The Budget Battle: What The Heck Is Going On In D.C.?

9:57 AM, Mar 13, 2013   |    comments
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(CBS News) -- The 2013 budget dance in Washington has begun: Both House Republicans and Senate Democrats unveil their budgets this week, and President Obama is sitting down with the major players in the debate. Unless you're a serious budget nerd, however, it's virtually impossible to make sense of exactly what's going on - and what it means for the country. Below, we do our best to sort it all out.

Start with the basics, ok?

Sure. Yesterday, House Budget Committee chairman Paul Ryan, R-Wis., unveiled the House Republicans' budget blueprint for the 2014 fiscal year, which starts in October. It would cut spending by $4.6 trillion through 2023, repeal Obamacare and the Wall Street reform bill, turn Medicare into a voucher-type program for Americans under 55, reduce Medicaid spending, scale back food stamp and education spending, reform the tax code so that there are only two individual tax rates (25 percent and 10 percent), reduce corporate taxes, and limit future spending growth to 3.4 percent. 

Details of the Democrats' budget blueprint also began emerging yesterday. The plan from Senate Budget Committee chairman Patty Murray, D-Wash., would achieve $1.85 trillion in savings over 10 years, according to her office, in part by raising tax revenues by nearly $1 trillion dollars through closing tax loopholes. We will know more about the specifics later today when Murray's plan is formally unveiled, though White House sources say Senate Democrats are not including the reforms to entitlements Mr. Obama has put forth in an effort to reach a "grand bargain" with Republicans.

Normally, the president releases a budget before Congress releases its plan. But the White House has yet to do so, despite a legal requirement that it be submitted to Congress by the first Monday in February. The White House suggested Tuesday that its plan will come during the week of April 8.

Wait, why are we talking about October? Isn't the government going to run out of money before that?

It is! Right now, the government is only funded through March 27. If Congress doesn't act before then, we could see a government shutdown. The House passed a $982 billion "continuing resolution" to fund the government through October last week, and the Senate is taking up its version this week.

The two chambers would fund the government very differently, but there is some relatively good news: Leaders in Washington do not want to put the public through another nasty budget fight so soon after the "fiscal cliff" battle, and they are indicating that they will come to an agreement without too much of a struggle. That's not a sure thing - Senate Majority Leader Harry Reid, D-Nev., indicated yesterday he may have to employ newly agreed upon Senate filibuster rules to move past a GOP filibuster - but it appears the major fight is going to be over the budget blueprints, not the stopgap measure.

OK, so then these budget blueprints fund the government for fiscal year 2014, right?

Nope. These proposals are more "blueprint" than "budget" - essentially, they are guidelines to how the government should spend its money over the next decade. They will not become law -- the president doesn't sign them -- and are thus non-binding. When it comes to actually funding much of the government, Congress still has to pass separate appropriations bills for the president to sign. (It's also worth pointing out that much of the federal government's spending is mandatory - if you qualify for Social Security benefits, for example, you don't have to depend on an appropriator to get them.)

Here's how it will work in a best-case scenario: The House and Senate both pass their budget blueprints, hopefully by Easter. (This is made easier in the Senate by the fact that a budget cannot be filibustered, and can thus be passed with a simple majority.) The bills then go to the conference committee, where the two sides try to work out their differences. If we get a deal, Congress can use the blueprint as a guide to write appropriations bills to fund the government for the next fiscal year.

But how are they going to get to a deal when they are so far apart to start?

A very good question. Senate Democrats are not looking to repeal Obamacare or make significant cuts to entitlement programs, and House Republicans say they are not going to agree to raise revenues. Top White House officials, meanwhile, told CBS News Tuesday that the House Republican budget is full of false promises and magic asterisks designed to mask accounting gimmicks. In light of all this, it's hard to see how anything gets done without major concessions from both sides, something that we have little reason to expect based on recent behavior.

"There's no reason why anyone should be very optimistic after watching the last four years of this process," said former Republican House Budget Committee chairman and Office of Management and Budget Director Jim Nussle, who helped explain the current state of play. (Nussle is now with the Committee for a Responsible Federal Budget.) "It tends to lend itself to being more pessimistic. But it's not impossible that a 'grand bargain' could be reached that would include all this."

The Senate has not passed a budget since 2009, and the last time anything approaching federal budget blueprint passed both houses and was in 1997, when the Balanced Budget Act was passed. (Though this was technically not a budget resolution.) Instead, the country has largely been getting by on continuing resolutions that keep the government running at roughly the same level as in the past. That's not good, since it means that 1.) the government is under the regular threat of shutdown and 2.) programs that receive federal money have a hard time planning for the future. It also means the nation has no established path forward as it tries to address the debt and deficit.

What is the president's role in all this?

He's spending much of this week meeting with various players on Capitol Hill to try to grease the wheels a bit - and maybe, just maybe, set the parameters for the "grand bargain" agreement that has eluded him thus far. The White House says the meetings are not formal budget negotiations - remember, the president has yet to even unveil his budget - but rather the president making his positions and priorities clear.

Part of the reason that Congress and the president are focused so much on the budget process - even though budget blueprints are non-binding and do not become law - is that it is vehicle for the two parties to try to find common ground. In theory, coming to an agreement on a budget would set the stage for a "grand bargain" deal that could 1.) replace the across-the-board sequester spending cuts now in effect with more focused and logical cuts and 2.) reform taxes and entitlements over the long haul to get the nation on a firmer fiscal footing.

White House officials told CBS News Tuesday afternoon that Mr. Obama will focus his attention on convincing Senate Republicans to accept new revenue as part of a "grand bargain," on the theory that House Republicans might be willing to abandon their steadfast opposition if Senate Republicans go first. They said the president has given up on trying to strike a deal with Boehner behind closed doors without participation from rank-and-file Republicans. 

And then there's this looming potential disaster: According to the Bipartisan Policy Center, the government will once again hit the debt limit in August. If House Republicans refuse to raise the debt limit without significant concessions from Democrats - and Democrats refuse to make those concessions - the nation faces the prospect of a government default that would degrade its financial standing in the world and potentially throw the economy back into recession.

Senate Republican Leader Mitch McConnell, R-Ky, said Tuesday that Republicans will use the debt limit to extract concessions on entitlements. One way to avoid such a fight, of course, would be to get to use the budget process to get to a "grand bargain" before August that deals with the debt limit. But with the parties so far apart, few in Washington are holding their breath for that to happen. 

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