Congress’s Last Chance to Avoid a Fiscal Disaster
Policy + Politics

Congress’s Last Chance to Avoid a Fiscal Disaster

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Momentum is building for a two-year bipartisan budget deal by the end of the week as Congress appears determined to end a dismal legislative and political year on something of a high note.

Barely one in ten Americans approves of the performance of Congress, according to a recent Gallup poll, and lawmakers this year enacted fewer than 60 laws in the first 11 months of the year, making the first session of the 113th Congress the least productive ever.

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With the House bumping up against a Friday adjournment, Senate Budget Committee Chairwoman Patty Murray (D-WA) and House Budget Committee chief Paul Ryan (R-WI) are putting the finishing touches on a modest deal that would cancel the sequester and boost overall discretionary defense and domestic spending by $65 billion throughout fiscal 2014 and 2015.

“Chairman Murray continues to work with Chairman Ryan and the staff continued to work through the weekend,” Eli Zupnick, Murray’s chief spokesman said late Friday. “She remains hopeful that they can reach an agreement by the deadline”  this week.

For sure, there will be some last minute drama, as some House Democrats threaten to hold out unless emergency unemployment benefits are extended and negotiators soften plans to force federal employees to pick up a larger share of their pension costs.

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Moreover, 22 conservative House Republicans are digging in against the emerging budget deal, urging House Speaker John Boehner to bring up a “clean” continuing resolution to fund the government at the much lower sequester level when the current authorization expires on Jan. 15.

Another wild card are Republican senators, still stinging from the Democrats’ party-line vote to strip them of the ability to filibuster most presidential nominees. A source close to several Republicans in the Senate said that in the regularly scheduled Tuesday policy lunch, GOP Senators expect to discuss whether and how to retaliate against Senate Majority Leader Harry Reid.

Even so, GOP senators will be reluctant to take the blame for another government shutdown, particularly heading into the 2014 mid-term election campaigns.  This means Congress must pass a spending measure by early next year.

The bottom line is that no one seriously thinks there will be another budget and debt ceiling crisis any time soon, but House Republican and Democratic leaders will have to rein in their members this week to get something passed. This is something Boehner, in particular, has struggled with in the past. But the amount of political  damage the recent shutdown did to the Republican party this Fall has most observers convinced that he’ll have the necessary leverage to keep all but the most fractious members of the GOP caucus in line.

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House Minority Leader Nancy Pelosi (D-CA) is sympathetic to her members’ efforts to protect federal workers from onerous new pension costs proposed by Ryan. And Murray is pressing to include an extension of emergency unemployment benefits as part of the budget agreement. But neither is willing to allow the budget deal to bite the dust over those issues.

The federal program to supplement state unemployment insurance is scheduled to end on Dec. 31, which would immediately cut off an estimated 1.3 million beneficiaries who have received benefits beyond the state-level limits, according to one estimate. Boehner said last week he was willing to entertain a White House proposal for extending unemployment insurance, but not as part of the budget agreement.

There’s no chance Boehner would heed the call of hardline conservatives to scrap the budget deal in favor of simply kicking the can down the road again with a short-term spending measure. The 22 GOP signatories say they want to avoid another confrontation and contend that Democrats would be responsible for a shutdown if they refuse to keep government spending at levels established under current law.

The 2011 Budget Control Act that ended a crisis over the debt ceiling imposed tough annual spending caps over the coming decade and included a sequester – or automatic across the board spending cuts – to enforce those caps. While the caps and sequester are popular among some conservatives, many other Republicans and Democrats were unhappy with cuts to defense and pet domestic programs.

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"The Budget Control Act is the law of the land," the lawmakers wrote. "Our Democrat colleagues are now threatening to shut the government down in order to change that. We should not permit that to happen. Again, we encourage you to bring a clean CR to the floor."

The letter was drafted and circulated by Reps. Mick Mulvaney (R-SC), Jim Jordan (R-OH) and Steve Scalise (R-LA). It began circulating Thursday and efforts will continue to gather signatures today.

The Budget Control Act capped discretionary spending in 2014 at $967 billion. The emerging budget deal would pump an additional $45 billion into spending by the Pentagon and domestic agencies and programs through next Sept. 30, and about $20 billion more for fiscal 2015.

The emerging deal would raise overall discretionary spending (other than for mandatory programs and interest on the debt) to slightly more than $1 trillion in both fiscal 2014 and 2015, according to sources. It would include a series of revenue raisers other than tax increases to offset the cost of the additional spending over a ten year period.

The House will vote on the plan by Friday, when it plans to adjourn for the remainder of the year. The Senate is scheduled to return next week, when it would vote on the deal.

Ryan has previously proposed $130 billion in cuts over a decade by asking federal workers to pay more into their pension programs, while Obama has previously proposed a level around $20 billion. Ryan is pushing for that $20 billion level, while Murray is trying to reduce the spending cuts if she can’t kill it altogether, according to aides

Once a budget conference agreement is in hand, House and Senate Appropriations Committee members will carve up the available funds into a giant spending bill that would cover most of the government agencies and programs for the remainder of the fiscal year that ends next Sept. 30. The Senate and House likely would take up that omnibus spending bill early next month, in time to meet a Jan, 15 deadline set by law.

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