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Is a Budget Deal Around the Corner?



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Some reporting seems to indicate as much. Politico yesterday reported that House budget chairman Paul Ryan and Senate budget chairman Patty Murray are closing in on a bipartisan budget proposal in conference committee, as they were tasked with doing by December 13 by the October deal that raised the debt ceiling and re-opened the federal government. Today the same paper has a piece on how this could be Paul Ryan’s first real legislative accomplishment (which is not an unreasonable characterization — though the second paragraph’s claim that Ryan’s budgets have been “slabs of red meat to the Republican base but have served little practical purpose, as differences have only deepened with the Democratic Senate” is grossly unfair to Ryan’s earlier proposals).

The proposed deal apparently will set spending levels for 2014 and 2015 above what they have been under the sequester, maybe about halfway between sequester levels ($967 billion in non-emergency spending) and the levels Senate Democrats want ($1.058 trillion), which will provide relief to the programs hardest hit by sequester cuts (which, objectively speaking, are almost all defense-related, but we’ll see what gets picked), in part paid for by fee increases rather than tax hikes. This does not sound like a deal likely to win a lot of support from House Republicans, many of whom, along with outside anti-spending groups, prize sequestration as a peerless victory for spending restraint.

While a lot of the Republican caucus is concerned about undoing sequestration’s impact on defense, it seems like the balance of the party is now more concerned with preserving a victory like sequestration. It’s quite hard to reconcile the two goals, as House Republicans found when they tried to pass a transportation-funding bill trimmed enough to provide extra funding to the Pentagon and realized it meant impractically large cuts for non-defense programs. The House–Senate proposal would look more acceptable to Democrats and moderate Republicans, but if that were a coalition capable of getting something reliably passed by Congress, the GOP wouldn’t have spent the first two weeks of October arguing the National Park Service is a crucial government function.

One way to resolve the problem without a good bit more revenue is by replacing the most devastating sequester cuts (defense, plus some Democratic priorities, probably) in exchange for changes to entitlements, which needn’t be too substantial, over the coming years. But that’s not something many Democrats will like — they’re already balking at Ryan’s possible proposal of finding $20 billion in savings from the federal employees’ retirement system — and the more rebellious Republicans in the House may not like the idea of trading sequestration’s cuts today for future entitlement changes.

Moreover, any deal that has “fee increases” as a significant piece (perhaps they’re not entirely necessary and will be somehow replaced once the public negotiations begin) is also a problem. Some of the fee increases, like auctioning off parts of the wireless spectrum and raising airport fees, are good policy ideas. But if the right wing of the House doesn’t like the deal, they may pillory them as tax hikes by another name, and for separate reasons, Democrats may not like them either. A sequestration fix, in other words, is far from a good bet at this point, and a lot of the optimism about a small, bipartisan bargain may be unwarranted.

UPDATE: See Jonathan Strong’s reporting, above, for some thoughts and reservations from conservatives about the Ryan–Murray deal (at this rate he may not want his name attached to it for too much longer). One possibility they raise: Much bigger entitlement cuts in exchange for watering down sequester right now — Representative Steve Scalise, chairman of the Republican Study Committee, suggested premium support for Medicare, the single biggest piece of entitlement reform Republicans have voted on in the Obama years, and much bigger in budgetary impact over the ten-year budget window than any sequester adjustment. In other words, they may want a much bigger future cut in exchange for giving a bit on the sequester now — although Scalise also says the entitlement savings “would have to be at least [the undone sequester] amount if not greater in order for it to work,” which sets the bar a lot lower than Ryancare.



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