Congress opens first budget debate in four years

Congress this week takes up the parties' sharply different views on taxes and spending. Just laying down political markers on next year's budget could help advance a 'grand bargain' on deficits and entitlements, some say.

When Senate Democrats and House Republicans unveil their budget proposals for the 2014 fiscal year this week, Washington’s next round of wide-ranging fiscal negotiations will start with a partisan roar.

After a week of bipartisan consultations, House and Senate spending committees are on track to reach a compromise bill on funding the government past March 27, when a stopgap funding measure runs out. But the next Capitol Hill debate – over competing blueprints for spending for fiscal year 2014, which begins in October – is expected to run at least until Easter and won’t have any of the bipartisan comity of the talks to keep government funded through the end of the current fiscal year.

Still, the debate over the FY 2014 budget could play a role in helping to break Washington's longer-term fiscal impasse.

The budget resolution is nonbinding, because it is the appropriations committees that actually set final funding levels. But the resolution requires both parties to take tough votes on tax and spending targets for government, as well as make estimates of their future consequences for federal deficits and debt.

Through it all, lawmakers and President Obama will be feeling out the contours of the long-elusive grand bargain that could wrap in changes to entitlement programs, revamp the nation’s tax code, and chart a fiscal path for the next decade and beyond.

First, it’s significant that both chambers will likely pass budget resolutions, for the first time since 2009. Senate Democrats, steered by the politically deft hand of Budget Committee Chairman Patty Murray (D) of Washington, who, as conference secretary, is also No. 4 in Senate Democratic leadership, this week will move their first budget resolution in nearly four years.

House Budget Chairman Paul Ryan (R) of Wisconsin, meanwhile, will take his third bite at what he and GOP colleagues see as an urgent need to head off an impending debt crisis, this time with a new twist – while Chairman Ryan’s last, controversial budget came into balance in nearly three decades, his latest version will equalize spending and revenues in 10 years.

Democrats, led by Rep. Chris Van Hollen of Maryland, the ranking member of the Budget Committee, are expected to savage Ryan for inflicting deep cuts on average Americans while being unwilling to reduce the deficit by closing tax loopholes that mainly benefit the wealthy. They’ll likely inveigh against the hypocrisy of pocketing a raft of budget-balancing help from the president’s health-care law and high-income tax increases that Ryan decried exuberantly while he was the party’s vice presidential nominee in the fall. (Ryan later voted for the "fiscal cliff" compromise that led to higher taxes on the wealthiest Americans.)

Over the weekend, Ryan told Chris Wallace on "Fox News Sunday" that the House budget would also again call for repealing Mr. Obama's health-care reform law.

Republicans, led by Ryan, are expected to lay into the Democratic budget, which will aim only to bring the nation’s debt down to a stable percentage of GDP (gross domestic product) over time and will likely include tax hikes. Republicans see this approach – new taxes without reforming the nation's entitlement programs – as an abrogation of duty in the face of the mounting costs of entitlement programs such as Social Security and Medicare and a record $16 trillion in government debt.

Few in Washington envision any achievable compromise between Ryan’s 10-year path to a balanced budget and Senator Murray’s likely vision of a budget that never hits balance. That takes the much-ballyhooed option of “regular order,” or meshing the two budget resolutions into a single set of instructions for appropriators in both parties, largely off the table, in this instance.

But that doesn’t mean that laying down political markers in the budget process won’t be important to making headway on a fiscal grand bargain behind the scenes.

Obama will meet with Republican conferences on both sides of Capitol Hill this week – his first visit with either since 2010. That comes on the heels of Obama's recent efforts to reach out to the GOP, including phone calls and dinner at a posh Washington hotel with Republican senators. The president even lunched with Ryan, his former campaign antagonist, and Representative Van Hollen on Thursday.

Both Ryan and senior White House officials in recent weeks have met with corporate executives from the Fix the Debt campaign, an organization dedicated to a sweeping financial pact and led by the co-chairs of Obama’s debt and deficit commission, former GOP Sen. Alan Simpson and President Clinton's former chief of staff Erskine Bowles.

The question to be answered in all of these meetings is clear: How can Washington break the logjam that has prevented it from enacting sweeping fiscal reform?

“What we want to do,” says Van Hollen, “is make sure the conversation starts early so there’s time to actually get a resolution.”

Starting the conversation early is to make sure Obama and Congress don’t find themselves locked in a game of high-stakes budget chicken when it comes time to raise the debt ceiling in July or August.

In 2011, that harrowing experience crushed the stock market and consumer confidence and cast a pall over congressional-executive relations for the remainder of Obama’s first term. Congress shows more than a few signs of wanting to head off that possibility again.

“The long-term budgetary problems we discussed last night have defied bipartisan solutions for far too long,” said Sen. Lindsey Graham (R) of South Carolina in a statement, after dinner with the president last week. “I'm ready to try to solve the serious, long-term budget problems our country faces and can accept failure as an outcome. But I cannot accept not trying.”