Republicans need a budget deal. They need a budget deal bad.

August 1, 2013

Another day, another THUD.

The House's bill to fund transportation, housing, and urban development (THUD) was pulled from the floor on Wednesday. Thursday, the Senate bill failed to clear a filibuster as Mitch McConnell mounted an aggressive, last-ditch effort to give House Republicans cover. Absent that sudden and overwhelming political imperative, the legislation likely would've passed: It got six Republican votes coming out of conference, and was being managed on the floor by the bipartisan team of Patty Murray (D-Wash.) and Susan Collins (R-Maine).


Paul Ryan's latest budget isn't working out that well. (Chip Somodevilla/Getty Images)

But amidst all these failures, something actually is changing, and very much for the better: Republicans are coming to realize that sequestration is both a political and policy disaster for them, and they need a deal that replaces it.

"Sequestration — and its unrealistic and ill-conceived discretionary cuts — must be brought to an end," said Hal Rogers, the Republican chair of the House Appropriations Committee, after THUD's failure.

This is, to be fair, something they once knew. Sequestration was designed to be so painful to both sides that it would force a deal. John Boehner told his conference it would "devastate" the military and that he'd never let it happen. Mitt Romney and Paul Ryan campaigned aggressively against it.

But after the election, Boehner learned he had bigger problems: His conference once again wanted to breach the debt ceiling unless Democrats accepted massive spending cuts. That wasn't going to fly mere months after the voters had voted for Barack Obama and Joe Biden.

So Boehner, in one of the more impressive moves in recent political history, managed to convince his members that they should punt on the debt ceiling for a bit and instead get comfortable with sequestration -- after all, Democrats hated it, and it was made up of spending cuts.

So Republicans learned to stop worrying and love sequestration. It became a Republican "victory": They had managed to snooker Democrats into another budget deal made up entirely of spending cuts.

But it wasn't actually a victory. Not all spending cuts are equal to Republicans. And sequestration's cuts were particularly punishing to Republican priorities -- that was how Republicans got Democrats to leave taxes out of the deal. The law exempted Democratic priorities like Medicaid, Social Security, and food stamps. Meanwhile, fully half of the cuts it did have came from the Pentagon -- the one area of spending Republicans wanted to increase.

The key budget story since January has been the Republican Party's rediscovery of the fact that sequestration is bad policy -- and thus bad politics -- for them.

Ryan's budget tried to get around sequestration by restoring some of the money to defense and taking a corresponding amount from domestic programs. The failure of the THUD bill came because even Republicans can't stomach cutting that deeply into domestic programs. And THUD isn't even where they need to make the toughest cuts: That designation goes to labor, health and human services -- and that bill, which was supposed to be unveiled last week, has been pulled from the schedule.

And all this is coming in the early days of the sequester. This is the low-hanging fruit, such as any exists. It will only be worse next year. And the year after that. And the year after that.

"Several months ago we were dealing with [sequestration] in the abstract," says one Republican aide who's involved in the budget negotiations. "But now that we’re moving into it people are realizing that it’s not the best way to do things."

The problem is that Republicans can't get out of it on their own. Doing so would mean admitting the Ryan budget -- which they all voted for -- is too draconian even for Republicans.

The only way out is a deal with Democrats, where they can get cover for the apostasies by chalking them up to the demands of the deal. As Politico's David Rogers reports, the Republican strategy now "is to slow walk decisions into the fall." That gets them to end of the government's funding and then the hard limit of the debt ceiling, both of which will force some kind of negotiating process.

That's not a set of negotiations anyone is looking forward to. But it's beginning in a better place than people expected.

Seven months ago, Republicans had fooled themselves into believing they could get a better deal by doing nothing and letting the sequester take over. Now they realize they need a deal that gets sequestration off the table.

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Lydia DePillis | August 1, 2013