Big Deal, Small Deal, No Deal: Why Hopes Are Low at Start of Talks Over Next Congressional Budget Cliff

Just as the last invented Washington fiscal crisis fades from memory, the next one looms ahead, with little signs of optimism from either side of the aisle

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Michael Reynolds / EPA

U.S. Senate minority leader, Republican Mitch McConnell, arrives at the U.S. Capitol on Oct. 16, 2013

Correction appended at 4:48 p.m.

Just as the last invented Washington fiscal crisis fades from memory, the next one looms ahead, with little signs of optimism from either side of the aisle.

Government funding is set to run out again on Jan. 15, and in seven weeks a bipartisan group in Congress has been told to present a new path forward. Their first — and so far only — scheduled meeting is this Wednesday. The group has no special legislative powers, little time to act, excludes key players and will work from documents — the Senate and House budgets — that are in one important way as partisan as Obamacare: neither bill when passed in March attracted a single vote from a member of the minority party.

Congressional leaders are already ruling out a big breakthrough in what amounts to the first budget conference in four years, and the eighth major budget commission in three years. It will not lead to a “grand bargain,” according to Senate majority leader Harry Reid and House Budget Committee chairman Paul Ryan. Indeed, the two Congressmen required for any deal that would reform the tax code — House Ways and Means Committee chairman Dave Camp and Senate Finance Committee chairman Max Baucus — have not been appointed to join the group.

So what will the conference do? The 29 members are required to send a report of recommendations to the full chambers by Dec. 13. The conference will likely focus on crafting a small deal to avert the next fiscal crisis early next year. Democrats will push for increased revenue from closing tax loopholes. Democratic congressional staffers point to a few notorious tax exemptions for corporate jets and the oil and gas industry, and the Gingrich-Edwards payroll-tax loophole. But many Republicans will reject any tax-revenue increases. “Revenues are a nonstarter in the House,” says a House Republican leadership aide. “They got their revenues on Jan. 1 and should not expect any more.”

(MORE: Obama: Government Shutdown Raises 2014 Stakes)

Democrats are quick to respond. “There is no way a deal is possible if Republicans say ‘It’s my way or the highway,’ and that the only way you can do a deal is with only cuts,” says a senior Senate Democratic aide. When asked if he would consider a deal without revenue increases, Representative Chris Van Hollen of Maryland, a member of the conference and the ranking member on the House Budget Committee, told TIME, “No, we support a balanced approach to reducing the deficit and replacing the sequester.”

But there is some opening on the Republican side for a narrow increase in revenues. Representatives Tom Price of Georgia and Tom Cole of Oklahoma, two of the four House Republicans on the conference, are divided on the issue. “Congressman Price believes the best way to generate revenue is to grow our economy and get more Americans working again,” says spokeswoman Ellen Carmichael. “He does not believe that we should take more money from hardworking Americans to bail out Washington.”

“Both sides would like to deal with the sequester,” Cole told Bloomberg last week. “And we’re willing to put more revenue on the table to do that, and we would like to do it with entitlement savings.”

As Cole’s comment suggests, mutual disgust of sequestration cuts could force a coalition of Republican defense hawks and Democrats together. Of the 34 Republicans on the armed-services panel, 30 signed a letter sent last week to the leaders of the conference, Ryan and Senate Budget chairwoman Patty Murray, decrying sequestration, half of which is targeted on defense spending. Sequestration cuts $109.3 billion in fiscal year 2014, up from roughly $80 billion in 2013.

But many Republicans like sequestration. “For the first time in 50 years, discretionary spending in Washington has declined for two years in a row,” Senator Roger Wicker of Mississippi wrote after he was named a budget conferee. “Republicans have successfully fought to ensure the budget savings, established in 2011, will continue. We must not stop there.”

Senate minority leader Mitch McConnell, who brokered the latest fiscal deal with Reid, has focused his 2014 campaign messaging on his success in establishing the sequester-funding triggers in 2011. Although he isn’t a budget conferee, recent history suggests that he needs to sign off on any fiscal deal for it to pass with Republican support. “This legislation is the largest spending-reduction bill of the last quarter-century and the largest deficit-reduction bill since 1981 that didn’t include a tax hike,” said McConnell on the Senate floor on Oct. 16. “Preserving this law is critically important.”


A previous version of this article stated that there were 28 budget conferees. There are 29.

MORE: On to the Next Crisis: Why Congress Learned Nothing From the Shutdown