What’s really holding up the budget deal

at 04:10 PM ET, 04/07/2011


(By Andrew Harrer/Bloomberg)

The news over the budget negotiations is starting to move very fast, so let’s take a moment to slow down and summarize where we are, and what’s left to do.

What the White House rejected today wasn’t a deal funding the government through the rest of 2011. It was a deal to fund the government for another week.

The real problem is that the negotiations to fund the government through 2011 have broken down. Harry Reid says the deal is stuck on measures restricting abortion and environmental protection. John Boehner says it’s fallen apart over unspecified issues beyond, though perhaps including, the abortion and EPA riders.

Eventually, a deal will be struck. It will either come in the next few hours, or after the federal government shuts down for some period of time. What makes the possibility of a shutdown so baffling is that we not only know what’s going to be in this deal, but approximately what it will look like. Here are the three elements:

1) the quantity of cuts, which most observers expect to fall between $33 billion and $40 billion when added to the $10 billion in cuts that have already passed;

2) the location of the cuts, which Republicans hope to concentrate in the 12 percent of the budget known as non-defense discretionary spending (here’s a useful guide to that category of spending), and which Democrats want to spread more widely across the federal budget;

3) the policy riders House Republicans attached to H.R.1, and in particular, the riders relating to abortion and the Environmental Protection Agency’s efforts to regulate carbon.

From talking to people involved in the negotiations, I’d say it’s a safe bet that the final deal will include about $35 billion in total cuts, a lot of which will come from non-defense discretionary spending but a fair amount of which won’t, and some sort of policy rider wherein Planned Parenthood can’t use the federal money it gets for abortions, but it can still receive federal money. This would be similar to the deal we saw on abortion funding in the health-care law.

To put that prospective package in context, the Republican leadership originally asked for $32 billion in cuts with no policy riders — they only upped their bid after conservatives in the House threatened to revolt. The deal they’re rejecting now far exceeds their opening bid — a very rare outcome in Washington.

If the deal was just about the policy, however, we’d probably have it done by now. The problem is that there are at least two intangibles that both sides are working to protect:

1) John Boehner needs to persuade House conservatives that he can effectively represent their interests;

2) Democrats need to prove that they still control the Senate and the White House and therefore will not be pushed around by House Republicans.

“That’s what this is all about,” says Robert Reischauer, who directed the Congressional Budget Office between 1989 and 1995, and now leads the Urban Institute. “This is posturing for the next event. How it comes out will be seen as the first indication of what’s possible when the debt ceiling issue comes up.”

 
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