House and Senate Democrats reached final agreement Monday evening on a five-year budget plan that gives President Barack Obama a clear shot at winning health care reform next fall but scales back his spending and tax cut proposals so as to hit a $523 billion deficit target by 2014.
If successful, that would represent a two-thirds reduction from the nearly $1.7 trillion shortfall projected for this year and would be about $225 billion less than Obama’s own projected 2014 deficit of $749 billion, as calculated by the Congressional Budget Office.
But it’s still a huge sum by historic standards, and Republicans were unsparing, accusing the administration of abusing its power to win health care and adopting “AIG accounting” to hide the worst from voters.
“I can understand shaking Hugo Chavez’s hand, but I can’t understand embracing his politics ... cutting down the minority,” said Sen. Judd Gregg (R-N.H.) in a pointed allusion to Obama’s encounter with the Venezuelan strongman at the recent Summit of the Americas. In a remarkable riff, the New Hampshire Republican — once Obama’s choice for secretary of commerce — went on to lecture Blue Dog Democrats for allowing themselves to be “bamboozled” and treated as “rubes” by the White House and said the United States wouldn’t qualify for entrance into the European Union under the fiscal policies espoused by the president.
“Latvia would get in; we wouldn’t,” Gregg said. “This budget does not reach anywhere near a sustainable deficit level at any time in the foreseeable future.”
Gregg’s jibes at the Blue Dogs appeared to be his best –but still unsuccessful—shot at stalling the process. Winning over the moderates is vital to Obama’s strategy and Democrats spent hours trying to appease demands for statutory language writing pay-go deficit reduction rules into law — a proposal endorsed by the president.
“That’s the bone of contention,” said House Budget Committee Chairman John Spratt (D-S.C.), emerging from a House leadership meeting at around 7 p.m. But Rep. Allen Boyd (D., Fla.), a leader of the Blue Dogs, predicted “absolutely” an agreement would come and this was confirmed soon after by negotiators who hope to complete House and Senate floor action by Wednesday, so as to fall in the first 100 days of Obama’s tenure.
Senate Budget Committee Chairman Kent Conrad (D-N.D.), who chaired the talks in an ornate Capitol meeting room, said an estimated $10 billion would be cut from Obama’s nondefense appropriations requests for the new fiscal year beginning Oct. 1. And going forward, the budget sets a goal of holding future annual increases to 2.9 percent on average.
Many of the most popular middle-class tax cuts enacted under former President George W. Bush and due to expire after 2010 would be retained at a cost of $512 billion. But that is about $90 billion less than the Senate had assumed in its budget and ensures a major battle over the treatment of the wealthy and income from investments.
The more immediate fight will be health care, where the budget gives Obama an invaluable backstop if Republicans attempt to stall this initiative past Oct. 15. Conrad said Democrats are still hopeful that a bipartisan deal can be reached prior to that. But if that fails, then the budget would trigger a process allowing the Senate to consider the issue on an expedited basis in which Democrats would no longer need 60 votes to cut off debate.
Republicans have used the same process in the past to push through tax cuts — most notably in 2003 when then-Vice President Dick Cheney broke a 50-50 tie. But health care is an even more far-reaching endeavor in many respects, and critics have warned that the results could be frustrating for all involved.
“Let’s not kid ourselves that this isn’t negotiations with a gun in one hand,” said Rep. Paul Ryan (R-Wis.), the ranking member on the House Budget Committee.
Watching from the sidelines are the House and Senate Appropriations committees, which will be charged with moving forward on the budget next with the dozen annual spending bills for the coming fiscal year.
The White House had promised its detailed requests next week. The committees will then have to begin scoping out the $10 billion in cuts called for in the budget, even as they also wrestle with an $83.4 billion war funding request for the current year.
“If that’s the directive we get, we’ll live with it, but it’s not going to be easy,” Senate Appropriations Committee Chairman Daniel Inouye (D-Hawaii) said in an interview with POLITICO. “I don’t wish to be party to fostering this assumption that we have no business in playing a role in appropriations, that we’re just a bunch of rubber stamps.”
“You can’t close your eyes to the fact that we’re in an economic crisis,” Inouye said. “Our deficit is getting horrendous. In the face of that, we cannot continue just spending. We’ve gone through an exercise where, as far as the media is concerned, you saw trillions being spent. There is a point where people are going to rebel, and I don’t blame them, because they may not get the big picture.”
In the case of the new war-funding bill, he said he was open to listening to House arguments in favor of adding new money for C-17 transport planes. And he himself said that more money could be needed to deal with the threat of a pandemic flu — an issue also raised by House Appropriations Committee Chairman Dave Obey (D-Wis.) on Tuesday.
“I don’t want to add too much money,” Inouye said. But he then added later: “I don’t want to give you the impression that my mind is closed.”
Secretary of Defense Robert Gates and Secretary of State Hillary Clinton are to testify before Inouye’s panel Thursday, and the chairman — a decorated veteran of World War II — admitted to some concerns about the growing U.S. military commitment in Afghanistan.
“I’m from the old school, literally hundreds of my friends disappeared,” he recalled of his service in a Japanese-American fighting unit in Europe. “Take my premed class, I wanted to be a doctor. All of us volunteered, every single one. Not one doctor came out of my generation. Not one.”
At 84, Inouye is widely respected but still new to the job of chairman, after taking over from Sen. Robert Byrd (D-W.Va.) this year. Across the Capitol, he faces a younger and often more assertive Obey.
“We’ve never raised our voices,” Inouye said of his House counterpart.
“Obey raises his voice all the time,” a reporter said.
“Not to me,” Inouye laughed. “He can raise his voice all he wants out there, but we’re friendly.”