GOP grapples over scope of budget deal

Senate Republicans are debating how far to go in budget talks with President Obama and Democratic leaders that would set spending levels for the federal government and possibly raise the debt ceiling.

The big question is how far Senate Majority Leader Mitch McConnell (R-Ky.) and Speaker John Boehner (R-Ohio) will go in wiping away the automatic spending cuts to defense and nondefense programs, known as sequestration.

{mosads}Senate Armed Services Committee Chairman John McCain (R-Ariz.) wants to raise defense spending by $38 billion a year over the caps, which would total $76 billion in additional spending over the two-year span of a deal envisaged by McConnell. McCain has the backing of other defense hawks frustrated by limits on defense spending.

Obama and Democrats say any increases in defense should be matched dollar for dollar with increases to nondefense programs. Meeting that demand could mean a $152 billion increase in discretionary spending over the budget caps for fiscal 2016 and 2017.

Finding a way to pay for a spending increase that large could be difficult, and Republicans don’t want to see a deal that would bust the nation’s budget.

McConnell is telling GOP colleagues that he supports significant reforms to entitlement programs such as Social Security and Medicare, according to Senate sources. Such reforms could pay for increased spending. 

But Democrats would put up significant opposition, and McConnell lowered expectations for his colleagues Wednesday, warning in a private meeting that Senate Democratic Leader Harry Reid (Nev.) and House Democratic Leader Nancy Pelosi (Calif.) “are muscling in” on the negotiations, according to one lawmaker.

Another question is whether a year-end package should include a multiyear transportation bill and corporate tax reform, two items McConnell has said he wants to keep separate from the budget summit. Reauthorizing the Export-Import Bank could also be rolled into the talks.

Finally, there’s the debt ceiling. Congress is likely to have to take action to raise the government’s borrowing limit this fall, and it would be natural to do so as part of a bigger spending deal.

Sen. John Thune (S.D.), the third-ranking member of the Senate GOP leadership, favors a narrower negotiation that would produce a smaller package. One rationale for this approach is that it’s better to wait to see whether a Republican wins the presidency in 2016, which would give the GOP more leverage.

“I think we’d all like to see a smaller end-of-the-year deal. I think it’s always better if you’re conservative,” Thune said. “These negotiations tend to favor people who want to expand and grow government, and the Democrats are trying to use leverage.” 

Republicans want to pass a year-end omnibus spending package because it would include an array of policy riders they favor.

But some GOP senators argue that the riders may not be worth it if the price tag for passing them exceeds $100 billion.

“We like the riders, but they may not be worth the cost,” said a Republican senator who suggested passing a yearlong measure that would essentially freeze spending levels as a backup plan.

Congressional Democrats want a year-end budget package that raises budget caps imposed since 2011, includes a multiyear extension of the Highway Trust Fund, raises the debt ceiling and reauthorizes the Ex-Im Bank.

“McConnell’s in a tough position, because all the things on the table are Democratic issues, and the key one is getting rid of the sequester,” a senior Democratic aide said.

McCain has already warned McConnell he will not support another stopgap funding measure after the short-term resolution passed by Congress Wednesday expires on Dec. 11.

“You’ve got to restore this money, and I’ve told Sen. McConnell this is the last time I’m voting for the [continuing resolution]. I will do anything to stop further sequestration,” McCain said.

Republicans on the Appropriations Committee are also keen to strike a deal that would allow the spending bills they’ve worked on all year to become law.

“Nearly as responsible as a government shutdown would be to do nothing more than to pass a continuing resolution for the next year,” said Sen. Lamar Alexander (R-Tenn.). “A solution for me does not include a continuing resolution, because that’s just lazy, irresponsible, wasteful government.”

Alexander said many Republicans now acknowledge that it will be necessary to bust the spending caps set by the 2011 Budget Control Act. 

“Most of us on the Republican side
are going to insist that there be more funding for national defense and expect that there’ll probably therefore have to be more spending for nondefense,” he added.