With the December 13 deadline less than one month away, the House/Senate budget conference committee held its second formal meeting amid growing frustration about the lack of progress it's making.
The committee heard testimony from Congressional Budget Office (CBO) Director Doug Elmendorf on budgetary and economic projections. However, during much of the meeting committee members used their time expressing dissatisfaction with the new Health Care Act and trading political barbs about taxes and spending.
As the deadline approaches, it appears that there are very few areas of agreement on the principal budgetary issues the committee faces: discretionary spending, entitlements spending, revenue, and tax reform.
The one area of general agreement in the committee is the need to come up with an alternative for sequestration, at least for FY2014. Unless some agreement is reached, over $90 billion in spending cuts will be implemented in January.
However, the sticking point in finding an alternative remains the deep differences between Republicans and Democrats on what to do about taxes. Democrats want to increase revenue by at least closing what committee co-chair Sen. Patty Murray (D-WA) called “egregious” tax loopholes. In fact, Sen. Murray has said that she can’t envision an agreement that does not involve closing some tax loopholes.
Republicans, led by co-chair Rep. Paul Ryan (R-WI), appear unwilling to accept any tax increase to forge a deal. In the first committee meeting, while expressing hope that the committee could work together to get an agreement, Ryan said that if the conference falls into an argument over taxes, “we’re not going to get anywhere.”
Complicating the consideration of closing tax loopholes is the problem it would cause for the House Ways and Means and Senate Finance Committees. These committees are trying to come up with a tax-reform proposal and want to use closing tax loopholes part of their bi-partisan deal. Ryan has said that tax loopholes should be addressed in these committees.
Meanwhile, House and Senate appropriators are anxious to complete action on FY2014 appropriations bills. They are keen, along with most in Congress, to avoid another government shutdown when the current Continuing Resolution (CR) runs out on January 15, 2014.
In a joint letter to budget conference committee leaders, House Appropriations Committee chair Rep. Harold Rogers (R-KY) and Senate Appropriations Committee chair Sen. Barbara Mikulski (D-MD) urged the budget conference committee to “make reaching an agreement on the FY 2014 and FY 2015 discretionary spending caps your first priority.” Rogers and Mikulski want the committee to set the discretionary targets by November 22, but no later than December 2 so they have time to finalize bills before mid-January.
So, the question now is whether any agreement can be reached the December 13 deadline. At the end of the hearing, Rep. Ryan said that he and Sen. Murray will continue to talk about how to proceed with the next steps. Those steps, at best, are likely to be small ones. But, As CBO Director Elmendorf said in his final comments, “small steps are better than no steps at all.”