Government Executive - Authors - Katy O'Donnell

No drama spending bill glides through House panel

Katy O'Donnell, National Journal — Thu, 13 Sep 2012 09:14:08 -0400

A room usually fraught with tense exchanges and snide one-liners (doled out during the committee's many late-night meetings) saw the top Republican and Democrat of the House Appropriations Committee speak briefly about their bill before being lauded by three Rules Committee members for their efforts. No leading questions, no terse remarks, just some pats on the back before the committee moved on to other business.

The bill's $1.047 trillion annual rate represents an increase of about $8 billion over current spending levels. Conservatives, though, support the bill -- in fact, they pushed for leadership to take it up now rather than risking the possibility that it could become tangled up in larger discussions about taxes and other spending if the measure were to be left for the post-election lame-duck session.

Republicans want to avoid allowing Democrats to use the threat of a government shutdown as leverage against them in the debate over the Bush-era tax cuts and sequestration. So conservatives agreed to a spending increase, despite having passed a fiscal 2013 budget that would cap spending at $1.028 trillion.

Congressional leadership announced a deal at the end of July on the bill, which contains no policy riders and cannot be amended on the floor. The Senate is expected to vote on it next Thursday.
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Outgoing senator on why he told Obama not to back Simpson-Bowles budget plan

Katy O'Donnell, National Journal — Tue, 11 Sep 2012 16:39:08 -0400

Outgoing Senate Budget Chairman Kent Conrad, D-N.D., acknowledged Tuesday that he advised President Obama against embracing the recommendations of the Bowles-Simpson fiscal commission and said he did so because he feared an endorsement from the Democratic president would cause House Republicans to "reflexively" oppose the panel's blueprint for deficit reduction.

"I said to him that if he just endorsed Simpson-Bowles, that House Republicans would then in all likelihood oppose it, and that it would be better, in my judgment, for him to make the case for why a comprehensive plan along the lines of Simpson-Bowles was needed," Conrad told reporters Tuesday.

The counsel that Conrad provided came to light in the book "The Price of Politics" by veteran journalist Bob Woodward. Woodward's book is critical of Obama's leadership on deficit issues and in particular his strategy for dealing with Congress. Many pundits have criticized Obama's decision to stop short of endorsing the December 2010 blueprint produced by the White House-appointed fiscal panel. Some view that decision as suggesting a lack of resolve by the president in tackling the long-term budget challenges.

Conrad, a member of the 18-member bipartisan commission led by former White House chief of staff Erskine Bowles and former senator Alan Simpson, voted in favor of the commission's plan. But all three House Republicans on the panel - Reps. Dave Camp, R-Mich., Jeb Hensarling, R-Texas, and Paul Ryan, R-Wis. - voted against it. As a result, the plan fell short of getting the 14 vote supermajority it needed to automatically advance to the House floor.

Asked if he thought Obama has done a good job of making the case for deficit reduction to the public since then, Conrad hesitated.

"Well, I mean, he's certainly tried -- it's a hard thing to do, you know, it's a very hard thing to do," Conrad said. "But I did recommend to the president that if he endorsed Simpson-Bowles - which is, look, something I worked on for five years - that if he just blanket-endorsed it, House Republicans would reflexively oppose it."

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The Obama and Ryan budgets, by the numbers

Katy O'Donnell, National Journal — Tue, 14 Aug 2012 17:44:12 -0400

A comparison of President Obama's approach to the federal budget and plans put forward by Mitt Romney's running mate, House Budget Committee Chairman Paul Ryan, R-Wis.

President Obama

TAXES:

Obama would allow the lower Bush tax rate of 35 percent to expire, bringing the tax rate back up to 39.6 percent for families earning more than $250,000 annually. His proposal would limit the reach of the Alternative Minimum Tax, a problematic tax Congress regularly has to “patch” at the end of the year because, while originally intended to ensure that the wealthy pay a minimum amount, the tax increasingly ensnares middle-class payers. But Obama would still employ an AMT-like tax by limiting the rate at which individuals can reduce their tax burden through deductions to a 28 percent income-tax liability. That measure would bring in an estimated $500 billion over 10 years.

The proposal would also raise the estate tax and the gift tax to 2009 levels of 45 percent over a given threshold — the first $3.5 million of an individual’s estate, and the first $1 million of a gift, would be exempt — to raise nearly $250 billion over 10 years. He would raise the capital-gains tax to 20 percent, ending the preferential Bush-era rate of 15 percent.

Altogether, the budget’s tax proposals would raise some $2 trillion more than if current tax policies were simply extended for 10 years. Obama is more specific than the budget plan being pushed by Rep. Paul Ryan, R-Wis., about the tax expenditures he would end (like the preferential capital-gains rate), but he hasn’t made any move to go after the breaks where the real money is, like the mortgage-interest deduction.

Obama would lower the corporate tax rate to 28 percent, according to a separate corporate tax reform proposal he released in February, and he would implement a minimum tax on overseas earnings. He would also get rid of various business tax deductions and give a 20 percent income-tax credit for businesses that move jobs back to the United States.

SEQUESTRATION/LONG-TERM DEFICIT REDUCTION:

Like Ryan, Obama wasn’t happy to leave the Budget Control Act — passed with the debt-ceiling increase last year — alone in his budget. The law, if allowed to take effect, would trim the deficit by $2.3 trillion over 10 years through a combination of annual spending caps and automatic across-the-board cuts, split evenly between defense and nondefense programs.

Obama’s proposal would remove the firewall between the caps on defense and nondefense annual spending, and its proposal for the next fiscal year actually transferred some money from nondefense to defense programs. Still, Republicans have attacked Obama for failing to address the nearly $500 billion in defense spending cuts over 10 years set to take effect in January.

DEFENSE:

The president’s proposal would implement defense cuts totaling nearly $500 billion over a decade.

SOCIAL SECURITY:

Like the Ryan proposal, Obama’s budget made no changes to Social Security.

HEALTH CARE:

The president’s plan relies on his health care law for most savings, counted in the form of lower drug costs, limited procedural and equipment payments, and the suggestions of the Independent Payment Advisory Board. The most recent estimate of the law’s costs and savings, released after the Supreme Court’s decision, found that it would be $84 billion cheaper over 10 years, now that states are allowed to opt out of the Medicaid expansion.

MEDICARE:

Obama’s budget counts about $150 billion in fees from drug manufacturers participating in Medicare Part D over 10 years; the plan would also reduce the growth in provider payments and increase premiums for high earners.

MEDICAID:

The budget counts about $50 billion in Medicaid savings, largely from streamlining state matching rates.

PROGRAMS THAT HELP THE POOR:

Obama took heat from members of his own party for his proposal to dramatically reduce funding for a program that gives heat and energy assistance to the poor; but for the most part the plan stays away from low-income assistance programs.

FINANCIAL-SERVICES REFORMS:

The president’s plan would increase funding for financial regulators, requesting more than $2 billion for the next fiscal year to implement the Dodd-Frank financial-reform law.

Rep. Paul Ryan

TAXES:

Ryan's plan would consolidate the current six individual income tax brackets into two, set at 10 percent and 25 percent, though the plan isn’t clear on how those rates would be applied, income-wise. He insists the plan will be revenue neutral -- that the government will not lose any money coming into its coffers -- because he would scrub the complicated tax code of unspecified breaks and subsidies. The biggest 20 breaks -- including the exclusion of employer health insurance and the massively popular mortgage-interest deduction -- make up 90 percent of the $1.1 trillion in revenue lost each year to the roughly 200 “tax expenditures” currently on the books.

