The Art of the Deal: The Budget Deal, That Is!

It’s time to Break It Down!

In 1987 current Presidential Candidate Donald J. Trump wrote a book entitled, “Trump The Art of the Deal.” This post is not about that. Rather, it is about the budget deal tentatively struck by Congress and the White House Monday evening. The measure will likely be voted upon today. This is key, and leaves no margin for error.

The urgency, in part, stems from the desire of House Speaker John Boehner to execute and dispense of the matter prior to the vote to elect a new Speaker, also tentatively scheduled for today, to elect Rep. Paul Ryan to the Speaker’s position. In the world of Washington politics, a lot has to go right for all this to happen.

First, not everyone is on board with the new budget. That includes Rep. Ryan; sort of. In fact, Mr. Ryan strongly condemned even the way the accord was put together. He explained he had not even laid eyes on it. He said:

“About the process, I can say this: I think the process stinks. Under new management, the people’s business will be conducted differently.”

Beyond the Ryan objections, it’s fair to say a number of the House and Senate’s most conservative members have reservations, objections, or concerns about the deal. In fact, to reach the deal, compromise, a word that has become anathema in the hallowed Halls of Congress in recent years, had to be reached. And it was.

The House Rules Committee met late into last night in an effort to ensure the deal reached the House floor by today. One key sticking point was a reduction in crop insurance payments; a move designed to raise $3 billion over ten years. A number of the top members of the Senate Agricultural Committee released a statement yesterday opposing the deal. Committee Chairman Michael Conaway (R-Texas) said:

“Make no mistake, this is not about saving money, it is about eliminating Federal Crop Insurance. The House Agricultural Committee was not consulted regarding any changes to policies under the jurisdiction of our committee.”

Also on the concerns side of the ledger, following Tuesday morning’s meeting, some conservatives complained that the budget negotiations were conducted without the input of committee chairs and rank-and-file members. It is however, unlikely that they will have the numbers to derail the pact, that is, presuming Democrats and moderate Republicans stay onboard. Representative John Fleming, a member of the House Freedom Caucus, said:

“I don’t know if this thing could pass. It could break apart, and we could begin tackling this piecemeal well into Paul Ryan’s Speakership.” Or so it would seem, he hopes.

Representative Tom Cole, a centrist, said:

“The deal isn’t perfect, but it prevents default and gives certainty to the military, while making long-term reforms to Social Security and Medicare. I think it’s a pretty good choice to make. It’s a compromise and that means we had to give some things up that we don’t want, but we got some great things.”

Concerns notwithstanding, aides downplayed the risks that reservations about the issue could alienate enough votes to damage the deal.

The gist of how, why, and when all of this came about is tied directly to politics and timing. It has been two years since Congress and the White House has reach genuine bi-partisan budget compromise. This…is that. Speaker Boehner, who resigned a few weeks ago, effective October 31st, wanted very much to craft/negotiate a budget deal, and get it approved before he left his position, and his Congressional Seat. He considered this a parting gift to Mr. Ryan, who will likely assume the reins of the Speakership tomorrow after the vote on the budget, if successful. Speaking about brokering the compromise yesterday, Speaker Boehner admitted he was cleaning a “dirty barn” for his likely replacement, Rep. Ryan, who was not involved in the secretive negotiations.

More precisely, Boehner said that he crafted the deal before his departure because he didn’t want the new Speaker “to walk into a dirty barn full of you know what.” He conceded that the package should have been assembled in a more inclusive way. He went on to add, “This is not the way to run a railroad.”

Ultimately, the leadership of the House and Senate privately negotiated the deal. Those actively involved included Speaker Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Mitch McConnell, and Senate Minority Leader Harry Reid. The group kept a tight lid on the negotiations. They revealed the deal only after it was complete.

Minority Leader Pelosi embraced the agreement yesterday, signaling that the 188 House Democrats could provide a large portion of the vote needed to get a majority in the House. She indicated:

“The bi-partisan budget package unveiled Monday night represents real progress for hard-working families across the country. I look forward to working toward House passage of this proposal this week. Next, we must move forward to complete the appropriations for FY2016 and keep government open.”

If Representative Pelosi and House Minority Whip Steny Hoyer can deliver votes from most, if not all, of their members, Mr. Boehner will have to win the support of only about 40 to 50 Republicans to pass the deal.

