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April 23, 2014

29 Reasons a Budget Deal Is in Reach, and 1 Reason It Isn’t

They couldn’t have scripted it any more obviously: The can is getting kicked to Friday the 13th.

Washington is committing itself to a return to regular order, but only for the next eight weeks.

The most important date for deciding whether this round of fiscal brinkmanship was worth all the melodrama will not be Feb. 7, the next moment when the Treasury might lack authority to borrow to pay the nation’s bills. Nor will it be Jan. 15, the next potential suspension of routine federal operations.

It will be Dec. 13, when negotiators are supposed to complete their conference report on a budget resolution for fiscal 2014. The question is, is two months enough time for cooler heads to take “yes” for an answer? 

The deadline was laid down as part of the deal sealed Wednesday to reopen the government and avoid an imminent debt default. If it gets met, and the fiscal framework is blessed days later by the Republican House and Democratic Senate, that would end the year with an against-all-odds bipartisan achievement. (This basic function of governing has eluded the divided Congress in each of the three previous years.)

It also would raise the likelihood that soon after lawmakers return for their midterm election year, they would defy the odds again by enacting a package of policy changes — with equivalent political sacrifices on both sides — to accomplish the newly minted budget’s nonbinding deficit reduction aspirations.

Overwhelming this hopeful scenario is the likelihood that none of it will come to pass, that instead lawmakers will skitter away for the holidays with no plans for confronting their next twin deadlines in deepest winter.

Such pessimism is underscored by the fact that the two Senate leaders, who came up with this budget conference “sidecar” to the debt and spending patches, didn’t cook up any punitive consequence for busting the Oh Lucky Day deadline. Neither did they agree on a precise target for how much red ink the budget negotiators should seek to mop up during the coming decade.

The implied message: It’s more important that there be a bargain than that it be all that grand.

Just to get that far, of course, will require the lead negotiators, House Budget Chairman Paul D. Ryan for the Republicans and Senate Budget Chairwoman Patty Murray for the Democrats, to divine an antidote for what’s poisoned a half-dozen bipartisan searches in the past four years for a long-term deficit deal:

Republicans refuse to talk about raising additional revenue, a position that only seems to have hardened since they were forced to swallow an end to some of the Bush-era tax cuts in the year-opening deal to avoid the fiscal cliff.

And, until the GOP puts higher taxes on the proverbial table, Hill Democrats won’t be open to negotiating big-time curbs on the growth of Medicare, Medicaid, Social Security and other entitlement programs — not to mention savings from limiting the reach or implementation timetable for the 2010 health insurance law.

(Both sides are interested in a simplification of the IRS code that does away with many tax breaks, but Democrats want to apply the resulting revenue to deficit shrinkage while the GOP wants it as a justification for cutting individual rates.)

Absent a sudden, inexplicably collective and bipartisan desire to reverse the reputation of Congress and be perceived anew as competent compromisers, there’s no real reason to believe conservatives or liberals on the Hill will use the next 56 days to break from their hardening molds. Their hardened positions still provide politically comforting shells to almost all of them back home.

Instead, budget conferees will confine most of their energies to a debate on the future of the  sequester, which Democrats and plenty of Republicans agree is their most immediate budget challenge. Without an affirmative agreement to do something different, discretionary spending after Jan. 15 will be reduced another 2 percent, to an annual rate of $967 billion, with the Pentagon taking a larger share of the reductions than it has been since the across-the-board cuts took hold in March.

A decision to allow the grand total to rise instead by about 5 percent, to $1.04 trillion, would probably ease the bulk of lawmaker anxiety, maybe even enough to get a line-by-line omnibus appropriations package completed before the next continuing resolution deadline in January. That means $50 billion more, or $500 billion if similar “plus-ups” are permitted over a decade.

Fortunately for the appropriators, a pot of money that very size is hiding more or less in plain sight.

Last summer, as another round of grand bargain talks was coming up short, my CQ colleague Paul Krawzak went looking for all the ideas for entitlement savings on which a decent measure of bipartisan agreement had formed. After reviewing scores of proposals that had been floated, and talking to many lawmakers and aides, he came up with a remarkably specific list of 29 cuts — to health care and other mandatory programs — that seem to be agreeable to all sides.

Those 29 cuts would save a bit more than (you guessed it) $500 billion over a decade.

The roster is worth clipping and saving as a field guide for the eight weeks ahead. You can find it online here.

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