Budget Tea Leaves: Why the Government Won’t Shut Down This Week

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The stopgap measure currently funding the federal government runs out at midnight on Friday and new rules in Congress stipulate that legislation needs to be posted publicly at least 72 hours before a vote, meaning the deadline for a 2011 budget deal falls on Wednesday. Democrats claim both sides have agreed to a number–  $33 billion in cuts over the remainder of the fiscal year — but the real sticking point will be what programs get cut and which ideologically charged policy “riders” are thrown in with the bill. That may seem like a lot to reconcile in the next few days, but negotiations are probably further along than either side is willing to admit.

Democrats and Republicans have an incentive to stick to their guns in public, in order to extract maximum concessions from their rivals and to signal to their bases, which will inevitably be disappointed by compromise, that they stuck it out until the end. “Now, you’ve heard Democratic leaders claim an agreement has been reached on this issue,” House Speaker John Boehner said Saturday in the Republican weekly radio address. “But let me be clear: There is no agreement. Republicans continue to fight for the largest spending cuts possible to help end Washington’s job-crushing spending binge,” he said. In his first serious test as Speaker, Boehner is caught in a particularly difficult squeeze. If he gives away too much, the conservative wing of his caucus will revolt. If he gives away too little, a shutdown could have catastrophic consequences. So, is a shutdown imminent? Not likely. Here’s why:

The costs, political and otherwise, are just too great for both parties. The parallels are imperfect, but it’s been said many time that Republicans fear a backlash a la 1995. They’ve also spent the last two years accusing President Obama of creating a toxic environment of uncertainty with his tax policy and new regulations. Allowing the federal government to shut its doors for an indefinite period, suspending contracts and benefits, would seriously undermine that argument. Plus, as  Boehner recently pointed out, shutdowns cost the government a lot of money: a shutdown in the name of fiscal austerity is a hard card to play. And there’s an economic consideration as well. If a shutdown were to derail the still-feeble recovery, hurting voters would take out their anger on incumbents from both parties in the next election. That fact is especially relevant to President Obama’s reelection campaign, which is set to officially get under way this week.

And for better or worse, Obama is now involved in the process. As part of a new communications strategy and out of an abundance of caution in handling matters as toxic as the budget, the President’s team has kept him far clear of recent negotiations. As the situation grew more dire, Obama went as far as to deputize Vice President Biden to deal with wrangling on the Hill.  But the White House released word on Saturday that the President had spoken with Speaker Boehner and Senate Majority Leader Harry Reid directly by phone about the ongoing talks.

The description of those conversations were vague and hardly broke new ground. But the fact that the White House publicized the calls says something about the state of play. You might take it as an ominous sign that negotiations need an extra push from the commander in chief. But the opposite is closer to the truth. It’d be political malfeasance for Obama’s team to expose their boss to the blowback of a failed budget deal at the 11th hour. If anything, Obama’s involvement over the weekend indicates the White House is confident of success.

There are bellwethers on the Republican side as well. Democrats are trying mightily to drive a wedge between Boehner and the Tea Party-wing of his caucus. On Sunday, Reid told “Face the Nation” that “the Tea Party is dictating a lot what goes on in the Republican leadership in the House.” He knows all too well that Boehner will have to let them down to strike a deal. But the fact that there are far more grave budget issues looming may increase Boehner’s chances of weathering the current storm and boost the prospects for a compromise this week.

House Budget Committee Chairman Paul Ryan told “Fox News Sunday” that he plans to announce the Republicans’ 2012 budget proposal on Tuesday, and with it, his ambitious plan to pare back major government programs, including entitlements, to the tune of $4 trillion over the next decade. Ryan’s plan would also include a mandatory cap on discretionary spending tied to GDP, and tax breaks.  The timing of Tuesday’s announcement will provide conservatives, long fans of Ryan’s fiscal thinking, something new to sink their teeth into just at the moment when they’ll be asked to swallow compromise on 2011’s numbers. With the 2011 budget only a prelude to the battles over Ryan’s plan and the coming debt ceiling vote, Boehner may be able to get political cover to strike a deal.

The long-term budget picture is far from clear, but this week’s deadline doesn’t present an insurmountable obstacle as some from both parties have suggested. Amid the weekend jockeying, Republican Senator Lindsey Graham told “Face the Nation” that “I think we’ll find consensus.” Reid, also on the program, said, “I think we can work this out.” As Wednesday’s deadline draws near, expect the rift between Republicans and Democrats to temporarily disappear.

Update, 1:18 p.m.

For now, the strategically aloof President has thrown himself fully into budget negotiations. Following Obama’s publicized call to lawmakers over the weekend, Press Secretary Jay Carney told reporters on Monday that Obama has invited congressional leadership from both parties to the White House on Tuesday to talk budgets. House Speaker John Boehner and Senate Majority Harry Reid, as well as their respective Appropriations Committee chairs Rep. Hal Rogers and Sen. Daniel Inouye, have been asked to attend.  Again, itseems unlikely to me that the White House would expose Obama to this kind of political risk if they weren’t fairly confident a deal is at hand. But his involvement may not last long. As Congress takes up the 2012 budget, his recent approach suggests he’ll recede into the background again and wait for an opportune moment to weigh in.