Narrow Fiscal Agreement Possible According to WSJ

November 28th, 2013 9:48 pm | by John Jansen |

The WSJ is reporting that Congressman Paul Ryan and Senator Patty Murray are close to cobbling together a budget deal. The Journal article notes that a deal is off the table because the negotiators have exempted the difficult issues of taxes and entitlement reform,  topics on which each side is intransigent.  The deal would replace the across the board sequester cuts. It would accomplish the task through a combination of airport fees, retirement cost cutting and auctions of broadband spectrum.

Via the WSJ:

Rep. Paul Ryan (R., Wis.) and Sen. Patty Murray (D., Wash.) will continue their budget talks next week. Associated Press

Negotiators in Congress are moving toward a narrow agreement on this year’s federal budget that would scale back some spending cuts set to take effect in January but likely wouldn’t ask either party to compromise on its core stands on taxes and entitlements.

Sen. Patty Murray, the Democrats’ leading Senate negotiator, is returning early from a recess next week to continue talks with her House GOP counterpart, Rep. Paul Ryan. The two lawmakers have been mum about their discussions, and important elements have yet to be resolved. But officials close to the talks say the building blocks for a deal have come into view—if only because some of the most controversial issues have been taken off the table.

Republicans on a House-Senate negotiating panel led by Mr. Ryan, of Wisconsin, and Ms. Murray, of Washington, have ruled out significant tax increases, while Democrats have stood fast against any structural changes in benefit programs such as Medicare.

That leaves a small set of elements still on the table for a deal, which would set a funding level for the rest of the current fiscal year and modestly reduce the roughly $100 billion in across-the-board spending cuts, known as sequestration, that will hit in January.

To replace the sequester cuts, officials close to the talks said, lawmakers are looking at increasing airport-security fees, cutting costs in federal-employee retirement programs and drawing on revenue from the auction of broadband spectrum. Democrats also want to count savings from program changes in a farm bill, which is being negotiated in a separate process, to offset sequester cuts, but Republicans say those savings should go to general deficit reduction.

Negotiators may try to come to a deal that covers both the current and the following fiscal years, when the sequester cuts are deepest.

“There has been a consensus that we should significantly narrow the scope of these negotiations to try and replace the sequester in whole or in part for at least two years,” said Rep. Chris Van Hollen (D., Md.), a member of the House-Senate conference committee working to draft the deal.

The law passed in October to end the government shutdown instructed that panel to file a report by Dec. 13. But there is no mechanism to enforce that requirement, and no immediate consequences would follow if the lawmakers failed to reach a budget agreement by then.

Missing the deadline, however, would make the task more difficult for the House and Senate appropriations committees that write the bills that set program-by-program spending. Appropriators say the budget panel must set an overall spending target by Dec. 13 so that the detailed spending bills can be written before Jan. 15, when the temporary measure that is now funding the government expires.

While budget negotiators aren’t looking for a large deficit-reduction deal, any agreement might be considered an achievement. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan antideficit group, said that even a modest deal could be a valuable exercise of Congress’s atrophied legislative muscles.

“If Murray and Ryan can come up with a small deal, even one that would otherwise be considered a political yawner, it breathes some hope into the thought that Washington can function,” she said.

The timeline for action is running short. The House returns from its weeklong Thanksgiving recess on Monday, but the Senate doesn’t reconvene until Dec. 9. House GOP leaders have set Dec. 13 as their target for adjournment for the year, meaning that the House and Senate would be in session simultaneously for only one week.

The government is now running on a budget that sets a $986 billion annual cap on discretionary spending for most government agencies, from the Pentagon to the Justice Department to the Education Department. Unless Congress acts, the sequester will trim that cap to $967 billion by mid-January.

Almost all the cuts are slated to come out of the Pentagon’s budget, across the board, a prospect that has pushed some Republicans to join Democrats in looking for a way to replace at least some of the automatic cuts with more carefully crafted deficit-reduction measures.

Officials say that considerable obstacles remain to closing even a modest deal. Some Democrats may bridle at dropping their party’s long-standing demand that tax increases, not just spending cuts, be included in any deficit-reduction deal.

Some Republicans, including Senate Minority Leader Mitch McConnell of Kentucky, have warned against any deal that lifts the spending caps set by the 2011 budget law and replaces them with a plan for long-term savings in Medicare or other entitlement programs that might not materialize.

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