Deal reached to avert government shutdown

After weeks of lurching, Congress moved swiftly on Thursday toward a deal extending the payroll-tax holiday and unemployment benefits, averting a partial government shutdown in the process.

An abrupt shift by Democrats ended the stalemate. By late Thursday, congressional leaders had almost resolved how to extend the payroll-tax cut and federal unemployment insurance as well as prevent doctors who accept Medicare from taking a pay cut. A temporary deal lasting two months, in case a deal for a one-year package doesn't completely gel in time, was also in the works.

Negotiations now focus on how to pay for those measures.

"The more difficult challenge is, how you deal with offsets?" said Sen. Ben Cardin, D-Md., a Finance Committee member.

Senate Democrats are eyeing a Saturday vote on the package.

The breakthrough moved the stalled omnibus spending bill. The White House and Senate Majority Leader Harry Reid, D-Nev., had blocked passage of the measure that rolls up the nine remaining fiscal year 2012 spending bills until a payroll deal was reached. The current stopgap measure funding most government agencies expires at midnight on Friday.

Democratic conferees finally signed the appropriations package on Thursday night after withholding their John Hancocks to gain leverage in the payroll-tax cut debate. The House was set to take up the report on Friday after the House Rules Committee met late on Thursday night to set the parameters of its debate. House Appropriations Committee Chairman Harold Rogers, R-Ky., got the omnibus ball rolling earlier on Thursday when he acceded to White House and Democratic requests to reopen the mammoth measure.

The shift was striking. On Wednesday, Reid and Senate Minority Leader Mitch McConnell, R-Ky., exchanged shots and parliamentary maneuvers aimed at driving talking points on the Senate floor while the administration planned for the possibility of a shutdown. By Thursday morning, the two leaders were confidently predicting Congress would complete both bills and head home for Christmas with a few days to spare and the government still open.

The change appeared to reflect an abrupt decision on Wednesday by Democratic leaders and President Obama to jettison a political fight they had picked with Republicans over the payroll-tax cut and focus on compromising. In a fight in which Republicans oppose Democrats' efforts to extend unemployment benefits and the temporary payroll-tax cut-expiration of which would slap the average worker with $1,000 tax hike-Democrats calculated that they win politically. Because many Republicans agree with that assessment, GOP leaders have said they are on board-as long as they approve of how the measures are paid for.

The latest developments mean that a deal was always achievable and likely. Democrats just postponed it by forcing votes on proposals that linked the payroll tax holiday to a surtax on incomes of more than $1 million a year. Democrats knew Republicans would balk and believed that on the campaign trail next year they could paint GOP opposition to a tax increase on millionaires as coming at the expense of the middle class.

Democratic leaders, long expected to eventually drop the surtax, finally did so during a Wednesday meeting with Obama.

"That's gone," Senate Finance Chairman Max Baucus, D-Mont., said on Thursday.

After returning from the White House, Reid requested a meeting with McConnell and House Speaker John Boehner, R-Ohio, GOP leadership aides said. A Democratic aide said Republicans rejected prior requests by Reid this week for similar meetings. After that meeting and further conversations with McConnell, Reid instructed his staff to begin working with McConnell's staff on a bill designed to win Senate GOP support, leadership aides in both parties said.

Boehner changed Reid's calculations when he filed a bill on Wednesday night that would allow him to bring to the floor the remaining spending measures without an official conference report.

By Thursday morning, Reid, less than a day after saying that multiple issues with the omnibus remained-echoing a White House refrain-called the issues "resolvable" and "really small," while requesting the House not move its new spending bill, which was actually three separate bills that included all the contents of the conference report.

While the outlines of the looming deal were set by Reid and McConnell, Baucus said the Finance Committee is "putting together" the deal.

Specifics of the pending agreement were fluid on Thursday, but Democrats signaled they would accept some changes to the federal unemployment insurance program included in a House-passed bill. A Senate Democratic leadership aide said Democrats will likely accept provisions that tighten requirements and give states opportunities to experiment with job training. But more onerous changes, such as requirements that beneficiaries at least pursue a high school diploma or GED and submit to drug tests, will not be included, the aide said.

The aide said Democrats do not want a provision requiring a White House decision on the controversial Keystone XL pipeline in the compromise bill, but GOP aides said McConnell was pushing hard for its inclusion, and some staffers said the sides were exploring whether the language can be tweaked to give the White House more flexibility.

The Democratic leadership aide said the bill will be mostly paid for with mandatory savings provisions that do not affect health care. Most of those provisions, such as an increase in fees that Fannie Mae and Freddie Mac charge lenders to guarantee mortgages, and sale of new radio spectrum, were discussed by the congressional super committee and are relatively noncontroversial.

Democrats said a provision imposing a means test on Medicare recipients will not be included in the compromise bill.

But cuts to hospitals are still in the mix to cover the cost of putting off a 27 percent cut to Medicare doctors' pay, even though many Democrats loathe the idea. House Republicans have insisted the "doc fix" be paid for with other health care funding. House Republicans passed legislation with a two-year "doc fix" this week, partly covering the cost by slashing more than $21 billion in Medicare payments to hospitals.

Hospitals have lobbied Senate offices hard against the reductions, but options that are acceptable to both sides of the aisle are slim. A one-year doc fix also costs $21 billion. Some of the cuts have the backing of the independent experts on the Medicare Payment Advisory Commission, which also gives Congress political cover. Democratic aides say it is likely any compromise measure to put off the doctors' pay cut will include hospital reductions.

Major Garrett, Meghan McCarthy, Kelsey Snell, and Ben Terris contributed to this report.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.