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No budget deal without pain, CBO warns

Nov. 13, 2013 - 06:00AM   |  
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Congressional negotiators facing a Dec. 15 deadline to try to work out a federal budget agreement are facing pressure to do something — even something small — to give the nation some economic stability.

With a Jan. 15 government shutdown looming over their heads and the possibility of $109 billion in sequestration cuts, including $53 billion in defense cuts, without an agreement, pressure is on the 29-member panel to deliver something that provides relief from the prospect of lurching from one short-term fiscal crisis to another.

Doug Elmendorf, director of the nonpartisan Congressional Budget Office, told negotiators on Tuesday that a grand agreement that settles the nation’s fiscal problems for the long term might be out of reach, but “this is not the World Series.”

“Big steps are better than small steps, but small steps are better than no steps,” Elmendorf said. “No steps is better than stepping backward.”

To help spur on lawmakers, CBO issued a report with 103 deficit reduction options, including some suggestions such as reducing Social Security for future beneficiaries by 15 percent and eliminating homeowner tax deductions

Included are some dramatic proposals that would affect the Defense Department: canceling the Army’s ground combat vehicle program, the Navy’s Ford-class aircraft carrier and littoral combat ship, reducing the number of ballistic missile submarines and deferring the new long-range Air Force bomber.

Troops and veterans would not completely escape pain under CBO’s recommendations. For current service members and retirees, the report includes options to cut the size of the military, reduce future raises, make retirees pay more for military health care, and eliminate the right to concurrently receive military retired pay and veterans disability pay.

For veterans, the report suggests eliminating health care for anyone without a service-connected disability, restricting disability compensation to injuries or illness incurred in the line of duty, and eliminating unemployability as a factor in the rate of disability pay for anyone who is under the Social Security retirement age.

The proposals amount to tough medicine, something lawmakers are reluctant to dispense. But Elmendorf said there is no pain-free way to resolve the current standoff, and the risk of doing nothing will hurt the U.S. economy.

The basic elements of any budget plan must include revenue increases, cuts in spending or cuts in federal entitlements, he said, adding there is no way to move forward without doing at least one of the three.

Tuesday’s budget conference meeting was the second for the negotiators, who so far have given no indication of how they might be leaning.

Negotiations are being led by Sen. Patty Murray, D-Wash., the Senate Budget Committee chairwoman, and Rep. Paul Ryan, R-Wis., the House Budget Committee chairman. Both have tried to lower expectations, indicating they are not really even aiming for a big budget agreement, but rather seeking a plan to get the government through the next few years, until after the 2016 presidential elections.

Ryan said Tuesday’s meeting was intended to “keep the ball rolling,” and to look for areas where Democrats and Republicans agree.

Murray said she expects to be exchanging proposals with Ryan in an effort to look for common ground.

Meanwhile, House and Senate appropriators are anxious for the budget conference to at least determine spending limits for federal agencies for the fiscal year that began on Oct. 1, and to indicate whether there will be a proposal for avoiding sequestration.

They need this information to complete work on spending bills to keep the government operating beyond Jan. 15, when temporary funding expires.

Appropriators are pushing, in particular, to avoid sequestration, but not everyone agrees with that goal. Sen. Charles Grassley, R-Iowa, one of the budget conference negotiators, said “sequestration is working” to cut government funding.

Grassley also opposes plans being discussed to exempt the Defense Department, at a minimum, from the 2014 sequestration cuts.

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