This is where the criticism that Ryan would raise taxes on the lower and middle classes in order to cut them for the rich comes into play: Many of the top breaks benefit the middle class along with the wealthy, and the one that almost exclusively benefits the wealthy, the lower 15 percent capital gains rate for returns on investments, is one Ryan has made clear he wouldn’t touch -- and might even lower more dramatically. Republicans point out that since 50 percent of people do not pay income taxes, they will not be affected by the removal of expenditures, even though 11 percent of the breaks go to lower-income individuals

Ryan also would repeal the alternative minimum tax -- a tax originally intended to ensure that the wealthy pay a minimum amount that both sides now concede ensnares middle-class payers -- rather than continue short-term fixes, as Congress traditionally does at the end of the year. On the corporate side, Ryan would lower the rate from 35 percent to 25 percent and exclude foreign income.

SEQUESTRATION/LONG-TERM DEFICIT REDUCTION:

Ryan has never supported the defense part of the automatic spending cuts spurred by the failure of the “super committee” of 12 members of Congress who were supposed to find $1.2 trillion in deficit reduction over a decade. The across-the-board spending cuts -- or “sequesters” in Washington-speak -- set to go into effect at the start of 2013 would be evenly split between defense and nondefense spending and total $1.2 trillion.

Ryan’s budget farmed out instructions to other committees to replace the 10 years of defense cuts by cutting additional domestic spending. The cuts to “mandatory spending” -- spending on things such as health care that do not get passed each year by Congress -- would reach the vicinity of $250 billion over 10 years.

Domestic cuts next year alone in “discretionary” spending -- the spending passed each year by Congress for programs to keep the government running --would hit $27 billion, in order to offset the increase in defense spending and still cut the overall budget for the year.

Democrats’ position is that while both parties are in favor of replacing across-the-board cuts with more considered policy, Republicans’ shift of money from domestic programs to defense amounts to targeting the most vulnerable members of society, since savings would be wrung from programs such as food stamps.

DEFENSE:

He would not only void the scheduled cuts, but increase defense spending for the next year by $8 billion, to $554 billion, excluding war spending.

SOCIAL SECURITY:

Like President Obama, Ryan stayed away from Social Security reforms. His 2008 plan included suggestions, but he dropped them after hearing concerns from fellow GOP House members.

HEALTH CARE:

The House-adopted package of long-term budget reforms counts more than $150 billion in spending cuts for health care programs over the next decade, mainly through the implementation of malpractice reform and defunding of many large parts of Obama’s health care law.

MEDICARE:

There would be no change for anyone enrolled before 2023 -- one of the reasons many of the budget’s hypothetical savings wouldn’t kick in until after the 10-year period by which budgets are usually measured. After that, the eligibility age would increase gradually until it reached 67 in 2034. The budget Ryan produced this spring would introduce a competitive-bidding system and would allow seniors to choose between traditional Medicare and a subsidy from the government to purchase a private plan. Last year, there was no option to maintain traditional Medicare’s fees for services. It’s a concession Ryan made when he crafted a new Medicare plan with Sen. Ron Wyden, D-Ore., last December. The cost-growth formula is also more generous this year than it was last year, but the over-all reform plan is still the most dramatic approach currently in circulation.

MEDICAID:

It would undo rules from the health care law requiring states to keep everyone who received Medicaid benefits in 2010 on support through 2014 and void scheduled expansion of coverage for most non-elderly people with incomes less than about 140 percent of the poverty level. It would also limit the taxes states can charge Medicaid hospitals and doctors and the extra Medicaid payments for hospitals that treat large numbers of uninsured patients.

PROGRAMS THAT HELP THE POOR:

The package would cut an additional $50.4 billion over 10 years from non-Medicaid programs that help the poor. It would eliminate a block grant designed to send federal funding to state social services programs; end yearly increases in funding for food stamp education programs and end the increase in food stamp money included in Obama’s stimulus. If the package were implemented, it would also be harder to qualify for food stamp assistance. Some of that money has now already been spent, so the $50.4 billion figure is now slightly high, but these cuts are a huge issue for Democrats, so expect to hear a lot about them.

FEDERAL EMPLOYEE PENSIONS:

By raising the amount that federal employees contribute to their pensions and eliminating supplemental benefits given to early retirees until they reach the Social Security retirement age, the package would generate more than $80 billion.

FINANCIAL SERVICES REFORMS:

The package counts $35 billion in savings from easing up financial regulation included in the Dodd-Frank reform law.

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Six-month deal reached to avoid government shutdown

Katy O'Donnell, National Journal — Tue, 31 Jul 2012 14:31:00 -0400

This story has been updated.

Congressional leaders and the White House have reached a deal to adopt a stopgap spending bill after the August recess that would fund the government through the first quarter of 2013, Senate Majority Leader Harry Reid, D-Nev., said Tuesday afternoon.

The agreement allows lawmakers to avoid engaging in an ugly spending fight during what is already expected to be an extraordinarily hectic post-election work session.

"It will provide stability for the coming months," Reid said of the funding extension. "This is very good because we can resolve these situations that directly affect the country as soon as the election is over."

The six-month continuing resolution, which Reid said would contain no policy riders, would be prorated at the 2013 spending level set by the Budget Control Act last August. Neither chamber will take up a continuing resolution bill this week; House Speaker John Boehner, R-Ohio, said in a statement that the legislation would be crafted during the August recess. Congress will have eight legislative work days in September before the current fiscal year ends on Sept. 30.

House Appropriations Chairman Hal Rogers, R-Ky., isn't thrilled about the half-year plan, though, because of the complications inherent in stopgap funding; appropriators would like to return to regular order or at lease keep any stopgap bill brief. Earlier speculation centered on whether Congress would adopt a two-month or six-month extension.

"From our perspective it would be better to have a short-term CR," said Rogers spokeswoman Jen Hing, noting the bills "are meant to be short-term Band-Aids."

Aides expected earlier this week for the resolution to be consistent with current funding levels rather than the BCA cap of $1.047 trillion. The Congressional Budget Office has not updated its score for 2012's spending rate but it is expected to show a slightly higher spending rate than the $1.043 trillion discretionary cap enacted for the fiscal year, thanks to the delay of some rescissions.

By announcing a deal on a six-month resolution this week, congressional leaders are giving agency officials time to put together requests for "anomalies," specific technical exemptions that would extend certain programs and activities, like the permission for D.C. to use its locally collected funds, not covered under a CR.

One senior Democratic appropriator last week told National Journal that he and some of his colleagues would push for sequestration legislation to be attached to the bill in exchange for giving up some of the Democrats' leverage going into the lame-duck. Reid said such requests did not come up in conversation when it came time to make a deal.

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House to take up Defense spending bill, hold off on others

Katy O'Donnell, National Journal — Thu, 12 Jul 2012 08:23:23 -0400

After considering the defense spending bill for fiscal 2013 next week, the House will not bring any more appropriations measures to the floor before the election, according to aides, making it highly likely each chamber will have to bundle messy funding bills during the lame duck session.

Senate Majority Leader Harry Reid on Tuesday made clear the Senate would not take up any of the 12 annual spending bills before the election, an announcement received poorly in the House.

"It is extremely disappointing that the Senate Democrat leadership is defaulting on their most basic fiscal duty as representatives of the people of this country," House Appropriations Chairman Hal Rogers said in a statement Wednesday morning. "The 12 annual appropriations bills cannot be swept under the rug and ignored until a more convenient political time."

But it is increasingly likely the House, once it takes up defense funding next week, will also be unable to pass each of its five remaining bills under regular order.

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Top Democratic House appropriations job will likely go to a woman

Katy O'Donnell, National Journal — Tue, 10 Jul 2012 16:09:00 -0400

Lowey won't say outright whether she's running for the spot being vacated by Rep. Norm Dicks, D-Wash. "It would certainly be an honor if my colleagues selected me" is as close as she'll come.

