Like North and South Korea sitting down in the DMZ, House Republicans and Senate Democrats will meet on Wednesday to start trying to flesh out some sort of compromise budget proposal. And as with North and South Korea, there's plenty of reason for pessimism that a compromise will be approved and signed into law.
The most recent divide between Democrats and Republicans doesn't go quite as far back as the split between the Koreas, but it could prove to be nearly as intractable. In the spring of this year, Wisconsin Rep. Paul Ryan, chairman of the House Budget committee, released a budget centered on long-term debt reduction. Simultaneously, Washington Sen. Patty Murray, chair of the Senate equivalent, released the Democrats' proposal. (There were at least three others proposed, including President Obama's.) The Senate called for a conference committee to hash out an agreement, but only in the wake of the government shutdown did it get on the calendar — and with a deadline: Friday, December 13.
National Journal has a good breakdown of the points of disagreement. There's nothing too surprising, but, in short:
- Taxes: Republicans want to reduce corporate taxes and keep revenue flat; Democrats want to raise $975 billion over 10 years from corporations and the wealthy.
- Spending: Republicans want $966 billion in non-discretionary spending in 2014; Democrats want $1.058 trillion. Both would spend $552 of that on defense.
- Debt and deficit: Republicans want a budget surplus of $7 billion by 2023 and debt reductions to 54.8 percent of GDP that same year; Democrats want budget deficits through 2023, but debt at 70.4 percent of GDP in 2023.
- Social safety net: Republicans want changes to eligibility for Medicare and to empower states on Medicare spending; Democrats want a $265 billion Medicare reduction.
- Sequestration: Republicans want to keep spending at sequestration levels by increasing defense funding but cutting non-discretionary spending; Democrats want to eventually eliminate the cuts.
- Obamacare: Republicans want to get rid of it; Democrats don't.
The goal of negotiations is to find middle ground between the two parties on those issues. Politico thinks that one way to do so would be to — again — skip trying to make a giant package deal on spending and taxes and instead to compromise on the most urgent consideration: sequestration spending. (In January, another round of deeper sequestration cuts is scheduled to kick in; that's largely what prompted Democrats to seek a shorter funding resolution when ending the shutdown.) In a meeting with senators, Obama suggested that a deal didn't have to include new taxes.
Obama responded that way because he did not want to nix options on a smaller package before the House-Senate conference committee work was even under way, according to a source familiar with White House thinking. It depends on the size of the deal, but the president would demand that any big package with entitlement reforms includes new revenue, the source said.
For example, Obama might be willing to accept some Republican priorities in exchange for reduced sequestration levels. Not that revenue increases are necessarily off the table; as we noted last week, one top Republican suggested that the party would consider them.
New York's Jonathon Chait argues that this is tricky territory for the president:
If Obama gives Republicans permanent changes in return for temporary concessions, it will be clear Republicans out-negotiated him on sequestration. If Obama can get other permanent policy victories — different (and more regressive) forms of taxation, or funding for early childhood education — that is the sort of victory that could be traded for long-term entitlement cuts.
In other words — there are many paths to a compromise from the conference committee. But there's only one path to an actual compromise that gets signed into law. And that path runs directly through the House Republican caucus, including the Tea Party advocates that were largely responsible for the shutdown in the first place. Politico notes that the caucus is skeptical.
There appears to be a stark split within Republican leadership about whether the budget process Rep. Paul Ryan (R-Wis.) is starting has any chance of succeeding. Some House Republicans believe these bicameral talks are a political trap, where Democrats are going to insist on raising taxes.
That fear, that a conference with Senate Democrats would necessarily put the party into a position of compromise on taxes, is one of the reasons that the conference didn't happen before the shutdown. If the Tea Partiers decide to obstruct a compromise proposal from the conference, it's up to House Speaker John Boehner to decide if he's willing to allow a consensus vote in the House — some Republicans, some Democrats — to pass a final measure. Which brings us, in essence, to where we were earlier this month; which is why we recommend bookmarking our "countdown to the next crisis" post. In one sense, resolving the Korea conflict would be easier than coming to agreement on the budget. Kim Jong-un doesn't need to worry about reaching consensus before doing what he wants.