Rep. Paul Ryan (R-WI), Chairman of the House Budget Committee, at a financial… (Brendan Smialowski/AFP/Getty…)
After four years of trillion-dollar deficits, the red ink is receding rapidly in Washington, easing pressure on policymakers but shattering hopes for a summertime budget deal.
Federal tax revenue is up and spending is down thanks to an improving economy, tax increases that took effect in January and the automatic budget cuts known as the sequester.
The sunnier outlook means that President Obama will be able to pay the nation’s bills for months without seeking additional borrowing authority from Congress — probably until Oct. 1, according to independent forecasts.
That might seem like good news, but it is unraveling Republican plans to force a budget deal before Congress takes its August break. Instead, the fiscal fight appears certain to bleed into the fall, when policymakers will face another multi-pronged crisis that pairs the need for a higher debt limit and the fresh risk of default with the threat of a full-scale government shutdown, which is also looming Oct. 1.
In the meantime, Republicans face a listless summer, with little appetite for compromise but no leverage to shape an agreement. Without that leverage, House Budget Committee Chairman Paul Ryan (R-Wis.) said Tuesday, there is no point in opening formal budget negotiations between the House and the Senate, because Democrats have no reason to consider the kind of far-reaching changes to Medicare and the U.S. tax code that Republicans see as fundamental building blocks of a deal.
“The debt limit is the backstop,” Ryan said before taking the stage at a debt summit organized by the Peter G. Peterson Foundation in Washington. “I’d like to go through regular order and get something done sooner rather than later. But we need to get a down payment on the debt. We need entitlement reform. We’re very serious about tax reform because we think that’s critical to economic growth and job creation. Those are the things we want to talk about.”
Democrats are urging Republicans to initiate talks well before the next deadline and at last resolve the long-standing dispute over whether to tame the debt solely by cutting spending, as Republicans demand, or also by raising taxes on the wealthy, as Obama insists.
“The American people — all of us — are tired of management by crisis,” Senate Budget Committee Chairman Patty Murray (D-Wash.) said at the Peterson summit. “We need to start working now.”
But senior Senate Republicans, including several who recently dined with Obama and huddled with administration officials, conceded that it may be tough to bring their colleagues to the table too far ahead of the debt-ceiling deadline.
“I think there’s a better atmosphere for a solution than there’s been in the past, but I’m a little worried about people here in the Senate having fiscal fatigue. There isn’t any sense of urgency right now,” said Sen. Bob Corker (R-Tenn.), one of three senators who joined Obama on Monday for a round of golf.
“We need to realize this debt ceiling is out there. It’s inevitable. It’s coming. And [the later deadline] should not relieve pressure,” said Sen. Jeff Sessions (Ala.), the senior Republican on the Senate Budget Committee. But “sometimes we don’t want to act until a gun is at our heads.”
Since 2011, when Republicans gained control of the House and made cutting spending their top priority, Washington has faced a series of economy-rattling showdowns that produced eleventh-hour deals to cut spending, raise taxes and extend the federal debt limit. The most recent came during the year-end “fiscal cliff” fight, when Republicans reluctantly approved more than $600 billion in new taxes on the wealthy over the next decade.
Demoralized by that defeat — it was the first time in more than two decades that congressional Republicans had approved a significant tax hike — House GOP leaders developed a strategy that promised greater success: They would goad Senate Democrats into adopting a budget plan and force them into negotiations, even as automatic spending cuts started to take effect March 1, slashing agency budgets.
Meanwhile, the House took the unprecedented step of suspending the federal debt limit, then set at $16.4 trillion, until May 19. When the debt ceiling goes back into effect next weekend, the limit will automatically be lifted to account for any new borrowing. But Republicans calculated that the Treasury would almost immediately be in trouble again and in need of an even higher debt limit before the August break.
Ryan laid out the strategy for rank-and-file lawmakers at a January retreat in Williamsburg and during listening sessions on Capitol Hill. “These pressure points would come together and force a bargain on the budget,” said a GOP aide, speaking on the condition of anonymity to discuss private meetings. “This was Ryan’s spiel.”