But it's clear she's got her eye on it. And if the Mario Cuomo mentee's reputation as a shrewd politician is anything to go by, it could be a fight. Full of smiles and small talk, Lowey exudes a sweet, maternal air--one aide described her as a prototypical Jewish grandmother, always asking members of her staff whether they're getting enough to eat. But she's also a formidable negotiator.

"She can make you smile while you're bleeding," former Rep. Henry Hyde, R-Ill., once said of Lowey. "We call that 'the perfumed ice pick.' "

Lowey flashed a proud smile when she brought up the remark. It's why she'd be good at defending liberal priorities as the House's top Democratic spending negotiator, she said.

National Journal subscribers can read more here.]]>

Social Security can sustain benefits for only 20 more years, Geithner says

Katy O'Donnell, National Journal — Mon, 23 Apr 2012 14:29:39 -0400

Social Security can sustain full benefit payments for only another 20 years, according to the latest report from the program’s trustees, the Treasury Department said Monday.

"The report projects that, when considered on a combined basis, Social Security's retirement and disability programs have dedicated funds sufficient to cover benefits for the next 20 years, but in 2033, incoming revenues and trust fund resources will be insufficient to maintain payment of full benefits,” Treasury Secretary Timothy Geithner said in a statement Monday.

In 2011, the trustees predicted the program’s trust fund reserves would be exhausted in 2036, and the year before, they projected solvency until 2037.

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GOP lawmaker accuses generals of 'smoke and mirrors' in budget requests

Katy O'Donnell, National Journal — Thu, 29 Mar 2012 14:25:00 -0400

House Budget Chairman Paul Ryan, R-Wis., claimed Thursday that senior U.S. military officials and commanders were being dishonest in their budget requests to Congress.

“We don’t believe the generals are giving us their true budget,” Ryan said at the National Journal Live Budget Policy summit, adding, “I think there’s a lot of budget smoke and mirrors in the Pentagon’s budget.”

Ryan's comment referred to a common Republican complaint that the defense request -- which is strongly supported by the Joint Chiefs of Staff -- was not "strategy-driven," and was based instead on an artificial spending cap. The chiefs, in testimony and public remarks since early February, have said they carefully built a strategy and a budget to meet the required limits of the Budget Control Act that Congress passed last year and endorsed the fiscal 2013 request.

In his FY2013 budget, Ryan proposed dismantling the automatic sequestration of defense spending, replacing those cuts with unspecified savings from mandatory programs

“We don’t think the generals are giving us their true advice,” Ryan said at the National Journal Live Budget Policy summit, adding, “I think there’s a lot of budget smoke and mirrors in the Pentagon’s budget.”

In his fiscal 2013 budget, Ryan proposed dismantling the automatic sequestration of defense spending, replacing those cuts with unspecified savings from mandatory programs.

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Payroll deal deepens fiscal hole

Katy O'Donnell, National Journal — Tue, 13 Mar 2012 17:23:00 -0400

At $1.2 trillion, the federal deficit will be $93 billion larger than previously expected in fiscal year 2012, due almost entirely to the cost of a payroll tax cut , the Congressional Budget Office projected Tuesday in its March baseline update.

The 10-year deficit accumulated by 2022 will fall by $186 billion, according to the CBO.

The deeper fiscal hole could hurt the GOP's ability to brag about slashing deficits during election season. But Democrats are unlikely to gain advantage either because they fought against Republican efforts to identify new spending cuts that would offset the cost of the payroll tax cut.

The annual figure and the $2.9 trillion estimate of cumulative deficits over the 2013-2022 period reflect both legislation enacted and technical adjustments made since the January baseline was prepared. That baseline had forecast a $1.1 trillion deficit for fiscal 2012 and $3.1 trillion over 10 years.

Even though it reflects more current information, the March baseline is calculated using the same economic assumptions as in January and is still bound by current law, which assumes that a host of regularly extended tax cuts will indeed expire and that automatic sequestrations will kick in at the end of the year.

Under the politically more viable alternative scenario – which assumes the extension of all expiring tax provisions other than the current payroll tax cut; a 10-year doc fix that would prevent Medicare payment cuts to providers; the repeal of the sequestrations set by the Budget Control Act; and an alternative minimum tax indexed for inflation after 2011 – deficits would clock in at $10.7 trillion over the 2013-2022 period.

March's revised baseline projected annual deficits averaging 5.3 percent of GDP over the next decade and a publicly held debt worth 93 percent of GDP in 2022. In January, the projection pegged the deficit at 5.4 percent of GDP with public debt at 94 percent.

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Obama chief of staff: 'Congress needs to get its work done'

Katy O'Donnell, National Journal — Mon, 13 Feb 2012 09:44:00 -0500

In a line the Obama administration has made clear will be one of its campaign slogans, new White House Chief of Staff Jack Lew on Sunday signaled how the White House will play both the extension of the payroll tax cut and the president’s fiscal 2013 budget request, to be released on Monday.

“Congress needs to get its work done,” Lew said on CNN’s State of the Union on Sunday.

Lew made the news show rounds Sunday for the first time as Chief of Staff, a position he assumed this month after heading up the Office of Management and Budget for a little over a year and a half. And he weighed in on a variety of issues.

Early leaks indicate the president’s budget will emphasize infrastructure spending and promise the creation of some 2 million jobs while cutting $4 trillion from the deficit over the next decade.

Lew dismissed the suggestion that the infrastructure spending included looked like another stimulus plan. “I think most Americans understand that a crumbling infrastructure is not the way to build an economy that can last,” Lew said.

Lew repeatedly weighed in on the payroll tax fight in his TV appearances Sunday, a tax provision scheduled to expire at the end of the month. A congressional conference committee is currently trying to hash out the details of an agreement on a year-long extension, but has made little progress. Lew emphasized the importance of the extension, an issue the White House deftly handled in December as Republicans stumbled into a position that opposed a tax cut for the middle class.

“There’s not enough economic growth, but we're heading in the right direction,” Lew said on Fox News Sunday. “The question is, is Washington going to be part of the solution or part of the problem? That’s why it’s so important for Congress to pass the payroll tax cut extension this month, that's why it’s so important that we not have the kind of dysfunction that last year became part of the uncertainty that held back the economy.”

Lew also addressed the imbroglio provoked by the Obama administration’s decision last week to require employers to pay for health insurance plans that offer free birth control even if they disagree with it on religious grounds. Many have cast the move as an overreach that violates religious liberty.

“The president had two important goals here,” Lew said on ABC’s This Week. “One is to guarantee that every woman has a right to all forms of preventive health care, including contraception, secondly, that we do it in a way that respects the legitimate religious differences and the religious liberties that are so important in our country.”

Obama on Friday softened the rule, shifting the cost to health insurance companies rather than religious institutions, after loud backlash from elements of the Catholic Church. Lew said the new rule would “reconcile those two very important values.”

President Obama’s budget was quickly dismissed last year as an unrealistic political press release -- one that even Democrats voted against in the Senate, where it failed 0-97 -- and the White House hinted then that it was only trying to put out a marker before House Republicans put out their own budget. The budget battles that have dominated Congress since then have made deficit reduction a goal the president will have to adhere to -- or at least appear to prioritize.

State of the Union host Candy Crowley suggested that the budget would be “attacked as a political document” that would simply lay the groundwork for Obama to say the GOP blocked job creation, even though Senate Majority Leader Harry Reid, D-Nev., said recently that the Senate didn’t need to pass a budget.

