Tense Endgame for Budget Talks

One week from deadline, budget negotiators Rep. Paul Ryan and Sen. Patty Murray are a few billion dollars apart from a deal

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Yuri Gripas / Reuters

Representative Paul Ryan

One week before a self-imposed deadline, congressional negotiators are trying to clinch a two-year budget deal that would set spending levels and soften deep cuts scheduled to take effect next year. Now details of a potential agreement are starting to emerge—along with signs of tension that could produce yet another dead end.

It remains unclear whether the budget deadlock that has gripped this Congress for months can be broken. On Tuesday, ranking member of the House Budget committee Chris Van Hollen (D-Md.) called the prospect a “jump ball,” as a group of negotiators led by House Budget Committee Chairman Paul Ryan (R-Wisc.) and Senate Budget Committee Chairman Patty Murray (D-Wash.) appear snagged on issues like pensions for federal workers and unemployment benefits for the long-term jobless.

Meanwhile, some of the nation’s biggest budget headaches—like the cost of entitlement programs and inefficiencies in the federal tax code—remain off the table for now. A “Grand Bargain” on the nation’s fiscal future remains as elusive as ever.

Though Congressmen have been tight-lipped, a GOP leadership aide tells TIME that the emerging deal would set discretionary spending levels for 2014 slightly above $1 trillion. That’s a compromise figure, above the $967 billion established under the 2011 Budget Control Act (BCA), which has already angered some House Republicans, but lower than the $1.058 trillion level sought by Senate Democrats.

The deal would also replace over $30 billion of the $109 billion in next year’s cuts contained in the budget sequester—the automatic budget reductions that began kicking in nine months ago, after the failure of previous budget talks—with a mixture of increased fees and tailored reductions spread over 10 years. The money would be split between military and domestic programs like Head Start and Meals on Wheels, addressing complaints that the sequester was a blunt instrument whose cuts should be more carefully targeted.

The proposed cuts won’t touch beneficiaries’ entitlements to Social Security, Medicare, or Medicaid, says the source, but also wouldn’t raise revenue from tax hikes. Increased revenue could come from increased fees such as those on airline ticket purchases, but that has not been settled. The deficit reduction accomplished by the BCA would remain intact despite the increase in discretionary spending.

“[Murray and Ryan] are still trying to fill a hole of a few billion dollars so I think it is premature to say that anything is completely off the table,” says the source, who says the details shift “hour to hour.”

The negotiators are haggling over a few sticking points—including how much federal workers should pay into their pension plans. President Obama’s 2014 budget would raise the contributions by 1.2 percent, saving nearly $20 billion over the next decade, while Ryan has called for a 5.5 percent contribution from employees to save more than $132 billion over the same time frame.

“I’ve always been supportive of making sure that federal workers have the same kind of benefits that the private sector workers have in terms of market rates,” House Majority Leader Eric Cantor told TIME. “I don’t think that it’s proper for our government workers to have anything more or less, and I think that what you’ve seen now in the benefit package on the federal level, it is much richer than what exists in the private sector.”

Democrats are digging in against asking federal workers to pay more, particularly when tax rates for the wealthy are not part of the conversation. House Minority Whip Steny Hoyer said he would “vehemently oppose” such a move. “It’s awfully wrong,” said Rep. Elijah Cummings (D-Md.), who added, “you can’t keep asking this small group of people to give, give, give, and the rest of the country not give anything.”

But Democrats are pushing their own contentious agenda items. House Minority Leader Nancy Pelosi irritated Republicans Thursday by saying Democrats couldn’t support a budget agreement that doesn’t extend unemployment insurance (UI) benefits. Around 1.3 million Americans will lose their unemployment insurance unless Congress extends an emergency aid program set to expire Dec. 28. Pelosi said failure to do so would “undermine who we are as a country.” Pelosi later stepped back, saying she could support the budget agreement without extending UI, adding that she hopes Congress will address the issue before January.

A Democratic aide familiar with the budget talks said Murray had already been pushing a UI extension, but that Pelosi’s comments increased pressure on Ryan to accept the provision as a means of winning Democratic votes for a final package.

Some Republicans insist Pelosi was pushing a poison pill, given that unemployment insurance, according to one source, had “never been part of the discussion.” “There is no way this could be viewed as anything other than a blatantly political attempt to kill a deal,” says the GOP leadership aide.

If Murray and Ryan fail to find common ground, the House Republican leadership has a backup plan: a short-term funding bill that continues current spending levels—the status quo, in other words.

That outcome is opposed by members eager to move beyond endless budget stalemates. Among them are pro-defense hawks, who want to alleviate $20 billion in Pentagon budget cuts planned for next year by sequestration.

But it may be safest to assume that this Congress—the least productive in decades—will once again choose deadlock over compromise.