CQ TODAY ONLINE NEWS
May 16, 2012 – 11:17 p.m.
Budget Fight Likely to Go into 2013
By Paul M. Krawzak, CQ Staff
A succession of public gambits, from a White House meeting with congressional leaders to serial Senate votes on lost-cause budget resolutions, is raising the political heat on the big tax and spending issues looming after the November election.
But the actions may only complicate any chance that lawmakers will reach agreement on a comprehensive debt reduction deal this year.
Some lawmakers and congressional insiders say it is almost inevitable Congress and the White House will have to seek an extension of existing temporary tax cuts and put off the automatic “sequester” spending cuts for several months into 2013, providing time for the two parties to work out their differences and avoid the so-called fiscal cliff.
President Obama and Senate Majority Leader
“We ought to work on it, we ought to try, we ought to make our proposals,” said Sen.
Alexander said the expiring tax cuts, sequester and other issues that have to be resolved “would be an awful lot to digest within a few months. So we ought to be prepared to extend everything, including the tax rates, so we can have ample time to deal with all these items.”
Experts warn that allowing all the tax cuts and related provisions to expire and permitting the automatic spending reductions required by the August debt limit law (PL 112-25) to take effect in January would have more than a $7 trillion impact over a decade and could throw the economy into recession next year.
Sequester Comes First
With all the issues crashing together at the end of the year, many say nothing can be solved before a lame-duck session after the November elections.
But Boehner, R-Ohio, sought to push up the timetable for negotiations Tuesday when he warned Democrats that he would not support an increase in the debt limit, anticipated to be needed later this year or early next year, without spending cuts equal to or greater than the increase.
“‘Nothing’ is not an option, and ‘anything’ is not a plan,” he said. “To get on the path to prosperity, we have to avoid the fiscal cliff, but we need to start today.”
Democrats initially reacted by accusing Boehner of putting the government’s credit rating at risk, as they say he did last year, leading to a downgrade imposed by Standard & Poor’s.
Democrats on Wednesday issued their own threats. Obama warned Boehner during a lunch at the White House with congressional leaders that he wanted a “clean” debt limit increase and would not sign a measure with the spending cuts that Boehner specified.
Budget Fight Likely to Go into 2013
The president said “we’re not going to recreate the debt ceiling debacle of last August,” White House spokesman Jay Carney said. “It is simply not acceptable to hold the American and global economy hostage to one party’s political ideology.”
Reid, D-Nev., said at the same lunch that he would not talk about a debt limit increase until Congress first determines what to do about the sequester.
“Since no debt ceiling increase will likely be necessary until after the end of the year, Sen. Reid conveyed his view that any discussion of the debt ceiling is premature until after the sequester takes effect or is replaced with a balanced agreement, and after Congress deals with the expiring Bush tax cuts,” said a Senate Democratic aide familiar with Reid’s statements at the event.
Reid also threatened to oppose any effort to turn off the sequester unless it is replaced with “a balanced agreement that pairs smart spending cuts with revenue measures asking millionaires to pay their fair share,” the aide said.
Open to Extension
Because it is a presidential election year, it is widely believed that no comprehensive deal is possible until after the November election. But in recent weeks there has been increasing talk about extending the tax cuts that expire at the end of the year for three to six months, as well as postponing the sequester for the same period.
House Budget Chairman
Senate Armed Services Chairman
“It’s obvious to me that if something can’t be worked out, you can’t accept sequestration,” he said Wednesday.
Republicans in both chambers have sought to put Democrats on the defensive over deficit reduction. GOP senators on Wednesday lambasted the Democratic majority for not bringing a budget resolution to the floor in three years as they unsuccessfully sought consideration of several Republican senators’ budget proposals. They also brought out an outline of Obama’s proposed fiscal 2013 budget and the House-passed budget resolution.
Richard E. Cohen contributed to this story.