Budget deal expected this week amounts to a cease-fire as sides move to avert a standoff


Lawmakers are due back in Washington on Tuesday. With a budget deal expected this week, congressional leaders hope to finish work quickly and leave town for the holidays as soon as Friday. (Jim Watson/AFP/Getty Images)

House and Senate negotiators were putting the finishing touches Sunday on what would be the first successful budget accord since 2011, when the battle over a soaring national debt first paralyzed Washington.

The deal expected to be sealed this week on Capitol Hill would not significantly reduce the debt, now $17.3 trillion and rising. It would not close corporate tax loopholes or reform expensive health-care and retirement programs. It would not even fully replace sharp spending cuts known as the sequester, the negotiators’ primary target.

After more than two years of constant crisis, the emerging agreement amounts to little more than a cease-fire. Republicans and Democrats are abandoning their debt-reduction goals, laying down arms and, for the moment, trying to avoid another economy-damaging standoff.

The campaign to control the debt is ending “with a whimper, not a bang,” said Robert Bixby, executive director of the bipartisan Concord Coalition, which advocates debt reduction. “That this can be declared a victory is an indicator of how low the process has sunk. They haven’t really done anything except avoid another crisis.”

Details of the agreement remained murky Sunday as aides to the principal negotiators, House Budget Committee Chairman Paul Ryan (R-Wis.) and Senate Budget Committee Chairman Patty Murray (D-Wash.), continued to work behind closed doors. Ryan and Murray chair a 29-member conference committee tasked with approving a plan to fund federal agencies through fiscal 2014, which began Oct. 1, and avoid another government shutdown when a temporary funding measure expires in January.

With lawmakers due back in town Tuesday, aides said Ryan and Murray are likely to bypass the committee and take the deal, if finalized, straight to the full House and Senate. Congressional leaders hope to finish work quickly and leave town for the holidays as soon as Friday.

Senior aides familiar with the talks say the emerging agreement aims to partially repeal the sequester and raise agency spending to roughly $1.015 trillion in fiscal 2014 and 2015. That would bring agency budgets up to the target already in place for fiscal 2016. To cover the cost, Ryan and Murray are haggling over roughly $65 billion in alternative policies, including cuts to federal worker pensions and higher security fees for the nation’s airline passengers.

Republican leaders are also seeking additional savings to knock a small dent in deficits projected to exceed $6 trillion over the next decade. But the deal would do nothing to trim the debt, which is now larger, as a percentage of the economy, than at any point in U.S. history except during World War II.

In that sense, the talks have followed the game plan Ryan sketched in October after Republicans agreed to reopen the government following a 16-day shutdown. Despite his own ambitious blueprint for shrinking spending, Ryan said he would not attempt a big deal, because it would require a “grand bargain” in which Democrats agree to cut safety-net spending in exchange for Republican concessions on taxes.

A grand bargain has been the holy grail in half a dozen rounds of negotiations, including talks between President Obama and House Speaker John A. Boehner (R-Ohio) in summer 2011.

“I saw those earlier episodes, these grand-bargain pursuits, as ultimately destined for failure because it required one of the parties in power to compromise core principles, and I just didn’t see that happening,” Ryan said in October. “That’s why it’s more appropriate to the moment we have to focus on common ground . . . to get some minimal accomplishments.”

In essence, Ryan was saying, “ ‘If we agree not to do anything, we can get something done.’ And he was right,” Bixby said. “There’s no budgetary or fiscal strategy in the choices they’ve used, except the strategy of avoiding any hard choices.”

Budget analysts say it is difficult to work up much enthusiasm for any of the small-bore moves under discussion.

Take pensions for federal workers. In his most recent budget blueprint, Ryan called for federal workers to pay an additional 5.5 percent toward their retirement, saving taxpayers $130 billion over 10 years. Even Obama proposed a 1.2 percent increase aimed at saving $20 billion.

But aides said Ryan and Murray were headed toward a smaller number — less than $17 billion. Republicans will need a substantial number of Democratic votes to push a deal through the House, and Washington area lawmakers — including House Minority Whip Steny H. Hoyer, House budget negotiator Chris Van Hollen and Senate Appropriations Committee Chairman Barbara A. Mikulski, all Maryland Democrats with large constituencies of federal workers — are having an outsize influence.

Meanwhile, Ryan and Murray were looking to squeeze billions more from the sale of broadcast spectrum. But analysts are already worried that an auction set for early next year could fall tens of billions of dollars short of revenue targets because smaller networks are lobbying to limit participation by wireless giants AT&T and Verizon.

A Senate hearing on the matter is set for Tuesday. Whatever the underlying math, revenue from spectrum sales may be “an easy thing to throw into a budget negotiation,” said Urban Institute budget expert Gene Steuerle. “But it seems like a gimmick.”

Even this modest package faces political hurdles. Democrats began pressing last week for a $25 billion extension of emergency benefits for the long-term unemployed that are set to expire at the end of the month, cutting off 1.3 million people. The last-minute demand frustrated Republicans, who note that the jobless rate fell to 7 percent in November, the lowest level in five years.

On Sunday, however, Sen. Richard J. Durbin (Ill.), the No. 2 Democrat in the Senate, said Democrats are not drawing a line in the sand.

“I don’t think we’ve reached that point where we’ve said this is it, take it or leave it,” Durbin said on ABC’s “This Week.” “What I hear from Patty Murray,” he added, is that “negotiations are making progress, moving in the right direction.”

More worrisome to many observers is the prospect that Republican leaders may prove unable to rally support for the agreement. Boehner has a long history of overestimating his ability to deliver Republican votes. And Senate Minority Leader Mitch McConnell (R-Ky.) has been notably unenthusiastic about repealing the sequester, which he has characterized as the most important prize of the GOP crusade to reduce government spending.

On the other hand, Republicans have also been unable to pass spending bills that include the sequester cuts. With an additional $20 billion reduction set to hit the Pentagon in January, many GOP lawmakers now agree with Democrats that the sequester should go.

“I don’t even want to think about” what would happen if Ryan and Murray fail to prevent the next defense cut, said House Armed Services Committee Chairman Howard P. “Buck” McKeon (R-Calif.). “I just hope they get a deal.”

If negotiators navigate the land mines and push an agreement through Congress, there will be one more cloud on the horizon — the Treasury Department will need another increase in the debt limit, perhaps as soon as late February. Congress agreed in October to suspend enforcement of the debt limit until Feb. 7.

Ryan has raised the idea of using the debt limit to demand progress on an overhaul of the tax code. But GOP leaders have shown little interest. Analysts in Washington and on Wall Street are betting that, after showdowns over the debt limit in 2011 and this fall drove GOP approval ratings to record lows, Republicans lack the appetite to do it again.

Where would that leave the nation’s financial outlook? Not in a particularly good place, budget analysts say. The most recent Congressional Budget Office projections show the red ink receding over the next two years. But annual deficits would start growing again in 2016 as the baby-boom generation moves inexorably into retirement. And the debt would again soar.

“With this little package, we’re not going to climb out of the hole we’ve dug,” said the Urban Institute’s Steuerle. “All we’re doing is agreeing to stop throwing shovels at each other.”

Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
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