Risk Of Budget Impasse Rises By Corey Boles and Damian Paletta

Wall Street Journal
July 24, 2013
Pg. 4

WASHINGTON — The White House and congressional Republicans on Tuesday ratcheted up the chances of another down-to-the-wire budget showdown in the fall, with both sides digging in on their policy positions and offering little evidence that negotiations are under way.

Laying markers for the fall’s fiscal debates, House Speaker John Boehner (R., Ohio) said on Tuesday that he would continue to insist that any increase in the debt ceiling — a limit on government borrowing that has given Republicans leverage in past battles — must be accompanied by spending cuts. The White House has said that it wouldn’t bargain with Congress over raising the debt ceiling, because such brinkmanship could lead to a financial crisis.

Meanwhile, President Barack Obama is about to kick off a round of speeches designed in part to bolster the argument that Democrats will take into budget fights with Republicans. Senate Democratic leaders are currently writing spending bills for the next fiscal year that include $91 billion more in funding than the House Republican majority is planning to spend.

The policy differences have the potential to engulf Congress in a chaotic and cloudy September, with multiple deadlines looming that could affect financial markets, businesses and consumers.

Congress must settle on new plans to fund the government by the end of the fiscal year in September, and the Treasury Department could hit the debt ceiling and run out of room to borrow money to pay its bills sometime during October or November.

Time is short, as both the House and Senate are set to leave Washington in 10 days and won’t return until the second week of September. But both sides are focused now more on messaging than negotiating.

Mr. Obama on Wednesday will give the first in his series of speeches that will argue for more government spending on education — including in the early childhood years — and infrastructure, among other things.

Republican leaders, meanwhile, are working to advance legislation that would cut government spending in these programs, as they look for ways to increase Pentagon spending without raising the federal budget overall.

The White House and congressional Republicans have gone to the brink in budget negotiations before, only to narrowly escape a government shutdown. Some lawmakers from both parties say it is difficult to envision how a deal could materialize this time, given how far apart the two parties are.

Congress hasn’t agreed to a budget resolution, a document that sets spending targets. That has left the House and Senate to write spending bills based on their own targets, which are far different from each other.

The Senate on Tuesday began debate on a bill to authorize $54 billion in spending for transportation and housing programs for the year that begins in October, with 19 Republicans voting with Democrats to advance the measure. But House Republicans have signaled they would seek just $44 billion in spending for the programs. Similar gulfs exist on other spending bills.

A major point of tension between the House and Senate is how each views the “sequester,” the across-the-board spending cuts that began in March and reduced spending by roughly $110 billion a year.

House Republican leaders say that any spending plans must continue the sequester cuts into next year, though they want to shift money from certain domestic programs to the military. Democrats say that violates a mandate in the sequester law that the cuts be split between military and nonmilitary discretionary programs.

House leaders are also planning a single, stopgap bill that would fund the government in the event that Congress can’t agree on individual spending bills. The bill hasn’t yet been written, a senior House Republican aide said, and wouldn’t likely be brought to the House floor for a vote until sometime in September.

Senate Minority Leader Mitch McConnell (R., Ky.) endorsed a version of this plan on Tuesday, saying his primary goal in the budget talks was to ensure that the automatic cuts remain in place.

Senate Majority Leader Harry Reid (D., Nev.) said he wouldn’t support a spending bill that lowers government spending to such levels, saying it would be a “disaster for the country.”

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