Shutdown Countdown: Congress Desperate for a Deal
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The Fiscal Times
April 3, 2011

reducing deficit spending by a total of $4 trillion over the coming decade.
The political chatter  in Washington on Sunday appeared to downplay the prospects of a government shutdown late this week but instead shifted the focus to the next round of squabbling over a plan for dealing with the long-term debt, runaway entitlement spending and the need for tax reform.

Even before the White House and Republican and Democratic leaders complete talks on a final spending plan for the current fiscal year, including spending cuts of as much as $33 billion, GOP leaders prepared to unveil their proposed 2012 budget on Tuesday that would outline their vision for addressing the nation's long term fiscal problems.  House Budget Committee Chairman Paul Ryan, R-Wis., said today on Fox News Sunday that his party's budget proposal for 2012 would cut deficits by more than $4 trillion over the next decade and would directly address Medicare, Medicaid and other costly entitlement programs.

The proposal would serve as the GOP's formal response to President Obama's proposed $3.7 trillion budget for 2012. The White House budget office claims its plan would cut deficits by $1.1 trillion over a decade. But Ryan in the interview accused Obama and the Democrats of trying to "kick the can down the road" in addressing long term entitlement problems, and boasted that the GOP plan would exceed the targets set by the president's own fiscal commission, which proposed
"We can't keep kicking this can down the road," Ryan said. "The president has punted. We're not going to follow suit."

Ryan -- echoing House Speaker John Boehner, R-Ohio, and other GOP leaders -- said that it "doesn't make sense to shut down the government when we've already cut so much" in government spending, noting that President Obama and the Democrats already have gone along with $10 billion of cuts in the current fiscal year and that considerably more in savings is in on the offing as negotiators attempt to fashion a final agreement before a midnight Friday deadline. Boehner is under enormous pressures to negotiate a final deal with the White House that keeps the government afloat while trying to placate growing demands from conservative and Tea Party members of Congress to achieve cuts of as much as $61 billion this year.

Despite upbeat forecasts last week by Vice President Biden and White House Press Secretary Jay Carney that a deal was close at hand, the outcome of the negotiations was still uncertain over the weekend, as congressional staff members pulled together new proposals and Obama personally called  Boehner and Senate Majority Leader Harry Reid, D-Nev., to urge them to forge a compromise that would be acceptable to rank and file members, the Washington Post reported.

According to a statement from the White House, Obama “made clear that we all understand the need to cut spending, and highlighted the progress that has been made to agree to all work off the same number — $73 billion in spending cuts in this year alone.”

The $73 billion figure stated by the White House is relative to Obama’s fiscal year 2011 budget, which was never enacted; in actuality, the $73 billion would represent cuts of more than $30 billion from current spending levels.

Republicans have disputed the idea that the parties are nearing agreement on a spending figure. In the weekly Republican address on Saturday, Boehner said, “Now, you’ve heard Democratic leaders claim an agreement has been reached on this issue, but let me be clear.  There is no agreement.  Republicans continue to fight for the largest spending cuts possible to help end Washington’s job-crushing spending binge."

“To support job creation in America, we need to keep the cuts coming, and we need to do much, much more," Boehner said. "That’s why it’s important for Congress to get moving and pass a final bill that resolves last year’s budget mess while making real spending cuts – so we can tackle the bigger challenges facing job creation."

The White House said in its statement that Obama “has instructed his team to continue to work hard over the weekend with the appropriators to help reach resolution on the composition of those cuts, and reiterated our opposition to cuts that will undermine our economic growth, job creation, and our ability to win the future.” Jon Summers, a spokesman for Reid, confirmed that negotiations would continue throughout the weekend. “We’re hopeful Republicans will work with us on responsible cuts that won’t harm our fragile economic recovery,” Summers said.

In discussing the Republicans' longer-term budget plan that will be unveiled this week, Ryan said on Fox News Sunday that the GOP proposal would reform the tax code but focus on spending cuts and entitlement reform to achieve savings. While many budget experts say that it will take a combination of spending cuts and tax increases and entitlements reforms to drastically reduce the $1.5 trillion budget deficit, Ryan and other Republicans argue that the problem is largely one of too much spending and there is no need to raise tax rates.

"We don't have a tax problem," Ryan said. "We have got to stop spending money we don't have."

Though the GOP plan will likely put off Social Security reform for a future time -- largely because Democrats are adamantly opposed to any changes or cuts now -- Ryan proposes to make big changes in Medicare, the health insurance program for the elderly, and Medicaid, the health coverage for the poor and disabled. He favors converting Medicaid to a system of block grants to the states, so that the states can "customize" coverage for the poor. Medicaid is jointly funded by the federal government and the states, and many GOP governors are seeking ways to reduce their mounting cost burdens.  "We want to give governors freedom," he said.

As for dealing with Medicare, Ryan said the Republican plan will be modeled after the "premium support" system outlined in an earlier proposal co-authored by him and former White House Budget Director Alice Rivlin. Such a proposal would provide a fixed amount of government assistance toward premiums in the health plan of seniors' choosing. The Ryan-Rivlin plan would call for seniors to pay more for smaller expenses but put a cap on what they could pay out-of-pocket.

Rep. Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, issued a statement later saying, “It is now clear that the Republican budget is not bold, but the same old ideological agenda that extends tax breaks to millionaires and big oil companies while cutting our kids education and health security for seniors. The question is not whether to reduce the deficit, but how. As the Bipartisan Fiscal Commission has shown, any responsible effort requires a balanced approach that addresses both spending and revenue.  The Republican budget fails this simple test. It is increasingly clear that the House Republicans are more committed to continuing tax breaks to millionaires and big corporate special interests than they are to a serious, balanced approach to reducing deficits.

Related Links:
White House Presses House, Senate Leaders on Budget (NECN)
Reid Urges Republicans to Drop Bid to Limit EPA in Budget Talks (Bloomberg)
Tea Party Activists Rally to Pressure Republicans on U.S. Budget Talks (Bloomberg)

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.