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April 24, 2014

Cracks in the Budget Impasse? Both Sides Searching for Daylight

The formal nomination of Janet L. Yellen to chair the Federal Reserve may be anticlimactic, but it comes at a crucial moment: It creates a daylong diversion when both sides in the fiscal deadlock can assess the chance of seizing the same sliver of an opening.

Tuesday’s unyielding rhetoric, from both President Barack Obama and Speaker John A. Boehner, will not be publicly contradicted today. But, off camera, each of their teams will be working to figure out if they’re correctly interpreting signs from the other.

Both sides have given hints in the past 24 hours that they are open to a limited cease fire — a reopening of the government and an increase in the federal borrowing limit that might last only a few weeks, but could allow time to negotiate a broader budget deal.

Historically, there would be little noteworthy about back-channel water-testing about a bipartisan agreement to kick the budgetary can down the road for such a short time. But with federal agencies having started operating on reduced power eight days ago, and with the Treasury saying it could be out of money to pay the nation’s debts eight days from now, even the slimmest reed of compromise looks like an enormous deal.

“There’s a crack there,” Boehner said about the impasse on Tuesday night, although he cautioned against optimism.

To exploit that perceived opening, however, each side must be willing to do what it has insisted so often and so emphatically it is unwilling to do: Decouple negotiations over other big-ticket budget items from the immediate fight over the shutdown and the imminent fight over the debt ceiling. Like stubborn but exhausted spouses at the end of a circuitous and bitter squabble, both Obama and Boehner would need to jointly declare that they are willing to move on to the more important matters in their relationship without conceding they have abandoned their hard-line stance on the preliminaries.

In other words, they need to agree that they aren’t going to keep talking about what they’ve been talking about so they can start talking about something new.

For Boehner, the timing is crucial: He is getting solid reviews from the tea party conservatives for holding firm on the demands they had, but the unified nature of the GOP caucus is otherwise showing signs of fray. He will benefit the sooner he can claim some measure of victory, which will allow him to reset his troops in an organized line for the next confrontation.

This is where Budget Chairman Paul D. Ryan comes in. Today he’s out with a roster of proposals on which he thinks both sides can come to agreement — and none of them has anything to do with limiting or altering Obamacare.

Instead, the list includes means-testing of Medicare, changing the way inflation is calculated to hold down Social Security costs and committing Washington to a tax code overhaul.

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