April 19, 2024

A Washington Puzzle: Solving 3 Fiscal Disputes

WASHINGTON — On the endgame for the budget showdown looming in Washington this fall, only this is clear: President Obama thinks Republicans cannot risk another debt crisis or government shutdown, and Republican leaders agree.

That consensus suggests that the odds of an economy-damaging stalemate are relatively low, despite rising jitters in the capital. Yet everything else about how the White House and Congressional negotiators will try to strike a deal, and then coax majorities to approve it, remains opaque.

“Even those of us quite close to it have a hard time saying how the movie ends,” said Representative Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee.

The showdown encompasses three interlocking fiscal disputes that will challenge Mr. Obama and his Republican interlocutors to bridge seemingly irreconcilable goals.

Perhaps easiest to resolve is the effort by some conservative Republicans to eliminate financing for the new health care law in return for keeping the government open beyond Sept. 30, the end of the fiscal year. As expected, Mr. Obama is unyieldingly opposed to undercutting his signature domestic policy achievement.

The House Republican leader, Eric Cantor of Virginia, has already rejected the Republican strategy as doomed to fail. Most Senate Republicans have not signed on, and Senator Richard M. Burr of North Carolina has called it “the dumbest idea I’ve ever heard.” Even one supporter, Senator Rand Paul of Kentucky, recently suggested that the threat was simply a tool to provoke negotiations.

A second challenge is determining the fate of the across-the-board budget cuts known as sequestration if Congress avoids a shutdown by extending government funding.

Republicans remain adamant that the level of budget cuts required by sequestration, about $90 billion per year, be continued. But with increasing complaints about the effects of those cuts on the Pentagon and elsewhere — shown by House Republicans’ inability to pass their own transportation spending bill last month — some party leaders want to rearrange the burden of those cuts so that they fall instead on entitlement programs like Medicare and Social Security.

The White House and Congressional Democrats, however, rule out that trade, except as part of a larger long-term deal that also includes new tax increases. And Republican resistance to tax increases, which has precluded such a “grand bargain” in recent years, has stiffened since the Bush tax cuts for top-earning Americans expired at the end of 2012.

The third challenge may be the most worrisome. While sequestration pinches particular constituencies, and a government shutdown would inconvenience millions, economists warn that default resulting from a failure to raise the government’s debt limit could tip the economy back into recession.

That challenge also appears, at least on the surface, the most intractable. Speaker John A. Boehner of Ohio has reiterated that Republicans will not raise the debt limit without offsetting spending cuts.

Mr. Boehner’s demand would require fewer cuts than during the 2011 debt crisis, when the debt ceiling needed to rise by about $110 billion per month to avoid default. That amount has shrunk to around $70 billion, according to the Bipartisan Policy Center, because the top-end tax increases and revenue from a stronger economy have helped shrink the deficit substantially.

But Mr. Obama, burned by the downgrade of the United States debt rating after those 2011 negotiations, insists he will not negotiate on the issue this time, to the bewilderment of some Republicans.

“This is, for me, very, very difficult to figure out,” said Stephen Bell, a longtime Senate Republican budget aide now at the Bipartisan Policy Center.

No formal negotiations have begun, although the White House chief of staff, Denis R. McDonough, has been meeting with a few Senate Republicans in search of common ground.

Congressional aides have also started exploring potential stopgaps. They begin with a temporary extension of government funding to allow budget talks to continue through year’s end.

Article source: http://www.nytimes.com/2013/08/16/us/politics/a-washington-puzzle-solving-3-fiscal-disputes.html?partner=rss&emc=rss

House Weighs Iran Measure Amid Doubts on Timing

The legislation, if enacted into law and fully enforced, could basically eradicate what is left of Iran’s diminished oil exports by coercing its remaining customers to find other suppliers. Proponents of the legislation say that with 376 sponsors, it is expected to pass the House easily. It would then move to the Senate for consideration in September.

But critics say the timing of the House vote has raised sharp questions about the kind of message it would send to Iran’s president-elect, Hassan Rouhani, before he takes office on Sunday. It has also laid bare a divide over Iran policy between Congress and the Obama administration, which has adopted a somewhat less confrontational approach.