The Vice President, Joe Biden, praised the deal yesterday. He said:

“The last seven years, we’ve gone from crisis to recovery, and we’re on the verge of being able to have a genuine economic resurgence here. And what we’ve put together is a good deal. No one got everything they wanted. But it will last for two years and it will prevent us from lurching from crisis to crisis.”

Yesterday, Senator McConnell said to reporters that the agreement reaches issues important to Republicans, including more money for defense programs and offering funding increases through spending cuts rather than increases. He added:

“I’m hopeful and optimistic that the bill will come over to the Senate, and when it does, we’ll take it up.”

By most early accounts, key Senate Republicans are also on-board. Among them, Senator John McCain, Chairman of the Armed Services Committee, said he would support the deal because “It restores all but $5 billion of the defense requirements.” He noted that if the budget agreement passes, he could move quickly to adjust and pass the National Defense Authorization Act that was recently vetoed by President Obama over budget concerns. Backing by McCain virtually insures the support of other defense hawks, including Senator Lindsey Graham, a GOP Presidential Candidate. About the deal, Senator Graham said:

“We’re in a box here. But if Senator McCain is okay with it, then I’ll probably be okay with it.”

The White house also weighed in. One White House official said:

“The agreement reached by congressional leaders last night meets these key tests: It provides substantial relief from harmful spending cuts, and it does so equally on the defense and non-defense sides of the budget.”

It should be noted that the deal is not a complete victory for Democrats, who wanted even more spending increases and hoped to pass an increase without including it in a broader budget deal. President Obama has insisted that the debt limit not be used as a negotiating tool for spending cuts. The proposal will allow the President to say he secured a bargain on a scale that has not been seen since the 2013 agreement between Mr. Ryan and Senate Budget Committee (then) Chair Senator Patty Murray.

Democrats will still get to celebrate a messaging victory and will probably take credit for the deal. Senator Charles Schumer pointed out that that the proposal is the kind of spending agreement he and other Democrats have been promoting. He also said:

“For months, we Democrats have asked for a budget that increases spending significantly above sequester levels and does so in a way that is equally balanced between defense and key middle-class programs. The agreement does both.”

There are several key elements of the bipartisan deal, which constitutes a win for both the economy and budget discipline. Some of these points include:

Bipartisan Debt Deal

  • Removes the cloud of uncertainty over our economy at this critical time, by ensuring that no one will be able to use the threat of the nation’s first default now, or in only a few months, for political gain;
  • Locks in a down payment on significant deficit reduction, with savings from both domestic and Pentagon spending, and is designed to protect crucial investments like aid for college students;
  • Establishes a bipartisan process to seek a balanced approach to larger deficit reduction through entitlement and tax reform;
  • Deploys an enforcement mechanism that gives all sides an incentive to reach bipartisan compromise on historic deficit reduction, while protecting Social Security, Medicare beneficiaries and low-income programs;
  • Stays true to the President’s commitment to shared sacrifice by preventing the middle class, seniors and those who are most vulnerable from shouldering the burden of deficit reduction. The President did not agree to any entitlement reforms outside of the context of a bipartisan committee process where tax reform will be on the table and the President will insist on shared sacrifice from the most well-off and those with the most indefensible tax breaks.

Mechanics of the Debt Deal

  • Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending;
  • President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013;
  • Bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011, which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011;
  • Enforcement mechanism established to force all parties – Republican and Democrat – to agree to balanced deficit reduction. If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 – split 50/50 between domestic and defense spending. Enforcement protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.

When you come right down to it, there are many angles to this proposed deal. There are forces that promote it; factions that oppose it, and a fringe that is watching to see who is for it and who is against it. I don’t have a crystal ball, but my reading of the tealeaves suggests, despite Senator Rand Paul’s pledge to filibuster the bill, the President, Democrats, and a fragile and fleeting coalition of Republicans, buoyed by the urging of outgoing Speaker Boehner will carry the day. That result would in effect provide the Speaker with a parting victory, Mr. Ryan with the gift of a clean slate…or barn, as it were, and the American People with a winning budget proposal, courtesy of The Art of the Deal: The Budget Deal, That Is!”

I’m done; holla back!

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