Lew countered that Reid was simply referring to the setting of caps on annual appropriations, which was already accomplished by the Budget Control Act passed in August 2011. “He’s not saying that they shouldn’t pass a budget,” Lew said.

“Unless Republicans in the House are willing to work with Democrats in the Senate,” Lew added, “Harry Reid is not going to be able to get a budget passed…but let’s be clear. There’s time and the desire to work together.”

Alexandra Jaffe contributed to this report.

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Leaders join deficit-reduction talks, aides say

Dan Friedman and Katy O'Donnell — Fri, 04 Nov 2011 00:00:00 -0400

The three congressional leaders are working with super committee members to hammer out a deal. The question now, according to staff, is whether they will get to $1.2 trillion -- going "big" and shooting for a $4 trillion plan is no longer in the cards. In fact, the group may have to settle on savings less than $1.2 trillion and let automatic spending cuts take care of the remaining balance.

But the group is hardly out of the woods-the committee is still at an impasse over tax revenues, though there is a sense talks are accelerating. The GOP members of the committee met with Boehner and McConnell on Thursday in McConnell's office to try to figure out the next step.

Sen. Max Baucus, D-Mont., also indicated the group is stepping up the pace; he said he expects to work through the weekend. He met briefly with Sen. Pat Toomey, R-Pa., on Thursday afternoon in his Capitol hideaway, saying afterward that the two "exchanged ideas."

In another development that bodes poorly for the chances of a large deal, 33 Senate Republicans on Thursday wrote to the super committee members asking them to include no net increase in tax revenue in any legislation they recommend. The group included all three Republican members of the "Gang of Six" senators who proposed a plan over the summer that included a net increase in taxes while cutting some tax rates.

The 33 GOP senators ask that the bill include "comprehensive tax reform that lowers rates and promotes economic growth with no net tax increase." They also ask that the panel "balance our budget within 10 years," put "entitlements on a path to fiscal solvency," and "avoid any further downgrade of our credit rating."

Meanwhile, amid reports of hopeless deadlock, McConnell and super committee aides tried on Thursday to squash rumors that the group would ask for more time to craft a deficit-cutting deal. It now has less than three weeks to produce a final package.

McConnell told The New York Times on Thursday that the deadline "can't be missed" and that "you would have to pass a new law for this deadline to be changed."

An aide to a Democratic committee member was even more blunt, stressing that the committee is not considering asking for more time, period. "Nobody's discussed it, it's not going to happen, it's a total nonstory," the aide told National Journal.

The latest tempest in a teapot -- over whether the panel would ask for more time -- was touched off by an answer House Minority Whip Steny Hoyer, D-Md., gave to a question about the deadline on Wednesday during his weekly meeting with reporters. That vague portion of a response -- a response that included Hoyer adding that the group would need Congress's approval and that as far as he knew, committee members weren't considering it -- was plucked as evidence that the group may seek more time.

Echoing McConnell, a Republican leadership staffer said a delay is unlikely because of the complexity of the Budget Control Act.

The committee would have to appeal to Congress to grant it more time; it could technically use its fast-track authority for a bill extending the deadline, but the bill would need to include language allowing the group to use fast-track authority again for the final package, since it's allowed to use it on one piece of legislation.

The committee has until Nov. 23 to submit to Congress a final package of deficit savings worth $1.2 trillion over 10 years. But it is past its informal deadline to send that package to the Congressional Budget Office so that it can be scored in time.

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Super committee hears from previous deficit panel chairs

Dan Friedman and Katy O'Donnell — Tue, 01 Nov 2011 00:00:00 -0400

With just over three weeks until the deadline to present its final plan to Congress, the super committee has given little reason for hope. Simpson, who led the president's fiscal commission last year with former White House Chief of Staff Erskine Bowles, and Rivlin, who put together a plan with former Sen. Pete Domenici, R-N.M., were summoned with their co-chairs to advise the committee on the best path forward to reach a bipartisan plan worth some $1.2 trillion to $1.5 trillion in deficit cuts over a decade.

The Simpson-Bowles and Rivlin-Domenici plans each achieved roughly $4 trillion in savings over that time period - through a mix of spending cuts and revenue increases - but the expectation that the super committee will "go big" is dwindling as the group plays out what feels like a sequel to this summer's debt-ceiling fight.

Still, Tuesday brought reports that Republicans are softening on revenue and that six members of the committee are trying to broker a compromise that could achieve slightly more than the mandated $1.5 trillion in savings.

The six super committee Republicans and their congressional leaders have thus far declined to consider any tax increases, including ending tax breaks, unless they were linked to broader tax reform. And the GOP has insisted that overhauling the tax code be revenue neutral-a guarantee they want written into law.

But GOP sources confirmed to National Journal that Republican leaders and members of the super committee may work to close some tax loopholes in a new proposal they will present to the deficit-reduction panel's Democrats.

Republicans are willing to consider decoupling loophole closures from an overall tax-code rewrite, and any GOP offer would likely also task committees of jurisdiction with coming up with a revenue-neutral tax-reform plan, said GOP sources familiar with super committee deliberations. They declined to cite specific tax-code changes or their total value.

Spokesmen for House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., declined to comment on such a GOP plan.

Committee co-chair Rep. Jeb Hensarling, R-Texas, though, was circumspect during his opening statement on Tuesday.

"Certainly we cannot tax our way out of this crisis," he said, sounding a familiar Republican theme. "We cannot solve it by tinkering around the edges of entitlement programs."

The committee has until Nov. 23 to produce a final package of recommendations; it had given itself an informal deadline to submit its proposals to the CBO for scoring this week.

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House votes to repeal contractor withholding tax

Billy House, Katy O'Donnell, and Meghan McCarthy — Thu, 27 Oct 2011 00:00:00 -0400

But it remains uncertain what the Senate will do.

Last week, Senate Democrats prevented similar legislation from reaching the floor; they objected to covering the cost of the repeal by directing the executive branch to rescind funds and make further cuts to discretionary spending in 2012. The White House threatened to veto that measure because of those pay-fors.

But the Republican-pushed House bill passed on Thursday would cover the cost of undoing the contractors' tax with a fix to the 2010 health care law that would tighten Medicaid eligibility requirements, saving $14 billion. That fix was passed earlier on Thursday, 262-157.

The Obama administration has backed the House bill. But how a final version will be worked out with the Senate remains ambiguous. The Office of Management and Budget has also said the administration would be willing to work with Congress to identify "acceptable offsets" for the repeal's budgetary costs.

Senate Majority Leader Harry Reid, D-Nev., said last week he would take up the House bill, though he said he wanted to pay for it with elimination of a corporate-jet subsidy and tax breaks for multinational corporations, an approach Republicans oppose.

Some Democrats are reluctant to use the Medicaid savings to offset the cost of eliminating the withholding tax, preferring to save the offset for other legislation. Whatever the approach to paying for it, Reid said he was confident the withholding tax will be repealed. "I don't think people are too far apart on this," Reid spokesman Adam Jentleson said.

The contracting rule was originally devised in 2006 as a means of combating tax avoidance, but has never been implemented and has drawn the ire of Republicans and Democrats alike as a burdensome requirement on potential job creators.

Implementation had been delayed earlier this year until the end of 2012. But President Obama proposed in his jobs package this fall that the regulation be delayed until 2014.

The Medicaid-related bill is a rare glimmer of bipartisanship when it comes to the 2010 health care law. The White House and some congressional Democrats, although not all, want to see the "fix" passed to alleviate a larger budget crunch on the already-strapped Medicaid program.

The bill would undo a piece of the 2010 health care overhaul that would have made more than a million seniors newly eligible for Medicaid, because Social Security income would no longer factor into eligibility.