Early this month, just weeks after Mr. Rouhani’s victory, the administration received an overture for direct talks with Iran’s leaders, and last week, in what was seen as a modest conciliatory gesture, it moved to ease a sanctions provision concerning sales of medical devices to Iran.

“Most people are saying this vote is taking place at the wrong time,” said Dariush Zahedi, an Iran sanctions expert who is now a political science lecturer at the University of California, Berkeley. “They should wait and give Rouhani an opportunity to make good on his agenda.”

Megan Whittemore, the press secretary for Representative Eric Cantor, the House majority leader, who is responsible for scheduling votes, said in an e-mail that she expected the debate on the bipartisan legislation to begin on Wednesday, with a vote most likely on Thursday. Others said the vote could be delayed until after the August recess.

Many of the bill’s sponsors, who did not anticipate Mr. Rouhani’s surprise victory in Iran’s election on June 14, were among the 131 lawmakers who signed a letter to President Obama on July 19 urging him to avoid “actions that delegitimize the newly elected president.”

Some signed a letter circulating among House members on Tuesday asking the House leadership to postpone the vote, at least until after Mr. Rouhani has an opportunity to restart talks on Iran’s uranium enrichment program, suspended before the election. Iran contends the enrichment is for peaceful purposes, but much of the world suspects it is meant to achieve the ability to make atomic weapons.

“The question is, why are proponents so adamant on having the vote now?” said Trita Parsi, the president and founder of the National Iranian American Council, a Washington-based group that opposes sanctions. “It certainly raises the suspicions they want to explode what opportunity may exist for negotiations.”

Supporters of the legislation argued that the vote’s timing would send exactly the type of message that, in their view, is the only one taken seriously by Iranian leaders: a threat that would force them to make a choice between self-preservation and economic catastrophe.

“We’re not negotiating with folks who trained at the Harvard Negotiation Project,” said Mark Dubowitz, the executive director of the Foundation for Defense of Democracies, a Washington group that supports stronger sanctions. The legislation’s sponsors, he said, “understand that Iran “has a negotiation strategy based on brinkmanship.”

Representative Keith Ellison, Democrat of Minnesota, who opposes a vote now, was among those circulating the letter to colleagues urging a delay. The Iranians, he said, will interpret the vote as a signal of hostility. “I’m worried we could strengthen the hand of the hard-liners who don’t want to talk,” he said.

Article source: http://www.nytimes.com/2013/07/31/world/middleeast/house-vote-on-sanctions-for-iran-could-stop-oil-exports.html?partner=rss&emc=rss

House Votes to Raise Debt Ceiling

The 285-144 vote staved off an impasse that could have put the full faith and credit of the United States government into doubt and potentially set off an economic disaster. Instead, the next Republican showdown with the president will come in March, when the subject will be across-the-board spending cuts first and a possible government shutdown by the end of the month.

“We know with certainty that a debt crisis is coming to America. It’s not a question of if. It’s a question of when,” Representative Paul D. Ryan of Wisconsin, the Republicans’ former vice-presidential nominee and current Budget Committee chairman, said as he vowed to press ahead with deep spending cuts.

To give House Republicans a rationale for giving in on the debt ceiling after dropping demands for offsetting cuts, the House legislation included a provision that would withhold the pay of lawmakers in a chamber of Congress that fails to pass a budget blueprint by April 15. That allowed House Republicans to turn a spotlight on Senate Democrats, who have not passed a detailed budget blueprint since 2009.

“It took one week in which their paychecks were on the line, and now the Senate is going to step up and do the right thing,” Representative Eric Cantor of Virginia, the House majority leader, said after the vote.

Senate Democratic leaders shrugged off the dictate as an insignificant gimmick and claimed victory.

“The president stared down the Republicans. They blinked,” said Senator Charles E. Schumer, Democrat of New York.

Senator Harry Reid of Nevada, the majority leader, thanked Speaker John A. Boehner for reversing course and said he would take up and pass the House bill without changes as soon as next week, possibly by unanimous consent. He said he would then move quickly on a budget plan for the first time since 2009, and to highlight Democratic priorities against the plan Mr. Ryan plans to move through his committee.

