WASHINGTON MAY be about to get a lesson in gratitude for small favors. A House-Senate conference committee headed by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) appears to be near agreement on a plan to undo some of the across-the-board cuts, known as sequestration, for up to two years without increasing the federal deficit.
The likely amount of restored spending authority — approximately $45 billion in the first year and $20 billion in the second, according to reporting by The Post’s Lori Montgomery — is a far cry from the long-term rebalancing that the federal budget needs. Major tax and entitlement reforms are not under discussion; nor is the debt limit, which must be extended again by mid-2014.
But given the chaos and conflict in Congress over the past year, a bipartisan mini-deal would be welcome just the same. If Mr. Ryan and Ms. Murray can strike a bargain, and get it passed by both houses and signed by President Obama before spending authority lapses Jan. 15, there will be no second government shutdown. Appropriations committees in both houses will know the “top line” for annual defense and non-defense discretionary spending: a total of roughly $1 trillion per year in fiscal year 2014 and fiscal 2015.
Details of the plan are still neither public nor fully established. Based on what’s been reported, the conferees have agreed to some trade-offs we might not have made. Federal employees are probably going to be asked to contribute more to their pensions, in addition to the pay freeze they have already faced for the past three years. This de facto pay cut might have been more palatable if matched by an upper-income sacrifice, such as abolition of the “carried interest” tax loophole for hedge-fund managers, but apparently GOP negotiators rejected anything that could be characterized as a tax increase.
On the plus side, however, the deal could do away with most of a damaging $20 billion reduction in defense spending that would otherwise occur — and it would restore billions of dollars for key functions such as research and law enforcement. Modest though they may be, these changes would enhance the federal government’s ability to perform core functions other than transfer payments.
What Mr. Ryan and Ms. Murray have cooking seems to be a modified version of a budgetary “cease-fire” plan offered last September by former Utah governor Jon Huntsman Jr. (R), former senator Evan Bayh (D-Ind.) and former representative Thomas M. Davis III (R-Va.). That would have essentially frozen existing tax and spending policies until unemployment drops to 6.5 percent — which the Federal Reserve expects to occur by late 2014. An extended timeout from fiscal quarrels in Washington might give businesses the confidence they need to invest and create jobs. Republicans and Democrats could use the interlude to work on longer-term projects in which moderates on both sides are interested, such as corporate tax reform. And the whole world could benefit from a demonstration, even a small one, that Washington is bitterly divided but not quite ungovernable.