Monday, July 11, 2011

CQ Roll Call Daily Briefing: Neckties Back On

CQ Roll Call Daily Briefing

Monday, July 11, 2011

Today In Washington

THE WHITE HOUSE: "It's time to pull off the Band-Aid, eat our peas," Obama said at the start of an 11:15 news conference on the budget talks.

The president plans to resume negotiations at 2 with the elite eight of the congressional leadership: Boehner and Cantor for the House majority, Reid and Durbin for the Senate majority, Pelosi and Hoyer for the House minority, and McConnell and Kyl for the Senate minority.

THE HOUSE: Convenes at noon and at 2 will begin debating amendments to its fifth spending bill of the year, which would allocate $30.6 billion (a 3 percent cut) for energy and water projects.

The only votes of the day will come after 6:30. Republicans will have to whip hard to come up with the two-thirds majority they need to pass legislation repealing lightbulb efficiency standards enacted four years ago with the goal of phasing out the traditional incandescent bulb.

THE SENATE: Convenes at 2 to resume debating a measure endorsing the notion that millionaires should shoulder a bigger burden of deficit reduction. A procedural vote is set for 5:30 on the bill, which may become a vehicle for more substantive budget legislation: a proposal to establish an expedited presidential rescission process — an apparently constitutional version of a “line item veto.”

THE SHORT TERM: It's remarkable that talk of the grand bargain lasted as long as four days. In the current political dynamic — where even doing something so seemingly obvious as modernizing the antiquated patent and air traffic control systems has been bogged down for half a year — it was essentially impossible to imagine that a $4 trillion deficit reduction deal could come together in only a couple of weeks.

The boomlet for the big deal lasted long enough, though, to add significantly to the extraordinary pressure that's already on the negotiators. As a practical matter, they need to declare agreement on a $2.5 trillion, 10-year framework by this weekend — or else there won't be enough time to write the deal into legislative language, and then sell it to all four increasingly wary and grumpy congressional caucuses, before the Treasury's Aug. 2 deadline for raising the debt ceiling.

The basic whipping formula is that the deal will only be enacted if it gets a majority of the Republican majority in the House and a majority of the Democratic majority in the Senate. The House remains the much tougher sell, because perhaps a third of the GOP caucus will vote against almost anything at this point — either on the grounds that a mid-sized deal is too timid or that the inevitable revenue-raiser will be too much. And so one very important logistical consideration is allowing time for the package to be rejected on its first pass through the House (which will almost certainly vote first), so that the leadership can have time to fine-tune it in search of the votes needed to win on the second try — and to be aided, in a perverse sort of way, by a lawmaker-scaring swoon by the markets if the bill loses the first time. (The model here: the two tries it took to get the TARP package passed in 2008.)

NO DEFAULT: The deadline, which is three weeks from tomorrow, remains immovable. Geithner said yesterday that the administration is not considering any claim of constitutional authority to borrow more money without congressional permission.

That's why it's important to note the three things that Obama and the Hill leaders did agree to in their past pair of meetings. All have promised to spurn a do-nothing option that would lead to a default and economic calamity. All have vowed to spurn a stopgap deal that puts the debt limit back on the table before the election. And all of them have agreed to meet every day until they have a plan for keeping promises 1 and 2. (None of them, in other words, wants to risk being labeled responsible for engineering a budgetary “banana republic,” a phrase the president reportedly used in his scolding speech at the start of last night's testy 75-minute meeting.)

BIDEN STATE OF PLAY: Negotiators in both parties say they're ready to to use the results of the Biden negotiations as their starting point. But there's no public consensus yet on what those six lawmakers and the vice president agreed to. In part, that's because of the old adage of negotiators that nothing's agreed to until everything's agreed to.

What appears to be the case is that the Biden group agreed to about $1 trillion over 10 years in discretionary spending reductions plus another $400 billion to $500 billion in cuts to mandatory spending programs such as farm subsidies. Beyond that, there is a willingness by the Democrats to accept another $500 billion or so in cuts to the bedrock health care entitlements, Medicare and Medicaid — but only if the Republicans would be willing to accept an equivalent amount in additional revenues, starting by ending several corporate tax breaks.

Beyond that, there was also a partisan standoff about whether a “firewall” should be established between defense and domestic spending — with Republicans opposing the idea (saying Congress should come up with the formula each year) but Democrats wanting to ensure that military spending would take a good amount of the hit in the next decade so that a certain level of domestic spending is protected.

In essence, then, dropping back from $4 trillion to $2.5 trillion as the bottom line did not change the core political or budgetary dynamics at all. Democrats are still going to have to accept some politically painful new limits on Medicare, which means they will have to abandon plans to hammer the Paul Ryan budget quite as hard as they wanted to as a 2012 campaign issue. And Republicans are still going to have to accept some “enhanced revenue” (or some other euphemism) from businesses and wealthy people, which means they will have to abandon plans to position themselves for 2012 as the absolutely-no-new-taxes-no-matter-what party.

For today, the impasse remains this simple: Democrats are insisting on a deal with more revenue, and the Republicans are insisting on a deal without more revenue.

JOHN AND ERIC: The Democratic talking point of the day is to label Boehner the latest in a long line of Republicans who's chickened out and stalled a historic budget deal near the eleventh hour. (They also note that the congressional Republicans on the Simpson-Bowles commission voted against its recommendations, that it was Tom Coburn who blew up the Gang of Six, and that it was Cantor who pulled the plug on the Biden talks.)

That roster may be undeniable — but the Speaker's motives for blinking on the big deal on Saturday night are also clear. He realized that he had suddenly gotten way too far out in front of the House GOP mainstream with his talk of a tax code overhaul and that in the interest of his own political self-preservation he had little choice but to get much closer to the rank-and-file — and particularly to Cantor, who continues to buttress his standing as the leader much more ideologically in tune with the tea party-infused caucus. (This new dynamic was underscored by the word from inside the Cabinet room last evening that the majority leader, not the Speaker, did almost all the talking for the House GOP.)

Cantor is not openly challenging Boehner yet, but in the cloakroom there is every expectation that challenge will come sooner rather than later if a majority in the House GOP turns up its nose at the eventual deal. So that leaves Boehner with little choice but to try to settle for convincing his colleagues that, whatever details they don't like, they should join him in declaring an enormous victory — just for getting the president to agree to spending cuts measured in the trillions and to make Medicare and Social Security part of that discussion.

HAPPY BIRTHDAY: Ed Markey of Massachusetts is 65 today, and threeother House members celebrated yesterday: fellow Democrat Russ Carnahan of Missouri (53) and Republicans Phil Gingrey of Georgia (69) and Tom McClintock of California (55).

— David Hawkings, editor

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