“Democrats are eager to contrast our pro-growth, pro-middle-class budget priorities with the House Republicans’ Ryan budget that would end Medicare as we know it, gut investments in jobs and programs middle-class families depend on, and cut taxes for the wealthiest Americans and biggest corporations,” said Senator Patty Murray of Washington, the chairwoman of the Senate Budget Committee.

House Republicans appeared eager for that fight. For two years, the House has passed detailed but nonbinding budget plans that would cut domestic programs to levels not seen since World War II, enact changes to Medicare that would offer older people fixed subsidies to buy private health insurance, and mandate a much-simplified tax code. Democrats have criticized those plans, declined to produce an alternative, and instead demanded what they called a “balanced approach” to deficit reduction.

Now, Republicans said, the debate will be over numbers.

“We have a budget that’s described as draconian, that decimates this program or that. They have a phrase, ‘balanced approach,’ ” said Representative Trey Gowdy, Republican of South Carolina. “I’m tired of debating against a phrase.”

The debt ceiling legislation — devised with awareness of the constitutional hurdles imposed by the 27th Amendment on Congressional pay — would simply impound lawmaker salaries until a budget is passed or the 113th Congress ends, whichever comes first. And it would not require the House and the Senate to come to a compromise on the two spending and tax blueprints, which are likely to be very different. That will be the really difficult task.

House Democratic leaders tried to persuade their members to vote against the deal, so as to force as many Republicans as possible to vote to do something most said they would never do: lift the debt ceiling. But 86 Democrats voted yes, more than enough to let 33 Republicans vote no without bringing the bill down and handing Republican leaders an embarrassing defeat.

House Republicans say punting the debt ceiling to May 18 is not so much a retreat as a “re-sequencing” of the coming budget showdowns. House Republicans now take for granted that the first deadline, March 1, will come and go, and $110 billion in across-the-board spending cuts to defense and domestic programs — known as “sequester” — will go into force.

“The sequester is going to go into effect on March 1 unless there are cuts and reforms that get us on a plan to balance the budget over the next 10 years. It’s as simple as that,” Mr. Boehner said.

The next real showdown will come by March 27, when the stopgap measure financing the government expires. Republicans have made clear that they are willing to let the government shut down at that time to force deep spending cuts or changes to Medicare and Social Security that would bring down deficits in the long run.

Such continuing brinkmanship brought a rebuke from Ms. Murray, who said Republicans were trying to have it both ways, forcing Senate Democrats to move forward in an orderly way with a budget plan by mid-April, but threatening the next budget crisis weeks before that.

The pay provision brought its own protests. Representative Jerrold Nadler, Democrat of New York, called it “institutionalized bribery,” since it effectively says, do what Republicans want or do not get paid. That was why the nation passed the 27th Amendment, which says Congressional pay cannot be varied within a single Congress.

Article source: http://www.nytimes.com/2013/01/24/us/politics/house-passes-3-month-extension-of-debt-limit.html?partner=rss&emc=rss

As Vote Looms, Leaders Court Skeptics

With only hours left before Tuesday’s looming deadline that carries the threat of a federal default, Vice President Joseph R. Biden Jr. arrived at the Capitol on Monday morning for back-to-back, closed-door meetings with Democratic lawmakers in the House and Senate. Republicans in the House and Senate also huddled in advance of the votes.

The last-minute wrangling on Monday morning reflected the lack of enthusiasm for the debt deal as lawmakers, party activists and pundits expressed relief but little excitement for a compromise that appears to have left few partisans eagerly promoting the deal as the one they wanted.

On the Senate floor on Monday, Senator Harry Reid of Nevada, the majority leader, said: “People on the right are upset. People on the left are upset. People in the middle are upset.”

But he called it a “remarkable agreement which will protect the long-term health of our economy.”

In his first public comments since the deal was reached Sunday night, Mr. Boehner on Monday hailed the agreement for providing a path toward a balanced budget amendment to the Constitution.

“It gives us the best shot that we’ve had in the 20 years that I’ve been here to build support for a balanced budget amendment,” he said.

Representative Eric Cantor of Virginia, the majority leader, said the deal is “not perfect,” but said its passage will begin the process of changing the political culture in Washington.

“The big win here for us, and for the American people, is the fact that there are no tax hikes in this package,” Mr. Cantor said. “The last thing we need is tax hikes.”