The president included the $14 billion cost-saver in his latest deficit-reduction package, and the White House did not threaten to veto the House bill passed on Thursday sponsored by Rep. Diane Black, R-Tenn.

But House Democrats largely voted against that bill because they would rather use the Medicaid funds to cover the cost of other health-related bills, like the looming Medicare doctors' pay fix that Congress must deal with by the end of the year.

"It certainly has been raised in my caucus," Rep. Allyson Schwartz, D-Pa., said in an interview.

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Deficit panel holds public session on budget cuts

Katy O'Donnell — Wed, 26 Oct 2011 00:00:00 -0400

And if the points members made during the two-hour hearing are any indication, the 12-member panel has a long way to go to reach a deal before its Nov. 23 deadline to present a package worth $1.2 trillion in deficit savings over 10 years to Congress.

The hearing was scheduled to be a discussion of discretionary spending, which makes up about 40 percent of the budget. But the members only loosely stuck to those guidelines, instead making partisan points about income distribution, defense spending and savings, tax reform, and economic uncertainty.

Congressional Budget Office Director Douglas Elmendorf, who testified during the group's first public policy hearing on the drivers of the debt, carefully explained budgetary concepts, warned the committee that its decisions on discretionary spending could be voided by future Congresses, and highlighted the savings already wrung from discretionary outlays. He also noted that mandatory spending "dominates" the federal budget.

The committee's Democrats and Republicans alike agreed with him - at least in theory. But while Democrats pointed out that mandatory spending reforms would have to be paired with reduced defense spending and additional revenues, Republicans maintained that spending - not revenues - is the problem.

"Lawmakers have already taken significant steps to constrain discretionary spending," Elmendorf said, noting that total discretionary funding in 2011 was lower than it had been since 2002 because of cuts already made to the discretionary budget.

Elmendorf pointed out that about half of discretionary spending goes to defense, with the other half split among a number of government priorities, including education, social services, health-related research, international affairs and policing. He noted that discretionary spending has risen from its share of the economy in 1999, when it constituted 6.2 percent of GDP, primarily because of increased defense spending over the last decade and the stimulus program of 2009. It now makes up about 9 percent of GDP.

The discretionary caps enacted in the Budget Control Act will already reduce budget deficits by $778 billion (not including interest savings) between 2012 and 2021, according to CBO calculations.

Still, Elmendorf noted, if lawmakers do choose to go down the discretionary route in achieving $1.2 trillion in deficit savings over 10 years, they will need to lower the caps for appropriations as well.

"Without a reduction in the caps," Elmendorf said, "funding for other discretionary activities would probably fill the gap created by the specific reduction or savings."

But if the opening statement by co-chair Sen. Patty Murray, D-Wash., was any indication, Democrats on the committee are not keen on making further cuts to the discretionary budget.

"Non-defense discretionary spending represents less than one-fifth of total federal spending," Murray said. "But listening to the debates here in D.C. over the last few months, you would think this small piece of the pie was a whole lot bigger."

Aides confirmed to National Journal that panel members Senate Minority Whip Jon Kyl, R-Ariz., and Sen. Rob Portman, R-Ohio, clashed with Democratic members over the outline of a Democratic deficit reduction plan presented during Tuesday's private meeting. Staff was asked to leave the room following the exchange. Reuters reported on Wednesday that Democrats proposed $2.5 trillion to $3 trillion in measures to reduce the budget deficit, including revenue increases and significant cuts to Medicare.

Kyl and committee staff have said pointed exchanges are not unusual in private committee meetings. The panel is stalled, with members unable to resolve the problem posed by GOP insistence that any plan not include new taxes, aides have said. Democrats will not discuss significant entitlement cuts without GOP concessions on taxes.

In an appearance on MSNBC's Morning Jo Wednesday ahead of the meeting, committee member Sen. Pat Toomey, R-Pa., said he was "cautiously optimistic that we'll reach an agreement."

But he said the committee is "not quite there yet."

As has become the norm during the committee's public hearings, protesters interrupted the proceedings at points. One man who appeared to be aligned with Code Pink complained loudly that he had not received a written copy of Elmendorf's testimony. At one point a woman wearing a shirt that read "GREED KILLS" walked up behind Elmendorf to shout that the committee was not listening to the public.

Murray requested the Capitol Police to restore order, prompting two guards to remove the woman as she called out, appropriating the language of the Occupy Wall Street movement: "I speak for the 99 percent: End the wars and tax the rich!"

Hensarling and Murray on Tuesday announced a Nov. 1 public hearing focusing on an "overview of previous debt proposals." Authors of prominent debt reduction plans are slated to appear. Former Sen. Alan Simpson, R-Wyo., and former White House Chief of Staff Erskine Bowles are scheduled to testify on the proposal they drafted with the president's fiscal commission last year. Former Office of Management and Budget Director Alice Rivlin and former Sen. Pete Domenici, R-N.M., will testify on their plan.

The committee must present its plan to Congress by Nov. 23, though Elmendorf has said that the group will need to submit a proposal to CBO early next month to have it scored in time.

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Smoke signals from the super-secret committee

Katy O'Donnell — Fri, 21 Oct 2011 00:00:00 -0400

Members schedule meetings at the last minute without putting the agenda in writing; try to dodge bystanders (in this case, reporters) on their way in; and feign ignorance when asked what they've been up to. There's no secret handshake or tattoo -- that we know of -- but at this point it's not all that difficult to imagine them starting each meeting with a chant of some sort.

The super committee's Nov. 23 deadline is fast approaching, but few signs of actual progress have emerged -- just rampant rumors of discord and nebulous comments from panel members.

To wit, an exchange between committee member Sen. Max Baucus, D-Mont., and National Journal this week:

Baucus: Everything's progress, by definition.

NJ: OK, but you guys always say you're making progress and that "everything is on the table." Surely some things have come off the table by now if you're actually making progress, right?

Baucus: I -- all truth is good to know, but not all truth is good to say.

Perhaps. But don't tell that to the frustrated lawmakers who aren't on the panel and want to know what, exactly, is going on.

Sen. Dean Heller, R-Nev., has voiced fears that the lack of public access to the committee could allow it to be unduly swayed by lobbyists. And Rep. Maxine Waters, D-Calif., went so far as to propose a bill eliminating the committee altogether.

"How can 12 people decide the fate of millions of Americans behind closed doors with little to no input from Congress or the average citizen?" Waters said when she unveiled the bill last week.

Members of the bipartisan Gang of Six emerged from a closed-door meeting with the committee on Wednesday morning tightlipped.

Sen. Kent Conrad, D-N.D., who became a kind of spokesman for the gang this summer -- always eager to discuss pressing deficit problems and possible solutions -- wouldn't comment other than to say the group discussed its plan with the committee.

The gang's plan, produced this summer, included broad tax reform that would lower individual marginal rates while bringing in some $1.5 trillion in additional revenue over 10 years, as well as reforms to Medicare and Social Security. In other words, Conrad admitted to speaking with the committee about the ideas that he'd already presented to nearly 50 senators and that budget-watchers in Washington have long speculated would form the meat of the committee's discussion.

"I think it would be inappropriate for me to say any more," Conrad said. "We've been asked to respect the deliberations of the committee. And I certainly do respect them."

It's not just that the committee's members are wary of their guests or the press. The panel imposed a one-aide-per-member limit (not including committee staff) on its closed-door discussions earlier this month, and the sight of aides filing out of the room to wait in the hallway for half an hour before going back in is not unusual.

One problem, according to a Hill staffer, is that members themselves are asking the CBO to score various proposals without including their staffers in the request - causing havoc as the CBO is forced to follow up on every question it has with a busy lawmaker rather than a legislative aide or policy wonk.

