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Will the Budget Process End Where the House Leadership Started?

Negotiations Look Likely to Lead to a Bizarre Outcome for the President and Senate Democrats

It’s beginning to look like the 2011 federal budget process could degenerate into a passive compromise that ends up precisely where the House Republican leadership started out nearly two months ago. That would be a very strange outcome for the Senate Democrats and the president to allow.

Here are the current public positions in the negotiations. The House has passed a continuing resolution to fund the government for the rest of the year that would cut more than $100 billion from what the president proposed in his 2011 budget submitted about a year ago. The Obama administration and Senate Democrats have already agreed to support a budget with about $50 billion less in discretionary spending than what the president originally requested.

the state of the budget negotiations

Negotiations can take many twists and turns. The bottom line numbers aren’t all that matters—how the money is spent is also very important. But when you see a Republican position of $100 billion and a Democratic position of $50 billion it wouldn’t be shocking if the number comes out to around $75 billion. If you ignore that the Democrats control two out of the three branches of government and how these numbers were arrived at, this might seem like a reasonable accommodation. But it’s worth recapping how we got to $50 billion and $100 billion as the two bargaining positions.

First, as already noted, the president has already moved substantially from the budget he proposed for 2011. His choice to move that far from what presumably he believes is the budget that would best serve the country is already a major concession. If one believes that negotiations should yield results roughly near the middle of the range of disagreement, it’s important to note that the president already met the other side half way before the negotiations even started.

As important and telling is how the House Republicans got to $100 billion. Back at the beginning of February, the House leadership proposed a continuing resolution that would have cut $74 billion relative to the president’s proposed 2011 budget. That sparked a rebellion from the slash-and-burn Tea Party wing of the Republican caucus, which demanded the full $100 billion they’d promised in the November election. The leadership caved and passed a bill with spending levels $100 billion below the president’s proposal.

The strange truth is that both the administration and almost certainly a majority in Congress believe that cuts of around $100 billion are much too big. Obviously, the president believes in his original budget, the Democrats in Congress are clearly against such massive cuts, and given their original proposal, most Republicans—as represented by their leadership—believe that $74 billion is the right number.

It’s not surprising that most everyone believes that $100 billion in cuts is too much—even many Republicans who think spending is too high. After all, cuts of that magnitude would mean hundreds of thousands of job losses in the near term, slower economic growth over the long term, and an unconscionable assault on services for children. They would also compromise the safety and health of all Americans and seriously fray the social safety net.

Unfortunately the administration backed away from its budget even before the negotiations started, and the Tea Party is calling the shots in the House. So instead of negotiation between the president’s original level and House leadership’s original level, we’re stuck negotiating between the Tea Party’s $100 billion, and the new status quo’s $50 billion. That means the likely compromise is right where the House Republican leadership always wanted it: around $74 billion.

That’s not much of a compromise if we end up with what the House Republican leadership wanted in the first place.

Michael Ettlinger is Vice President for Economic Policy at the Center for American Progress. Michael Linden is Director for Tax and Budget Policy at the Center.