to $498 billion and spending for all other discretionary domestic programs to $469 billion.

That’s because of the Budget Control Act of 2011, which deemed that failure to reach agreement on a better plan to curb budget deficits would bring steep across-the-board cuts to most federal spending.

The act was designed to be so onerous that it would force agreement, except that it didn’t. The sequester cuts began last March. The act mandates $1.2 trillion in savings over 10 years, and for the 2014 fiscal year, which began Oct. 1, it could slash another $50 billion in military spending come January. It’s why defense spending is likely the starting place for any deal.

“Sen. Murray thinks the defense cuts are a horrible way to cut spending,” said Eli Zupnick, a spokesman for the Budget Committee. “There is no reason the two sides shouldn’t be able to replace the automatic across-the-board cuts to both defense and non-defense investments with smarter savings.”

Beyond that, the best that budget experts hope for is a path to talks that might, over time, lead to a bigger deal.

“It may just be what comes out of this . . . is an adjustment to discretionary spending levels for 2014, and the argument is, ‘We’ll take it to the American public for midterm elections’ ” in November 2014, said G. William Hoagland, a senior vice president of the Bipartisan Policy Center and a former budget aide to former Senate Majority Leader Bill Frist. R-Tenn.

Email:; Twitter: @KevinGHall

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