The crackdown on the number of people allowed in was spurred, aides said, by growing concern over leaks. In a kind of daily witch hunt, whenever an article about the committee is published, staffers call or e-mail around to try to figure out who leaked.

Leaks? Most stories about the super committee have been of the "almost certainly" variety, fueled with speculation about what could be going on.

But there's plenty of time to get a "no comment" from the members, given both the frequency of meetings and the fact that the media stakeout at the most common meeting place is right next to restrooms, allowing for several false alarms - lights up, cameras swiveling, reporters flipping on recorders -- during each hours-long gathering.

Some reporters have ventured inside the room after meetings to see if any paperwork has been left behind, only to find that the room in the basement of the Capitol Visitors Center has become a kind of situation room, wiped clean after each use. (It's unclear whether burn bags have been brought in.)

The group has only held two public policy hearings. Its third, on discretionary spending, comes next week. But if the charade of public hearings is actually supposed to demonstrate the committee's real work, the group may want to consider varying its witness list.

Congressional Budget Office Director Douglas Elmendorf, the sole witness at the first hearing, will testify again at the third. The second hearing saw testimony from Joint Committee on Taxation Chief of Staff Thomas Barthold, who -- as several members pointed out when Sen. John Kerry, D-Mass., tried to get Barthold to answer a question in greater depth -- is in fact a government employee who can answer the committee members' questions at any time, regardless of hearings.

The unofficial deadline to submit a package, aides and Elmendorf have agreed, is at the end of the month, in order to give the CBO time to score it. But for now, the committee continues to resemble Skull and Bones more than the most important congressional committee in town. In fact, it's not unusual to see 12 members enter the room and nine leave. Who knows, maybe there's even a secret exit.

Nancy Cook and Billy House contributed.

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Super committee schedules first closed-door meeting

Katy O'Donnell — Wed, 14 Sep 2011 00:00:00 -0400

News of the newly scheduled breakfast comes after one committee member -- Senate Minority Whip Jon Kyl, R-Ariz. - complained earlier this week he was growing concerned by the lack of real policy work sessions scheduled as much of the tough give-and-take usually occurs then, probably behind closed doors.

The group held its first policy hearing on Tuesday, with testimony from Congressional Budget Office Director Douglas Elmendorf on the drivers of the debt. But members spent much of the meeting subtly posturing and pushing for Elmendorf to agree with them, even though he repeatedly refused to give advice on the best deficit-reduction path forward. The private meeting raises hopes that, away from the glare of the camera, members can actually discuss substantive policy and leave talking points behind.

Elmendorf also cautioned members that if the committee ultimately recommends specific changes to programs such as Medicare, Medicaid, or Social Security, his CBO analysts would need several weeks to calculate their budgetary impact.

Meaning, he said, that the committee likely needs to get a draft of its recommendations ready by early November-even though its official deadline is later.

"We need to do our jobs right and not pull numbers out of the air," Elemendorf said.

The final package of recommendations is officially due Nov. 23. It will be given expedited consideration in both chambers and go for a vote by Dec. 23; if Congress fails to adopt the package, automatic cuts worth $1.2 trillion would be triggered starting in January 2013.

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Super committee's first meeting dominated by jobs

Katy O'Donnell — Thu, 08 Sep 2011 00:00:00 -0400

Beyond the standard ruminations about American decline and warnings about the threat the deficit poses to national security that accompany nearly every deficit discussion in Washington, committee members spent much of the meeting discussing employment in the context of deficit reduction. Republicans insisted that bringing down the deficit would itself pave the way for job growth, while Democrats argued that a short-term jobs agenda needs to be part of a deficit-reduction plan in order to bring in more revenue in the future.

"We can't fix our budget without fixing jobs, and we can't fix jobs without fixing our budget," Sen. John Kerry, D-Mass., said, summarizing the dilemma others acknowledged.

Even if the committee members hadn't wanted to focus on jobs during their first meeting, a pack of more than a dozen protesters made that impossible.

A little over 20 minutes into the roughly hour-long meeting, protesters huddled outside the meeting room's doors interrupted the proceedings with chants of "What do we want? Jobs! When do we need 'em? NOW!" The chants caused Rep. Dave Camp, R-Mich., to stop speaking, and the meeting paused briefly as staff struggled to block out the noise.

Even when Camp did resume, he was barely audible over the shouts. But he, like most of the members, focused his opening remarks on the dual need for job growth and deficit reduction facing the committee.

"The final product must be looked at through the prism of job creation," Camp said. "By reducing the burden the federal debt places on employers, families, and taxpayers, we can help get the country back on track and Americans back to work."

Rep. Chris Van Hollen, D-Md., meanwhile, reversed that causal link: "The quickest, most effective way to reduce the deficit in the short-term is to kick the economy into a higher gear and grow jobs."

Members also brought up tax reform, even as they acknowledged that the committee has just 77 days to make its recommendations. That time crunch may explain the repeated references to the work of past bipartisan groups dedicated to bringing down the deficit. The plan put forward by the president's fiscal commission last December, the plan championed by former Sen. Pete Domenici, R-N.M., and former CBO Director Alice Rivlin, and the work of the Gang of Six all figured into the opening meeting. Each of those plans addresses comprehensive tax and entitlement reform to achieve savings in the neighborhood of $4 trillion over 10 years.

"If this committee fails-and I'm confident it won't-it won't be from a lack of ideas, but a lack of political will," Van Hollen said.

Sen. Pat Toomey, R-Pa., called on fellow committee members to go above and beyond the $1.2-$1.5 trillion in deficit cuts they are tasked with identifying and look to larger reforms of both entitlements and the tax code.

"You-we-could choose to just nibble around the edges of this problem and just look for redundant programs and obsolete programs … and it might even be that they'll add up to one and a half trillion dollars, which is our statutory goal," Toomey said. "But if that's all we do then I would suggest, as I think Senator [Rob] Portman observed, that we really wouldn't be doing all that is necessary to put us on a pro-growth and sustainable path."

President Obama is also expected to urge the panel to cut more than $1.5 trillion from 10-year spending plans and "overshoot" its target, White House press secretary Jay Carney said.

Yet, belying the cordiality of the committee's first meeting, it's clear that there are places each side isn't willing to go.

During an American Enterprise Institute event Thursday afternoon, Sen. Jon Kyl, R-Ariz., warned against any more cuts to defense than the $350 billion already planned for the next decade. Defense, he said, "cannot be seen as a solution to deficit reduction." Kyl added that he has already warned his GOP colleagues on the deficit-reduction committee that he will quit the panel if further defense cuts are considered.

And on the other side of the aisle, Rep. Xavier Becerra, D-Calif., voted against the fiscal commission's plan last December because of its cuts to benefit programs.

But the most contentious of issues may not be discussed in public, its two leaders said on Thursday, despite calls from colleagues that the panel's work all be done in open session.

Cochair Sen. Patty Murray, D-Wash., echoing fellow cochair Rep. Jeb Hensarling, R-Texas, said, "We looked at how House and Senate committees operate, and we worked together to make sure this committee met publicly, but also had the ability to meet just among members to discuss important issues."

The committee's official deadline to report out recommendations for deficit reduction is Nov. 23, but Kyl said that realistically the panel needs to complete its work by the end of October in order to have a final package by Thanksgiving.

The package will be given expedited consideration in both chambers and go for a vote by Dec. 23. If it fails to pass, $1.2 trillion in automatic spending cuts, split equally between security and non-security spending, would take effect beginning in 2013.

Billy House and Megan Scully contributed.

