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5 Reasons This Supposedly Boring Budget Year Could Be Anything But
Posted at 5 a.m. on March 2
The budget President Barack Obama sends to Congress on Tuesday will be a month late and hundreds of billions of dollars short.
But no matter, the Capitol’s conventional wisdom holds, that the unenforced legal deadline for his submission was Feb. 3, and that he’ll propose acquiescing in significant deficits for the indefinite future. A truce has been called in the fiscal wars, the thinking goes, and so Obama’s fiscal 2015 document will be little more than the ritualistic starting point for the most desultory budget debate of this decade.
In the big picture, that is the way it looks to play out. But there are several secondary policymaking and political storylines that could make the budget beat interesting in 2014.
The reasons it’s supposed to be a snooze are by now well understood: The rare bipartisan budget deal reached and ratified in December decided the grand total for discretionary spending in the coming year, so there’s minimal reason for an appropriations deadlock. The latest debt limit extension has locked away that particular countdown clock until well after the elections. That means there’s no new fiscal cliff in sight, allowing both Obama and top Republicans to set aside their last, best offers in pursuit of a grand bargain on deficit reduction.
These are five subplots most worth watching.
House Republicans. Speaker John A. Boehner is promising his side will produce and push to adoption a budget resolution with a path to balance in a decade. Writing most of it shouldn’t be too heavy a lift, on the assumption that in this election year Budget Chairman Paul D. Ryan will start by reviving the entitlement program overhauls from his previous three budgets — and sticking with the $1.014 trillion spending cap he agreed to with Senate Budget Chairwoman Patty Murray.
Suspense may be in store when he puts that plan on the floor this spring. Few if any Democrats will vote for it on “it would destroy Medicare” grounds alone, meaning adoption may require 95 percent support from Republicans. But in December, only three-quarters of the GOP conference voted for the Ryan-Murray plan; the remaining 62 opposed it principally on the grounds that the new and slightly increased spending cap was too high.
An inability of the majority to secure House adoption of its own fiscal blueprint would be a first in the 40-year history of modern budget law and would expose the internal divisions the party so hopes to obscure during campaign season.
Senate Democrats. On the other side of the Capitol, the questions are whether the majority will even try to win adoption of a companion budget resolution, and whether it’ll take much of a political hit if it doesn’t.
Last year the Democrats wrote a budget resolution for the first time since 2009, for two reasons: The GOP had gained some traction with its “the other side is shirking its duty” argument. And the exercise got the caucus nearly unified behind the causes of breaking the sequester (to allow more domestic spending) and ending tax breaks for the rich (to mop up some red ink.) This year, the landscape is different. Most Democrats are willing to live with the new appropriations cap for at least this year, and those in re-election fights would just as soon avoid having to face the fusillade of politically tricky policy amendments that always get offered in the budget “vote-a-rama.”
So look for Majority Leader Harry Reid to prevent a debate on the floor — and watch for the GOP to say little about it. That’s at least partly because it was the Republicans who ended up with the “abdicators of responsibility” label last year when they declined to name negotiators to find a compromise with the Senate budget plan for which they’d been clamoring.
Defense. If there’s a place where another effort to break the sequester gains attention — or at least flexes an enormous amount of military-industrial complex lobbying muscle — it will be over the Pentagon budget.
Defense Secretary Chuck Hagel guaranteed as much when he detailed the reductions in weaponry, manpower, benefits and bases the Obama administration would choose for living under the caps. After the coming year, those caps mean only slight annual defense funding increases into the early 2020s. Congressional priorities would be rebuffed by many of the Hagel cuts, which include shrinking the National Guard and the Army and mothballing the Air Force’s A-10 “Warthog” tank-killer aircraft. (All that would happen even though Obama’s own budget will call for exceeding the defense cap by $28 billion next year, and the nondefense cap by the same amount, to accommodate some priorities.)
But, from the start, there’s very little chance Congress will agree to push the military “top line” above $500 billion. Democrats will remain flatly opposed to any trimming of domestic spending in order to help out the military — the only way to boost defense while living within the overall limit. Democrats would also be open to raising more revenue and splitting it between defense and the rest, but that’s an obvious non-starter for the GOP. And Republicans will remain divided on the other option: raising the discretionary ceiling again and putting almost all the new money toward troops and their equipment. Defense hawks want that, but absent a new national security emergency, don’t have the clout to triumph over the budget hawks.
Transportation. The trust fund for financing road, bridge and mass transit projects will be drained by summer, jeopardizing as many as 700,000 jobs just weeks before Election Day. How to replenish those coffers looks to be the most high-profile fiscal challenge that both sides are ready to address this year.
Obama last week called for giving this fund a four-year, $150 billion shot in the arm through an overhaul in the corporate tax code that his budget will explain. The same day, House Ways and Means Chairman Dave Camp unveiled a tax overhaul that sounded similar, if less ambitious: $127 billion in corporate taxes earmarked for public works in the next eight years.
Either way, the new revenue from businesses — along with the current federal taxes on gasoline and diesel fuel, which haven’t gone up in two decades — would be enough to keep up with demand for new construction and repairs until the end of the decade.
That alignment looks at first blush to be the makings of a rare bipartisan accord this campaign season. But the president’s power to push a big plan seems limited, Republican resistance to anything called a tax increase is emphatic, and the business community’s ability to resist being tapped to pay for public works looks unbeatable.
Leadership. Beyond all the big policies and macro political dynamics, the budget machinations will be another important proving ground for two of the most ambitious, involved and recently accomplished members of the current Congress.
As the 2012 GOP vice presidential nominee readies for his next move — to the Ways and Means chairmanship, most likely, with the speakership and a White House run both eventual possibilities — Ryan will be closely watched for signs that he’s making something politically problematic for his party. The same holds true for Murray, who hopes to move into the next top Senate Democratic leadership job that comes open.
The pair generated considerable praise for engineering the last budget deal, but politicians at their level don’t get judged by their most recent laurels for long.