August 3, 2013

Lawmakers dig in for fiscal fight

Both parties retrench, as the sixth showdown on the budget deficit looms

By Julie Hirschfeld Davis and Michael C. Bender / Bloomberg News

WASHINGTON — President Obama and Republican congressional leaders are staking out positions ahead of next month's budget battle, setting up their sixth showdown over how to avoid defaulting on the U.S. debt and shutting down the government.

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On Capitol Hill, compromise may remain elusive as members of both chambers seek to win deals that will satisfy their core supporters.

The Associated Press

Obama is insisting Congress raise the debt ceiling with no strings attached, while a group of Republicans say they are willing to stop paying the government's bills unless the president's signature health care law is defunded.

"Both sides are more dug in than in the past," said Jared Bernstein, a former chief economist for Vice President Joe Biden who is senior fellow at the Washington-based Center for Budget and Policy Priorities, a fiscal research group.

Lawmakers return from a five-week break on Sept. 9, just three weeks before government funding runs out. For the new fiscal year starting Oct. 1, House Appropriations Committee Chairman Hal Rogers of Kentucky favors a one- or two-month extension of current yearly spending levels, which are $988 billion, said Jennifer Hing, a spokeswoman.

If Congress concurs, that would push the broader fiscal fight into November, when the government is expected to reach its $16.7 trillion debt limit.


The collapse of transportation funding bills in both chambers this week points to a broader stalemate over the fiscal 2014 spending bills. Senate Republicans this week blocked a $54 billion measure funding highways, aviation, passenger rail and other transportation projects because it exceeded spending limits earlier agreed to by both parties.

The budget votes could be the last major fiscal-policy ones before the 2014 election, escalating the political stakes as Republicans in the House and Democrats in the Senate fight to keep their respective majorities. Both parties want to avoid taking the blame for a government shutdown while finding a deal that satisfies their core supporters.

For Republicans, that means coming up with a resolution acceptable to the small-government tea party activists who are willing to challenge incumbents who negotiate bipartisan deals.

Meanwhile, a shrinking budget deficit makes Democrats less likely to sign off on cuts to Medicaid or other entitlement programs that Republicans want in exchange for raising the debt ceiling, said Stan Collender, a budget specialist and former Democratic congressional aide.

The deficit on July 9 was $512 billion, according to the Congressional Budget Office, which would make it an estimated 3 percent of the economy by the end of the third quarter, according to data compiled by Bloomberg. That's an improvement from the shortfall in 2009, when the budget office reported that the deficit was 10.1 percent of the gross domestic product.

"This is all preparatory for the 2014 elections," said Collender, a partner at Qorvis Communications.

Obama reinforced his call for increasing the debt ceiling without conditions during private meetings July 31 on Capitol Hill with House and Senate Democrats.

He also wants to undo 10 years of automatic spending cuts that Congress agreed to as part of the 2011 debt ceiling deal and that his political rivals are determined to maintain. The cuts, known as sequestration, reduced projected spending by $85 billion this year and will total $109 billion in 2014.

Republicans, in turn, are insisting on deeper cuts as the price of increasing the debt limit and passing a budget. They're divided on the strategy.

Senate Minority Leader Mitch McConnell of Kentucky, facing a tea party-backed Republican primary opponent, is hearing from a vocal faction – led by Sens. Ted Cruz of Texas, Marco Rubio of Florida and Mike Lee of Utah – that says they will force a government shutdown if funding is included for the 2010 health-care law.

"If we do not stand on principle now, it is likely that we never will repeal Obamacare," Cruz, who won his first political race in 2012, said July 30.

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