The House and Senate began to smooth out their differences Monday over federal spending in 2016 and beyond, paving the way for showdowns between majority Republicans and President Obama over Obamacare, whether to slash health and welfare programs instead of raising taxes, and how to bolster the Pentagon without running afoul of spending caps the lawmakers agreed to years ago.
Republican lawmakers in charge of the negotiations said it was time for Congress to finalize a budget, period, and define a path toward spending bills that put fiscal solvency ahead of new taxes and spending.
“Our work today and in the coming weeks will show hardworking taxpayers that Congress is committed to a government that’s more effective and more accountable,” said Sen. Mike Enzi, Wyoming Republican and Senate Budget Committee chairman. “Our fiscal outlook is grim and has been ignored for far too long.”
The House plan, written by Budget Chairman Tom Price, calls for spending $5.5 trillion less than currently projected over the next decade, while the Senate plan from Mr. Enzi would spend $5.1 trillion less. Senators resisted sweeping changes to Medicare, although the House plan would eventually turn the health program for seniors into a voucher-system.
A unified budget would be Congress’s first since 2009 — a plan that helped ease passage of Obamacare — and Republicans hope this one will create a path to repealing that same law, as well as eliminating annual deficits within a decade.
“I was tempted to take a selfie at the beginning of this thing. It’s a really rare occasion,” Rep. Mario Diaz-Balart, Florida Republican, said of the first round of talks.
House Majority Leader Kevin McCarthy, California Republican, has said he expects the GOP-driven budget to be finished by the end of the month, although negotiations failed to make it past the litany of opening statements Monday.
The Senate sent 12 Republicans and 10 Democrats to the conference, while the House sent five Republicans and three Democrats.
Democrats at the table accused the GOP of using budget gimmickry to claim balance in their plans, retaining the revenue from Obamacare even as they called for its repeal, and failing to account for new tax-cutting bills.
“This is math that just doesn’t add up,” said Rep. John Yarmuth, Kentucky Democrat.
The showdowns are just getting started, though, as appropriators will have to write spending bills to match the non-binding budget, and other committees would try to carry out the instructions under “reconciliation,” which could include an Obamacare repeal or tax code overhaul.
Those bills are subject to a presidential veto, and the White House has already signaled it won’t accept a defense spending boost without domestic spending increases — and potentially higher taxes to pay for both.
The resulting standoff will force lawmakers to consider whether to lift “sequester” caps that Congress and the White House agreed to in 2011. Mr. Obama announced earlier this year he wanted to do away with the caps, and his Democratic allies pressed his case Monday.
“What, are we going to stick by a vote that was taken in August of 2011 on budget caps, when the world is throwing curveballs at us everyday?” Sen. Tim Kaine, Virginia Democrat, said, citing threats from Ebola, Russian President Vladimir Putin and the Islamic State.
Deficit-minded Republicans are unlikely to lift the caps without offsetting cuts elsewhere. And they do not want to raise taxes, so the calculus becomes, “what type of entitlement savings or user fees can they pull together to lift the caps in a way both sides can agree on?” said Joel Friedman, vice president for federal fiscal policy at the Center on Budget and Policy Priorities.
As it stands, defense is the main sticking point. Both chambers’ plans pump $96 billion into war-spending as a gimmick to boost the Pentagon budget without breaking the sequester caps, although the Senate must surmount a 60-vote threshold to green-light funding beyond the $58 billion that the White House requested for overseas contingency operations, or “OCO.”
The administration might oppose the Republicans’ war-account maneuver, and attempts to add defense money through regular appropriations would be constrained by the sequester caps, unless Congress agrees to change the law.
“In both of those cases, you have the White House with leverage over the spending number,” said Douglas Holtz-Eakin, president of the American Action Forum.
Former Sen. Tim Hutchinson, Arkansas Republican, said using the overseas war account offers a pragmatic way forward.
“I think the sequestration level is just not acceptable for our national security. I think anyone who looks at national security on a serious basis has come to that conclusion, that something has to be done,” he said in an interview.
While the White House and Republican-majority Congress may struggle to reach consensus, analysts said GOP leaders have shown no appetite for a government shutdown duel come October, when the 2016 fiscal year begins.
For now, analysts said syncing up a budget between House and Senate Republicans, who control both chambers, should prove relatively easy, both because of the number of areas they agree, and because a final deal is necessary for Congress to have a chance to use reconciliation, the budget tool that would help the GOP repeal the president’s health law by approving legislation on a filibuster-proof basis in the Senate.
Republicans are awaiting an expected Supreme Court decision, due by late June, that could blow a hole in Obamacare, opening the door to GOP-driven reforms and dictating whether the part should use reconciliation for health care or other priorities, such as tax reform.
Some say using it on Obamacare is a waste, as Mr. Obama would certainly veto a repeal bill.