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The deal, point by point

Katy O'Donnell — Mon, 01 Aug 2011 00:00:00 -0400

President Obama is authorized to increase the debt limit by at least $2.1 trillion in three steps, allowing Treasury to continue to borrow through 2012 and lawmakers to avoid a retread of this fight in six months.

Nearly $1 trillion of spending cuts over 10 years will be implemented immediately through discretionary spending caps.

Congress will vote on a balanced budget amendment before the end of the year.

A bicameral, bipartisan group of 12 lawmakers will be charged with identifying additional deficit cuts worth about $1.5 trillion. The joint select committee must report precise deficit-reduction proposals by November 23, the day before Thanksgiving, and Congress must vote on the group's package by December 23.

Should the committee fail to come to an agreement on a deficit-reduction package, automatic across-the-board spending cuts worth about $1.2 trillion will kick in starting in 2013 - with 50 percent coming from defense and 50 percent coming from domestic programs - in order to raise the debt ceiling by an equivalent amount. Entitlements largely get a pass: Social Security and Medicaid would be exempted from the cuts, and Medicare would only face cuts to providers and insurers, not beneficiaries.

The White House is assuring supporters that the committee can raise taxes, and several senators have said that, as far as they know, there will be no restrictions on the committee. But House Speaker John Boehner's PowerPoint, sent to his conference, says the group "effectively" cannot raise revenues because any plan it puts forward must be scored by the Congressional Budget Office on current law, which assumes that the Bush tax cuts of 2001 and 2003 will expire at the end of 2012. Either way, it's kind of a moot point: It's hard to believe the six Republicans on the committee will agree to raise tax rates. Still, Obama maintains the ability to veto an extension of the Bush cuts if Congress fails to get the ball rolling on comprehensive tax reform, which means that closing "loopholes" and ending various subsidies will almost surely be a big part of the committee's discussions -- and taxes will continue to fuel the fury of liberals and conservatives alike as the House gears up for a vote on the deal this week.

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Boehner to rewrite debt-limit bill after CBO score

Major Garrett, Susan Davis, and Katy O'Donnell — Wed, 27 Jul 2011 00:00:00 -0400

House Speaker John Boehner will rewrite sections of his debt-limit extension bill in response to the Congressional Budget Office's score that the original plan falls short of its advertised $1 trillion in savings.

Boehner spokesman Michael Steel told National Journal what had already been communicated to GOP skeptics in the House and Senate-that the CBO score required Boehner to revamp his up-front and 10-year budget savings to achieve the stated $1 trillion in deficit reduction.

And after National Journal learned that the House Rules Committee will not report out a rule on Tuesday evening on Boehner's bill, postponing a scheduled Wednesday vote on the plan, House Majority Leader Eric Cantor's office announced that the vote will take place on Thursday. The decision throws the fate of the plan in flux, with GOP aides working into the evening in search of additional savings, the sources said.

CBO has yet to score Senate Majority Leader Harry Reid's companion bill in the Senate. But because Boehner's vote is first-and the most consequential of his speakership-he has to meet the demands of dozens of skeptical House Republican who want the debt-ceiling bill to represent a credible down payment on deficit relief. For better or worse, at this late hour $1 trillion in savings over 10 years has become necessary for credibility among his colleagues. Boehner and his staff are now scrambling against time to meet that standard.

A GOP source familiar with the options on the table said leaders are considering finding additional deficit-reduction measures or lowering the amount by which Boehner's proposal would increase the debt ceiling, currently at $900 billion, to a number lower than the $850 billion deficit cut projected by CBO. Lowering the debt-ceiling figure would maintain the GOP pledge to enact spending cuts in excess of the debt increase.

Leadership was already facing an uphill battle to find the votes needed to pass the speaker's plan. The CBO report was likely to fuel skepticism among undecided lawmakers, particularly those in the GOP freshman class, that the Boehner proposal was not as far-reaching as they had been told. Boehner sparked doubts among freshmen and other conservatives earlier this year when the spending cuts he negotiated to head off a government shutdown also fell short of their expectations.

Even before the CBO report, leaders spent Tuesday working their conference to find the votes, which appeared out of reach even as Boehner asserted the bill could pass the chamber. House Democratic leaders are simultaneously working to hold their caucus together in opposition to the bill, making it harder for Boehner to get the bill over the finish line on his party's votes alone.

According to CBO, Boehner's plan would cut about $850 billion from federal budget deficits between 2012 and 2021 relative to the March 2011 baseline. Relative to its January baseline-a score Boehner requested be calculated-CBO reported that the bill would reduce deficits by about $1.1 trillion. The bulk of the plan's savings would come from capping discretionary spending.

The adjusted March baseline accounts for reductions in projected spending that had already been enacted through the appropriations process after the January baseline had been prepared. The January baseline largely assumed funding levels that had been continued from the previous year. The March baseline used in the scoring is what Boehner negotiated with the White House earlier this year to reduce spending and head off a shutdown.

To score Boehner's legislation, both the January and the March baselines were adjusted to account for the expected reductions in winding down the wars in Iraq and Afghanistan. The baseline used by CBO to score Boehner's plan includes the savings already projected for the wind down. Republicans have accused Senate Majority Leader Harry Reid, D-Nev., of inflating the savings in his competing $2.7 trillion plan by using accounting gimmicks that are achieved by the winding down the wars, but Reid's plan has not yet been scored.

Relative to the March baseline, CBO estimates that Boehner's plan would return about $695 billion in savings from discretionary spending, $20 billion from mandatory spending, and $135 billion in savings on interest paid on the public debt due.

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Senate minority leader fashions escape for GOP on debt ceiling

Dan Friedman and Katy O'Donnell — Tue, 12 Jul 2011 00:00:00 -0400

The complicated proposal would accomplish two goals: It would give Republicans the ability to say that they are not for default under any circumstances, and it would foist full ownership of the debt ceiling on Democrats.

Under the plan, Congress would pass a bill granting Obama the authority to raise the debt limit on his own provided he notified Congress of his intent to do so. His request to Congress for greater borrowing authority would be subject to a resolution of disapproval, which McConnell said would likely pass both chambers. Obama would then have to veto the resolution, forcing Democrats to back up his veto by a one-third-plus-one vote in each chamber. At the same time, Obama would be required to outline spending cuts he would approve equal to the amount of his extension request.

The plan would be carried out in three "tranches" - similar to the process by which Congress okayed the release of funds for the Troubled Asset Relief Program - that would force Obama to repeatedly request more borrowing authority and Congress to repeatedly vote to raise the limit in the run-up to the 2012 election.

McConnell cast the proposal as a necessary "back-up" plan Republicans were forced to construct, rather than a complicated political maneuver.

"This is, again, not my first choice," McConnell said. "I had hoped all year long that the opportunity presented by his request of us to raise the debt ceiling would generate a bipartisan agreement that would get our house in order by reducing spending. That may still happen -- I still hope it will -- but we're certainly not going to send the signal to the markets and to the American people that default is an option."

Of course, the proposal would likely be dead on arrival in the House.

A House Republican leadership aide said McConnell's proposal had not been vetted in the Conference, but that it stood almost no chance of movement in the chamber, where the rank-and-file have largely coalesced around their leadership's current strategy to continue to seek roughly $2 trillion in spending cuts over 10 years coupled with budgetary reforms. The aide acknowledged, however, that House Republicans have not come up with a "Plan B" scenario, as McConnell appears to be doing, in the event that Congress and the White House can't reach an agreement.

Senate Majority Leader Harry Reid said on Tuesday that he couldn't say much about the proposal "because I don't know much about it."

Reid said he talked to McConnell "for just a few minutes" about it and that McConnell's chief of staff had briefed Reid.

