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Budget talks start with low expectations for fiscal deal

By Deirdre Walsh, CNN Senior Congressional Producer
updated 8:28 AM EDT, Wed October 30, 2013
Tourists flock to memorials in Washington on Saturday, October 19, the first weekend after the end of the partial government shutdown. The Washington Monument and other landmarks across the country have reopened to the public after the 16-day shutdown. The government impasse ended when President Barack Obama signed a spending and debt ceiling agreement that Congress passed, averting a possible default. Tourists flock to memorials in Washington on Saturday, October 19, the first weekend after the end of the partial government shutdown. The Washington Monument and other landmarks across the country have reopened to the public after the 16-day shutdown. The government impasse ended when President Barack Obama signed a spending and debt ceiling agreement that Congress passed, averting a possible default.
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STORY HIGHLIGHTS
  • Lawmakers begin talks on budget deal to avoid another government shutdown
  • Both sides say a "grand bargain" to put a dent in nation's deficit won't come from these talks
  • What could result is undoing forced spending cuts that were part of 2011 budget deal
  • Committee is supposed to come up with budget document by mid-December

(CNN) -- Even before the group of bipartisan lawmakers meets Wednesday morning in the basement of the Capitol to begin negotiations on a budget deal to avoid another government shutdown, members of both parties say the chances they can reach a deal are pretty low.

Maryland Rep. Chris Van Hollen, the top Democrat on the House Budget Committee and a member of the budget conference committee, told CNN right now he puts the odds at any deal coming out of the panel at "50-50."

"The jury is still out," he said, arguing that House Speaker John Boehner insisted Republicans would not even discuss any new tax revenue as part of a budget deal, which he says diminishes the chances of anything significant.

Oklahoma GOP Rep. Tom Cole, also a member of the conference committee, said he understood why expectations were so low for the group.

"Given the performance of the institution, having relatively modest expectations is probably a good place to start," he said.

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Another senior House Republican who declined to talk on the record about the talks before they started, questioned whether President Barack Obama and Senate Democrats are willing to seriously negotiate with the GOP, telling CNN, "I've seen no indication that either one of them wants an agreement."

This House Republican pointed out that House members appointed seven members to the conference committee, but the Senate appointed the entire budget committee, which this member believes makes the process unwieldy, and "doesn't bode well" for a deal to get done.

One thing both sides do agree on is that any talk of a so-called "grand bargain" making a major dent in the nation's deficit isn't something this panel can or will tackle.

House Budget Committee Chairman Paul Ryan, who heads up the conference committee, said in an interview last week, "We aren't focusing on a grand bargain because I don't think in this divided government you'll get one."

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Instead Democrats and Republicans on the panel say what's more doable is replacing some or all of the forced spending cuts that were part of the 2011 budget deal. If the conference committee doesn't swap those out they will be locked in for the rest of this fiscal year and even deeper cuts will hit in January.

Georgia Republican Rep. Tom Price, another conference committee member, told CNN that a one-year plan to replace the forced cuts, known as sequestration, is "a reasonable expectation."

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Many conservatives on Capitol Hill believe the lower federal spending levels created by the sequester represent progress in their drive to slash the size of the federal government. But there are also many Republicans who are worried about the $20 billion hit defense programs are scheduled to take if Congress doesn't pass new legislation to replace those cuts with something else.

Democrats believe the GOP concern over the impact to national security programs gives them some negotiating power on other issues, and that's the only reason some Republicans are expressing interest in the talks at all.

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Van Hollen told CNN, "There are significant numbers of Republicans in the Senate and the House who recognize that the cuts to defense is too much, too fast and that it's irresponsible, so they're going to have to weigh that."

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But the Maryland Democrat also said he and other Democrats will argue non-defense cuts are also too severe, saying, "What we've said is you need to treat both of these equally."

In addition to replacing spending cuts, Democrats also believe a top priority in the budget conference is to press for measures boosting job creation, such as more federal money for new infrastructure projects, including bridges and roads.

Democratic attempts to add more federal spending to the budget will undoubtedly be met with GOP objections that the government already spends too much, and a demand that any new spending must be paid for with money from other programs.

Cole is one Republican who may be opening the door a crack to accept some forms of new revenue, telling reporters on Tuesday, "we shouldn't rule out all revenue any more than I would expect them (Democrats) to rule out all entitlement reform."

Cole said he knows GOP members of the conference committee won't engage in discussions about new tax increases, but he pointed to other savings that could be achieved through tax code changes. One example Cole gave was the money from profits that are "repatriated" to the United States from companies making overseas investments. Changing the way those profits are treated in the tax code could provide some savings.

Other Republicans like Price insist revenue from "pro-growth tax reform" is not something this budget conference committee can consider, telling CNN that debate has to "go through regular order" on a separate track in the tax-writing committees.

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But on Tuesday Senate Democratic Leader Harry Reid told reporters he would refuse to consider a deal that did not include any revenue.

Setting aside revenue, Ryan and other Republicans emphasize a deal to replace the sequester should use savings from changes to entitlement programs like Medicare or Social Security to help adjust spending levels at federal agencies. They argue Democrats have already said they could accept changes to these mandatory spending programs and some are included in budgets put out by the President and Senate Democrats.

One proposal that Obama has advocated, called "chained CPI," would change the way Social Security benefits are adjusted for inflation. But Van Hollen insists that proposal is a nonstarter as part of this more modest budget negotiation in which the GOP won't entertain tax revenue.

"That and other provisions are part of package deal and Republicans have already said they refuse to take the package deal so that's not part of the discussion," he said.

Members believe Wednesday's budget conference meeting will likely just be a session with both sides staking out their negotiating positions. But the clock is ticking and the panel doesn't have much time if it is able to cobble together even some modest proposal.

It is supposed to come up with a budget document by mid-December, and any legislation to replace spending cuts would need to be passed by both the House and Senate by mid-January.

Both Democrats and Republicans admit there is little chance of another potential government shutdown if the budget conference fails to reach a deal. If talks fall apart they believe Congress will be forced to pass another short-term spending bill, but this time it will be at the lower spending level that forces agencies across the government to deal with another round of indiscriminate cuts.

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