The Obama administration views the collapse of House Republican support for deep cuts in transportation and housing spending as a good omen that it’s possible to forge a budget compromise this fall and avoid a government shutdown.
House GOP leaders pulled a bill Wednesday that would have begun to implement the second round of deep cuts under the sequester after many rank-and-file members balked at slashing federal transportation and housing funding by more than $4 billion. In a stern note to House leadership, frustrated Appropriations Committee Chairman Harold Rogers (R-KY) wrote, “Sequestration – and its unrealistic and ill-conceived discretionary cuts – must be brought to an end.”
The division suggests there might be room for Republicans to agree to an alternative to the $1.2 trillion, 10-year sequestration process, which was mandated under the 2011 Budget Control Act after Congress could not agree to specific reductions.
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“What we learned yesterday is that substantively, people cannot accept the depths of those cuts in transportation, housing and development,” said White House budget director Sylvia Mathews Burwell during a breakfast meeting sponsored by The Wall Street Journal.
Republicans like Rogers now fear that sequestration has merely put the nation on a “lurching path” of endless budget crises, and the White House sees an opening for a budgetary agreement. Until recently, that looked impossible because of the domination of Tea Party-type congressmen in the GOP House majority.
‘CONVENTIONAL WISDOM’
Burwell said that other recent events, including a bipartisan deal in the Senate that paved the way for confirmation of a handful of administration appointments, call into question the conventional wisdom that at best the administration and Congress would strike a deal to temporarily extend current spending levels under a continuing resolution.
The setback may force House Republicans to reconsider their refusal to sit down with Senate Budget Committee Chairwoman Patty Murray (D-WA) and other Democratic leaders to try to thrash out a comprehensive budget, deficit and tax deal before current spending authority runs out on Oct. 1, she said.
Burwell reaffirmed President Obama’s refusal to allow the Republicans to hold an increase to the $16.7 trillion debt ceiling as a hostage in larger negotiations about spending and taxes. “You can’t negotiate” a possible default that has only been staved off because of “extraordinary measures” that will be exhausted toward the end of this year, she said.
Burwell stressed, however, that all other fiscal and tax issues are on the table and can be addressed separately from the debt ceiling – an assertion roundly disputed by House Speaker John Boehner (R-OH). He insists any increase in borrowing authority be matched, dollar for dollar, with cuts in long-term spending. These exact terms previously led to the 2011 Budget Control Act and the current sequestration mess.
Asked repeatedly whether the president would veto a continuing resolution that cut domestic programs deeply, Burwell said that the two sides still have time this fall to achieve considerably more, even though just nine legislative days exist when Congress returns from its August recess.
“I don’t know why we just talk about the CR,” she said. “Why don’t we talk about the real deal? . . . Why do you need an extension instead of getting your work done? . . . Why do we need to kick the can [down the road]?”
On tax reform, Burwell said the president still supports a comprehensive overhaul of the tax code, including elimination of costly loopholes. She disputed claims that Obama undercut the efforts of Senate Finance Committee Chairman Max Baucus (D-MO) and House Ways and Means Committee Chairman Dave Camp (R-MI) to negotiate bipartisan legislation by announcing a rival tax proposal.
“I don’t think so,” she said.
Obama this week called for a “grand bargain” on new infrastructure spending and lower corporate tax rates by closing loopholes. Baucus and Camp were cool to the idea, in part because it didn’t address needed changes in the individual tax code, treating it as one of several proposals they will consider.
Burwell said the confidential tax reform talks between the two lawmakers may prove time consuming and the president wants to do something more quickly to help the middle class.
“If you believe you can do something we haven’t figured out, we’re open to seeing that and hearing that,” she said.