"I would be happy to give his suggestion every consideration," Reid said.

The plan is vintage McConnell: politically savvy, but open to charges of cynicism. It represents a gamble that Republicans would benefit electorally if Democrats are forced to take the bait, but opens them to charges that they are less interested in cutting the deficit than in exploiting it for votes.

A senior Democratic official, who said Reid and the White House are reviewing the plan, noted it is a "political" plan designed to free Republicans from responsibility for voting to raise the debt ceiling.

"It's clever, but it's not principled," the official said.

Criticism also came from the right.

McConnell's plan was met with swift skepticism from outside conservative advocacy groups who fear it gives too much power to the White House and fails to secure the kind of systemic budgetary reforms that conservatives are seeking in the debt ceiling debate. Heritage Action for America, the political arm of the conservative think tank Heritage Foundation, said McConnell's proposal was "a serious walk back from that position and would seemingly trade the leverage needed to achieve reforms in return for political gains."

A spokesman for leading fiscal conservative Sen. Tom Coburn, R-Okla., said he sees the proposal as "a political solution, not a policy solution."

Susan Davis contributed to this report.

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Moody's threatens U.S. debt downgrade

Katy O'Donnell — Fri, 03 Jun 2011 00:00:00 -0400

Moody's Investors Service warned on Thursday that "if there is no progress on increasing the statutory debt limit in coming weeks, it expects to place the U.S. government's rating under review for possible downgrade."

While the emphasis on raising the debt ceiling could aid Democrats in negotiations, Moody's also said it "would like to see substantial deficit reduction" -- a caveat some Republicans, like House Ways and Means Chairman Dave Camp, R-Mich., have already seized on in the push for significant budget cuts to come with the debt ceiling vote.

Treasury has said it would start defaulting on its obligations as soon as August 2 if the debt ceiling is not raised; "if the government misses any interest payments, that would likely trigger a downgrade of one to three notches" from the United States' AAA rating, The Wall Street Journal reports.

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Obama directive would politicize contracting, senator says

Katy O'Donnell — Fri, 20 May 2011 00:00:00 -0400

Washington Post, excoriates the Obama administration over a draft executive order that would require government contractors to disclose political spending, arguing that the stipulation would "infuse politics into the contracting process."

"In true Orwellian fashion, the draft order suggests that the only way to keep politics out of the contracting process is to include political information with every contract offer," Collins writes, adding later that "this would inevitably have a chilling effect on the First Amendment rights of individuals to contribute to the political causes and candidates of their choice."

Collins's argument is an idealistic one: "The administration's proposal violates the fundamental principle that federal contracts should be awarded free from political considerations and be based on the best value to taxpayers."

Collins, the ranking Republican on the Homeland Security and Governmental Affairs Committee, charges that federal contracting officials would use the information to select the winning bidder. The order's proponents, meanwhile, note that since there are already so many suspicions about the politics involved in awarding federal contracts, putting everything on the table will only make the process fairer.

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States face $1.26 trillion in retiree benefit shortfalls

Katy O'Donnell — Tue, 26 Apr 2011 00:00:00 -0400

State funds that pay pension and health care benefits to public workers faced a $1.26 trillion shortfall at the end of the 2009 fiscal year, according to a Tuesday report from the Pew Center on the States. The funding gap increased 26 percent over the previous year, a surge caused by a combination of inadequate state contributions, an aging population and recession-driven market losses.

States faced a $660 billion pension funding gap and a $604 billion health-care liability gap in FY2009, according to the report, which drew from state financial reports. The gap reflects the failure of a number of state policy choices, including a failure to make annual payments for pensions systems at the levels recommended by their own actuaries and the expansion of benefits and cost-of-living payments at an unsustainable level.

Perhaps most troubling is the fact that states' larger fiscal prospects are dim for the near future; declining property values have shrunken revenues, and the recession has driven up the need for benefits among the poor and unemployed.

"States' ability to meet their annual payments may not improve anytime soon; most government finance experts expect state tax revenues to continue recovering slowly in the years ahead," the Pew report notes, later warning that "a state's failure to pay the annual bill for retirement benefits can mean it will have to pay more in the future."

The report found that states had only saved about $31 billion, or 5 percent, for retiree health care benefits. State pensions plans were 78 percent funded, down from 84 percent the year before. A piddling five states made full contributions for retiree health benefits in 2009, and just 22 paid their annual pension bill.

To calculate the funding gap, Pew used states' assumptions for what their pension funds would earn in annual investment returns - typically 8 percent. That's a return states have met in recent decades, but if states were to calculate investment returns the same way private firms are required to for their pensions, the gap would grow to $1.8 trillion, according to the report. If they were to peg returns to 30-year Treasury bonds, it would go up to $2.4 trillion.

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Ryan: Obama's 'vision' would leave seniors poor, out in the cold

Katy O'Donnell — Fri, 15 Apr 2011 00:00:00 -0400

Washington Post opinion page to defend his budget and take a few jabs at Obama's "rhetorically heated but substantively hollow" address.

Ryan's op-ed pointedly refers to Obama's "speech"-noting that it "doesn't even rise to the level of a plan"-throughout, while taking on the president's framing of the fight around "vision": "Unlike the speech, our budget advances a vision of America in which government both keeps its promises to seniors and lives within its means."

Obama's vision, Ryan says as he plays to the GOP base, would couple "greater reliance on government price controls… with $1 trillion in tax increases, which would destroy jobs and hurt the economy." Obama has said he wants to take on tax expenditures -- widely seen as spending within the tax code -- but he confirmed on Wednesday that he would also seek to end the Bush tax cuts for the wealthy.

Ryan also takes a whack at Obama's February budget, writing that it was "widely planned as lacking seriousness." The Congressional Budget Office estimated last month that Obama's budget would double publicly held federal debt by 2021 and initially boost deficits before they decline.

"We cannot accept an approach that starts from the premise that ever-higher levels of spending and taxes represent America's new normal," Ryan writes. "We have a historic commitment to limited government and free enterprise."

Noting that "no amount of taxes can keep pace with the amount of money government is projected to spend on health care in the coming years," Ryan makes the case that reforming Medicare and Medicaid -- in the case of his own budget, by moving Medicare to a lump-sum subsidy program and Medicaid to a block-grant program administered by the states -- is the only way to avoid "leav[ing] our most vulnerable citizens with fewer health-care choices and reduced access to care."

Obama has repeatedly characterized his plans as the humane alternative to the savage cuts Republicans want. Ryan makes the case that cuts and reform are the only path by which government can remain humane: "Our budget offers a compassionate and optimistic contrast to a future of health-care rationing and unbearably high taxes."

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Former White House, congressional leaders call for faster appointment process

Katy O'Donnell — Wed, 13 Apr 2011 00:00:00 -0400

Washington Post op-ed on Wednesday that "the federal appointments process is broken and urgently needs substantial reform," specifically a bill in the Senate that would exempt more appointees from the confirmation process.

Former Sens. Bill Frist, R-Tenn., and Charles Robb, D-Va.; former Clinton White House Chief of Staff Thomas McLarty; and Clay Johnson, former White House director of personnel under George W. Bush, co-chair a 20-member bipartisan commission to reform the federal appointments process.

"As many as one-third of presidentially appointed positions, particularly at the subcabinet level, go unfilled at a given time, depriving many agencies of key officials," the group writes. "These vacancies are particularly problematic during the first year of an administration, when a president is trying to deliver on his campaign promises."

The four co-chairs are pushing for a shorter process -- but one that would avoid "diminishing the attention paid to nominees' qualifications." The bill they champion, co-sponsored by Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., calls for about 200 non-policymaking, non-senior positions to no longer require Senate confirmation.

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