DC Update: Capitol Hill Fiscal Fights Won’t Fade With Deal

DC Update: Capitol Hill Fiscal Fights Won’t Fade With Deal

Congress, sharply divided and bruised by three weeks of battling over the partial government shutdown, now faces the task of coming up with a broad fiscal accord in about two months. While Wednesday’s agreement (HR 2775) to reopen government puts off the threat of widespread furloughs and default into next year, it leaves unresolved fiscal 2014 spending levels and whether automatic spending cuts, known as sequester, will take hold in January. The measure establishes the first bicameral budget conference since 2009 to decide on next year’s spending and, perhaps, to consider a tax code overhaul and changes to entitlement programs by no later than Dec. 13. If they fail, the government could shut down again on Jan. 15 and would face default on Feb. 7. In coming weeks, the members of the conference committee will face enormous pressure to find common ground without giving up on their own party’s spending and fiscal priorities. House Budget Chairman Paul D. Ryan, R-Wis.; Senate Budget Chairman Patty Murray, D-Wash.; and the ranking members of the Budget panels — all of whom will be involved in the conference talks– will hold a bipartisan breakfast meeting this morning to kick off their efforts.

CHALLENGING ‘TO DO’ LIST FOR BUDGET CONFEREES: Deciding on the level of discretionary spending for fiscal 2014 will be among the first goals of the budget conference.

Republicans’ main focus will be preserving the $967 billion discretionary spending level set for fiscal 2014 under the 2011 Budget Control Act (PL 112-25) and resisting Democrats’ efforts to find new tax revenue to raise spending.

“We need a budget agreement to cut spending,” said Ryan, who was one of 144 House Republicans to oppose the deal. “I’ve made no secret that I want to get a budget agreement that gets spending under control, and get a dent on the debt and enacts pro-growth policies to create jobs. Nothing has changed from my perspective.”

Democrats are likely to push for $1.058 trillion in fiscal 2014 spending as called for in their budget resolution (S Con Res 8) and will seek an end to the sequester’s across-the-board spending cuts that hit in mid-January. They are likely to propose ending some corporate tax breaks to make up for the sequester savings.

Murray struck a bipartisan note on her party’s approach to the talks. “I am looking forward to the big challenge that bridging the significant differences between the House and Senate budgets presents, I am absolutely committed to finding common ground, and I hope Republicans are too,” she said.

If the two sides can settle on this year’s spending, they likely would turn to broader issues and perhaps revive “grand bargain” talks, including an overhaul of the tax code and changes in entitlements.

On taxes, the panel may build off the work of Finance Chairman Max Baucus of Montana and Ways and Means Chairman Dave Camp, who have spent months building support for a comprehensive rewrite of tax regulations that swaps lower rates with more revenue from broader tax base.

As for entitlements, a likely starting point would be White House-backed proposals to use a less generous method for calculating cost-of-living increases for Social Security beneficiaries and means-testing for wealthy Medicare recipients to cut costs. Democrats would likely resist those efforts, but that could emerge as a bargaining chip in a wider accord on taxes.

CQ reporters will be following all the developments in budget talks and whether they can lead to an agreement by the conference’s end date of Dec. 13.

GOP SPLIT OVER FORCING SHUTDOWN: Some Republicans said they hope the party’s experience with the government shutdown ensures that it won’t be used again anytime soon. Others said it served its purpose and that the debt limit should continue to be used as leverage for GOP priorities.

“People tend to forget that you don’t get much out of it. Those of us who needed to learn that learned it. Some of us never wanted to go there, but I think that’s the main takeaway. You don’t get leverage having the government shut down,” said Jeff Flake, R-Ariz., who was one of 27 Senate Republicans to support the legislation to end the shutdown.

Sen. John McCain, R-Ariz., said he hopes “we’ve learned this lesson so we wouldn’t do it again for a while.” And Sen. Johnny Isakson, R-Ga., said “the long-term impact is probably that it will never happen again.”

But Rep. Tim Huelskamp, R-Kan., a leading critic of the deal, said the fight was worth having because Republicans staked out what he thinks will be winning positions for the 2014 elections.

Rep. Raul Labrador, R-Idaho, said Republicans can make the shutdown a political winner if they use it to make their case for cutting federal spending, overhauling entitlement programs and curtailing, if not stopping, the 2010 health care law.

Huelskamp added that when Congress comes to another battle over the budget in January and February, when a stopgap spending plan expires and another debt limit deadline approaches, more Republicans may support another confrontation.

CQ reporters will continue to track any political fallout from the deal for both Republicans and Democrats.

DISASTER FUNDING, POULTRY RIDER IN BILL: Tucked into the legislation to reopen the government and raise the debt limit is hundreds of millions in disaster aid to Colorado and a provision weighing in on a long-simmering fight between poultry processors and farmers.

The aid provision would lift an existing $100 million-per-state cap on emergency highway funding, providing as much as $450 million to Colorado to rebuild from floods that damaged highways and bridges last month.

The aid mirrors Senate passed legislation (S 1560). The House passed similar legislation (HR 3174) last month that did not include the $450 million limit in the Senate measure. The bills were passed on the eve of the government shutdown and never became law.

A policy rider would roll back U.S. Department of Agriculture rules intended to strengthen the hand of chicken farmers in their dealings with poultry processors. The rider also has been included in earlier versions of fiscal 2014 House and Senate continuing resolutions.

The language is the product of a fierce fight over regulations that the Grain Inspection Stockyard and Packers Administration proposed to comply with a directive in the 2008 farm bill (PL 110-246). Backers say the rider provides fairness in an unbalanced power relationship between farmers and big poultry companies.

CQ reporters are continuing to examine the legislation for other riders and spending that might have been added with little fanfare.

CQ’s editors and reporters value your feedback on our news coverage and welcome your questions and comments on the stories we’re covering.

— Adriel Bettelheim, Morning Briefing editor, adrielbettelheim@cqrollcall.com, on Twitter @abettel

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