The House moved Monday toward an afternoon vote, but it remained unclear whether the Senate would follow suit by the end of the day. Mr. Reid told his colleagues Monday afternoon that a final vote on the measure could be brought up Monday night or Tuesday.

A sense of exuberance over the weekend compromise gave way to a daylong expression of grievances.

Mr. Biden spent hours on Capitol Hill, listening and gently persuading Democrats to vote for the plan. His meeting with House members lingered far beyond its allotted time, as several representatives voiced their strong objections to what they perceived as a deal cut on the back of poor and working-class Americans, with no sacrifice by the rich in the form of tax increases.

“I wouldn’t call it anger, but we are perplexed that it has turned out like it has,” said Representative G.K. Butterfield, Democrat of North Carolina, grimacing as he left the meeting. “But we’ve run out of options and we know the consequences. I’ve heard horror stories from the Great Depression. I don’t want my fingerprints on that.”

Representative Nancy Pelosi of California, the minority leader, reminded her fellow Democrats of the consequences if the deal would collapse. She did not twist arms or deliver stern remarks, several legislators said, but rather urged them to vote their conscience.

Representative Elijah Cummings, Democrat of Maryland, said he had deep reservations about the budget compromise, declaring: “This is a hard compromise. But he added that the “ramifications would be long” if the deal did not go through.

Several Democrats said they were reserving judgment until the voting actually began, when it became clear how many votes that Democratic leaders needed to deliver. Republican leaders were embroiled in their own challenge of trying to persuade conservatives to sign onto the plan, reminding them that the deal did not include raising taxes.

Most of the leading 2012 Republican presidential candidates weighed in Monday in opposition to the debt ceiling deal, saying that it did too little to address the nation’s spending problem. Mitt Romney, the former governor of Massachusetts, said the deal “opens the door to higher taxes and puts defense cuts on the table.”

But business groups urged passage as the United States stock market initially rallied before sinking again on disappointing manufacturing news. The U.S. Chamber of Commerce said in a statement that the agreement “takes us a step in the right direction and is the right thing to do.”

Article source: http://feeds.nytimes.com/click.phdo?i=01b40c80364f098b80b75c80ada4fa68

Boehner and Obama Nearing Deal on Cuts and Taxes

Congressional and administration officials said that the two men, who had abandoned earlier talks toward a deal when leaks provoked Republicans’ protests, were closing in on a package calling for as much as $3 trillion in savings from substantial spending cuts and future revenue produced by a tax code overhaul. If it could be sold to Congress, the plan could clear the way for a vote to increase the federal debt ceiling before an Aug. 2 deadline.

But the initial reaction to the still-unfinished proposal hardly suggested a quick resolution. This time, the flak came mostly from senior Congressional Democrats, who are angry at some of Mr. Obama’s concessions and at being excluded from the talks.

The president worked to ease concerns from members of his party, inviting Democratic leaders to a  White House meeting on Thursday evening that lasted nearly two hours. The participants would not comment afterward.

Mr. Obama and Mr. Boehner had maintained tight secrecy to prevent a recurrence of the Republican rebellion that stymied their effort earlier this month. With only a few top advisers involved, the news that they were nearing an accord broke only after administration officials told Democratic Congressional leaders on Wednesday night about the outlines of the Obama-Boehner discussion, following talks earlier in the day between the president, Mr. Boehner and Representative Eric Cantor of Virginia, the No. 2 House Republican.

Hours before the Congressional Democrats met with Mr. Obama, they had expressed alarm publicly to reporters that the emerging proposal seemed too reliant on deep spending cuts compared to new revenue. In private, some vented their criticism at Mr. Obama’s budget director, Jacob J. Lew, during a heated party lunch of Senate Democrats on Thursday.

“The president always talked about balance: there had to be some fairness in this, this can’t be all cuts,” said Senator Harry Reid, the Senate majority leader, as he left the meeting with Mr. Lew. “The caucus agrees with that. I hope the president agrees with that, and I’m confident he will.”

But the president and Mr. Boehner were moving ahead with their plan, aides said, trying to agree on matters like how much new revenue would be raised, how much would go to deficit reduction, how much to lower tax rates and, perhaps most critical, how to enforce the requirement for new tax revenue through painful consequences for both parties should they be unable to overhaul the tax code in 2012.

