- The Washington Times - Tuesday, November 12, 2013

No tax increases, no major cuts to Social Security or other entitlements, and no big jump in federal spending. As House and Senate negotiators meet Wednesday to try to hammer out a unified 2014 federal budget, what’s most striking is how many options they’ve already ruled out.

Democrats and Republicans have both rejected a “grand bargain,” which ties together tax increases with cuts to entitlement programs such as Social Security. And without a more ambitious bargain, neither side is ready to give in to the other side on tax rates or spending levels.

In fact, about the only area of common ground is a willingness to revisit the sequesters, or across-the-board automatic budget cuts, that began earlier this year and are slated to trim spending for the rest of this decade.

“We made a mistake, Congress did, by enacting sequestration,” Sen. Tom Harkin, Iowa Democrat, said Tuesday as he hosted voters on Capitol Hill who said the sequester cuts had hurt them. “Its time to fix that mistake.”

The budget was supposed to have been passed seven months ago. It wasn’t, so the federal government is operating on stopgap funding for fiscal year 2014, which began Oct. 1.

Leaders have set a deadline of mid-December for getting a new budget written, but some lawmakers want to see it done by Thanksgiving, which would give the spending committees more time to convert the budget blueprint into specific appropriations bills.

The budget negotiators held their first meeting late last month and drew lines on what they could accept.

House Budget Committee Chairman Paul Ryan, Wisconsin Republican, has already ruled out any increase in taxes, warning any attempt by Democrats to demand higher taxes would undermine the negotiations from the start.

“If we look at this conference as an argument about taxes, we’re not going to get anywhere. The way to raise revenue from our perspective is to grow the economy, to get people back to work,” he said during the negotiators’ first meeting on Oct. 30.

Meanwhile his Democratic counterpart, Senate Budget Committee Chairwoman Patty Murray of Washington state, said that while she is open to some minor cuts to entitlement programs, she is not willing to talk about major ones that would create hardship for ordinary Americans.

Despite the tough talk, Marc Goldwein, a senior policy director for the Committee for a Responsible Federal Budget, said he doesn’t believe anything is truly off the table.

“I don’t think anyone has said, ‘This particular policy under the circumstances is not up for negotiation,’” he said. “They have started to set expectations to find a one- or two-year plan, but that doesn’t mean they couldn’t do something bigger.”

Still, he said the most likely area of agreement will be on sequester cuts.

“They all agree that the [sequester is] not the best way to cut spending,” Mr. Goldwein said. “I suspect they won’t try to replace all $105 billion of sequester, but they might try to replace half, a third, two-thirds, depending on what savings they can identify.”

Other options where there might be some agreement include closing tax loopholes, said Joel Friedman, vice president for federal fiscal policy at the Center on Budget and Policy Priorities.

“Both sides acknowledge there are these loopholes in the code that should go,” he said. “In the context of a smaller deal, identifying one or two for a solution seems reasonable.”

However, even that possible point of agreement isn’t without challenges.

Chris Edwards, editor of DownsizingGovernment.org at the Cato Institute, said the two parties can’t even agree on what constitutes a “loophole” — which means negotiators will have a tough time agreeing on whether to get rid of them.

“That’s a real hurdle — it’s that Democrats’ basic understanding of tax policy is just fundamentally different from Republicans,” Mr. Edwards said.