For any kind of camel trader, used car salesman or politician the first bid in a negotiation is rarely the number they actually expect to get. Some suckers may agree to pay that price, but most people bargain. House Speaker John Boehner’s first bid was $32 billion in cuts, a number his freshmen laughed at. They jacked their bid up to $100 billion off of President Obama’s 2011 request. (Keep in mind, in cuts to current levels this actually equates to $61 billion.)
The Senate today unveiled their first bid. Senate Majority Leader Harry Reid introduced two bills: the House version, House Resolution 1, and his bill, which cuts $51 billion from President Obama’s 2011 request. This includes the $4 billion in cuts already passed by the Senate this week. (In real terms $41 billion of these amount to roughly no cuts from current levels, meaning the only real new cuts Reid is proposing is about $6 billion.) “I think that this is the place to start,” Reid sadi on the Senate floor today. “We have some confidence that we’ll get the votes on our bill that we’ll move this matter forward.”
The competing bills would fund the federal government for the seven months remaining in fiscal 2011. A compromise must be reached by March 18 or the government will shut down. If one cannot be reached, both chambers will have to pass another short term extension — as they did last week — to give negotiators more time.
Of course, Republicans howled at the first bid. “Yesterday, the White House and congressional Democrats finally announced their position,” Boehner said in a statement today. “Unfortunately, it is little more than the status quo, and the status quo is indefensible and unacceptable.”
But Reid’s right, I’m not even sure HR1 will get unified Republican support, let alone draw Democratic votes. Conversely, I don’t think Reid’s bill will get unified Democratic support and is unlikely to draw any GOP votes. Which means that next Tuesday the Senate will hold two votes, both will fail and negotiators will head back to the drawing table. As Reid put it: “If HR1 doesn’t pass, and it won’t pass, and if ours doesn’t pass, we at least know where we stand.”
The two sides are $51 billion apart (whether you count the difference as between $10 billion and $61 billion or $51 and $100 billion). Before the White House entered the debate yesterday – with Vice President Joe Biden journeying to the Hill to oversee negotiations – Senate Dems had been looking at $24 billion in cuts Obama proposed in his 2012 budget and an additional $8.5 billion in earmark rescissions. This puts Dems somewhere in the ballpark of $35 billion – remarkably close to Boehner’s first offer of $32 billion. Unless one chamber is bluffing, the two sides aren’t really that far apart. Of course, getting there will be the hard part.