The White House wants a trigger that would raise taxes on the wealthy; Mr. Boehner wants the potential penalty for inaction to include repeal of the Obama health care law’s mandate that all individuals purchase health insurance after 2014.

 Officials on all sides of the tense negotiations warned that no firm deal to raise the nation’s $14.3 trillion borrowing ceiling was in hand, and tried to play down progress — if only to stave off attempts to change the deal’s shape or to kill it by hard-liners on both sides of the debate.

“While we are keeping the lines of communication open, there is no ‘deal’ and no progress to report,” said Kevin Smith, a spokesman for Mr. Boehner.

The White House also denied that any agreement was imminent. Jay Carney, the White House press secretary, said: “There is no deal. We are not close to a deal.”

The same issues that foiled earlier negotiations between Mr. Obama and Mr. Boehner remain. Many Republicans oppose abandoning the party’s no-compromise stand against any new taxes, while many Democrats fear a “grand bargain” will undercut their party’s ability in the 2012 campaigns to use Republicans’ support of deep cuts in Medicare, Medicaid and Social Security against them.

Congressional Democrats already are suggesting the potential Obama-Boehner deal is more tilted toward Republican priorities than a bipartisan plan suggested this week by the so-called Gang of Six senators, three Republicans and three Democrats.

House Republicans, too, expressed wariness. While initial reports suggested the emerging plan would appear to meet Republican demands for less reliance on new revenue than Democrats had insisted on, Republicans could be uneasy about accepting a deal tied to higher revenue through tax changes. “The trick on this has always been the tax issue,” one Republican said.

Alternative solutions in Congress appeared to be faltering as the Senate on Thursday took up and prepared to reject on Friday a conservative House Republican plan to slash spending by $5.5 trillion, deeper cuts than anything proposed before.

A backup plan being prepared in the Senate by Mr. Reid and his Republican counterpart, Mitch McConnell, the minority leader, was meeting stiff resistance from the House. That plan would allow a debt ceiling increase without the approval of Congress, in effect, but also without the guarantees of deep spending cuts that Republicans wanted in tandem.

Mr. Reid and Mr. McConnell summoned the Gang of Six — rather, the Gang of Eight with the addition of Senator Michael Bennet of Colorado, a Democrat, and Senator Mike Johanns, Republican of Nebraska — to a meeting on Thursday. Both party leaders were unhappy with the group’s re-emergence this week, and with Mr. Obama’s immediate warm words for the group, because it complicated their own efforts to reach a solution to the debt-limit impasse.

As Mr. Boehner called for some action to avert a default, he said Thursday that he was confident that many in the conservative House majority would ultimately be willing to accept some compromise.

 “At the end of the day, we have a responsibility to act,” Mr. Boehner told reporters. But he also made clear that he was not inclined to take any steps that could be considered a tax increase.

“I’ve never voted to raise taxes,” he said, “and I don’t intend to.”

As the capital markets continued to assess the possibility of American default on its debt, R. Bruce Josten, the executive vice president for government affairs of the U.S. Chamber of Commerce, wrote a blog post warning that such a potential default “has real, immediate, and potentially catastrophic consequences.”

Jennifer Steinhauer contributed reporting.

Article source: http://www.nytimes.com/2011/07/22/us/politics/22fiscal.html?partner=rss&emc=rss

Farm Subsidies Become Target Amid Spending Cuts

This week, Representative Paul D. Ryan, Republican of Wisconsin and the chairman of the House Budget Committee, told reporters, “We shouldn’t be giving corporate farms, these large agribusiness companies, subsidies. I strongly believe that.”

His budget proposal would take $30 billion out of the farm program over the next decade.

Representative Eric Cantor, Republican of Virginia and the majority leader, attended the first session of debt-limit negotiations on Thursday with a list of areas where he saw a potential agreement between Republicans and the White House, including farm subsidies.

A confluence of factors have lined up against the farm programs. While the rest of the economy remains largely stagnant, commodities prices and farm incomes have remained at a protracted high. The House Agriculture Committee, while still dominated by farm state members, is now peppered with freshmen who view cuts to these programs as an essential part of the broader attack on the federal deficit, the centerpiece of their campaigns.

