Rep. Paul Ryan, R-Wis., left, listens to Sen. Patty Murray, D-Wash., during a Nov. 13 Conference on the FY2014 Budget Resolution meeting on Capitol Hill in Washington. Congressional Budget Office Director Doug Elmendorf briefed the conferees on CBO's budget and economic outlook. (Alex Wong / Getty Images)
The House and Senate are only $90 billion apart on reaching a deal on the $3.5 trillion federal budget for 2014, but closing that gap is proving difficult because nobody is budging.
Delays in getting an agreement are a growing concern for lawmakers, especially members of the House and Senate appropriations committees who are trying to pass 2014 spending bills by Jan. 15 to avoid another shutdown and prevent $109 billion in sequestration cuts that would lop $53 billion from the defense budget.
Differences with defense spending are part of the problem, but only a part. The House version of the 2014 defense funding bill proposes $512.5 billion in the base budget plus $85.8 billion for contingency operations. The Senate bill proposes $516.4 billion in the base budget and $77 billion for contingency operations.
Budget negotiators are expected to resolve differences on defense spending and how much to allocate for contingency operations but details of how money would be spent would be left to the appropriations committees, which need time to make adjustments.
Sen. Barbara Mikulski, D-Md., the Senate Appropriations Committee chairwoman, said that if budget negotiatons do not wrap up before Dec. 15 — the current deadline — completing detailed budgets would be difficult because Congress is scheduled to work only eight legislative days between Dec. 15 and Jan. 15.
As budget negotiators met Nov. 13 to discuss their differences, Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, warned there is no miracle cure.
With choices that include cutting discretionary spending such as the defense budget; cutting entitlements such as Social Security and Medicare; and raising taxes, lawmakers need to understand that they have to pick at least one and possibly a combination of more than one, Elmendorf said.
“You don’t have a choice about doing at least one of those things,” he said. “You can do one or two or three of them, as you choose to, but at least one of those things will have to change.”
Elemendorf said he sensed that a big budget deal might be impossible in the short term but he urged lawmakers to do something to reduce the fiscal uncertainty that is hurting the economy.
“I think the big steps are better than small steps, but small steps are better than no steps at all,” he said. “And no steps at all would be better than stepping backward.”
Rep. Paul Ryan, R-Wis., the House Budget Committee chairman, tried to sound upbeat. “We are trying to find common ground but we are not there yet,” he said. “There is a big gap between our two budgets, if anyone noticed.”
“Our budgets are dramatically different,” said Sen. Patty Murray, D-Wash., the House Budget Committee chairwoman. “We need to step out of our partisan corners and make some compromises.”
Elmendorf also tried to sound an optimistic note. “We think the economy will turn the corner next year, but no one can be sure,” he told negotiators.
However, he said CBO currently forecasts that defense spending will be hurt by the lack of a long-term budget agreement. He provided charts to the committee showing defense spending has, on average, been 4.5 percent of gross domestic product from 1973 to 2012 but has dropped to 3.8 percent this year and will drop to 2.6 percent by 2023.
At the same time, Social Security and Medicare spending will rise as a percentage of GDP.
Not everyone agrees that sequestration, the automatic spending cuts ordered under the Budget Control Act because lawmakers failed to reach agreement on $1.2 trillion in spending cuts and debt reduction, is a bad idea
“Sequestration is working,” said Sen. Charles Grassley, R-Iowa, one of the Senate negotiators who said he would not support a move to protect the Defense Department from additional cuts.
“Compromising on sequester for more money for the military, I think, is shortsighted,” Grassley said. “I hope we keep in mind that the economic strength of our nation is a necessary precondition to our military strength. Without economic strength, there won’t be any national security.”
Not everyone shares that view. Sen. Mark Warner, D-Va., called his state “ground zero” for sequestration cuts and urged his fellow negotiators to come up with an alternative.