Further, after taking a beating from constituents concerning their Medicare proposal last month, Republicans are eager to find an area of common ground with Democrats. Farm subsidies seem to fit the bill; conservatives condemn them as intrusions into the free market, liberals denounce them for encouraging environmentally harmful overfarming, and both sides see them as a form of corporate welfare.

What is more, some subsidies have placed the nation in violation of trade agreements, and members from both sides of the aisle have questioned why, with biofuel mandates creating such demand for ethanol, the government needs to subsidize it.

Powerful interests and political traditions continue to constrain efforts to cut subsidies. While all the free-market Republicans back reducing subsidies in general, some continue to support targeted aid like the subsidies long enjoyed by ethanol. Newt Gingrich, the former Republican House speaker and likely presidential candidate, has been assertively arguing in favor of maintaining ethanol subsidies in the face of intense criticism from backers of market reforms like the editorial page of The Wall Street Journal.

But in both parties there is a sense that support for subsidies is waning. This year, Senator Richard J. Durbin, Democrat of Illinois, one of the nation’s biggest farming states, told the state’s farm bureau to expect cuts. Senator Debbie Stabenow, Democrat of Michigan and chairwoman of the Senate Committee on Agriculture, Nutrition and Forestry, told reporters at a state agriculture conference that “making sure that we’re doing our part in being fiscally responsible” would be the biggest challenge in the next farm bill.

Others are thinking in a similar vein.

“I have been telling folks that the pie is getting smaller,” said Representative Reid Ribble, a Republican freshman from Wisconsin who sits on the House Agriculture Committee. “I am hearing from constituents back home that they want to see the government have less involvement in the pricing. There is a kind of a tenor right now that will allow us to have a significant change.”

Farm advocates say they hope they can stave off the worst.

“The scrutiny of farm programs is stronger than ever,” said Chuck Conner, president of the National Council of Farmer Cooperatives. “It’s not that farmers don’t want to participate in deficit reduction,  but at the same time, we hope people appreciate that all other federal programs have skyrocketed, which is why we are in this mess, and farm subsidies have not.”

Historically, federal farm subsidies have operated like piles of laundry: there are constant efforts to make them go away, but they always rise right up again.

The program is rooted in the response to the Great Depression, when the nation enjoyed a largely agrarian economy and the federal government recognized that farmers lacked a safety net.

The program has evolved over the years into a series of direct payments, insurance programs, low-cost loans and other benefits. The programs come up for reauthorization every five years, and farm advocates lobby hard against efforts to meaningfully reduce them, though some have been reformed over the years.

“Substantial cuts to agriculture have already been made,” Ms. Stabenow said in an e-mail. “And we’ll continue measuring the performance of every program to reduce the deficit and maximize effectiveness.”

In 2011, taxpayers are projected to pay roughly $16 billion in aid to farmers through various programs, according to figures from the Congressional Budget Office.

The most controversial of these programs are the $5 billion in annual so-called direct payments to farmers of corn, soybeans and other crops, awarded simply for owning tillable farm land, even if they do not plant on it.

“If we can’t figure out a way at this point to trim these payments,” said Representative Ron Kind, Democrat of Wisconsin, who has long fought against farm subsidies, “then it is just embarrassing.”

Large cuts to the agriculture subsidies will not go far in taming federal spending.

“Cutting farm subsidies doesn’t bring that kind of ongoing savings,” said  Tyler Cowen, a professor of economics at George Mason University, comparing cuts to farm programs with longer term restructuring to entitlement programs like Medicare. “Still, it is a great one-time gain, and it means lower prices for consumers and is a good idea all around.”

Farmers and their advocates insist that the subsidies have been demonized and overstated.

“Every time you read an article saying Congress better be looking at farm programs I am scratching my head,” Mr. Conner said. “When people think of the U.S.D.A. budget they think of farm programs, but it is really more a rounding error.”

But Mr. Kind and others say the push for broad budget cuts is working in their favor.

“The political dynamics have shifted in light of deficit reduction,” he said. “I am cautiously optimistic.”

Article source: http://feeds.nytimes.com/click.phdo?i=b6eb80eae52dac9725b83ab7cdfe9097