Avoiding Another Government Shutdown Moves To Front Burner

On Capitol Hill, another red-letter budget deadline is fast approaching. The Senate and House budget chairs are working toward an agreement on spending levels that they are supposed to be announced by the end of next week.

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RENEE MONTAGNE, HOST:

This is MORNING EDITION, from NPR News. I'm Renee Montagne.

STEVE INSKEEP, HOST:

And I'm Steve Inskeep. Good morning.

The end of Thanksgiving weekend brings us closer to another deadline. The budget chairs of the Senate and the House, here in Washington, are continuing talks to set spending levels for the coming year and maybe beyond. They're leading a conference committee setup as part of the deal to end the partial government shutdown this past fall.

Now, in theory, the group is supposed to announce an agreement by the end of next week. So, for an update on where things stand and what's at stake, we're joined this morning by three of our correspondents. White House correspondent Scott Horsley is here, Pentagon correspondent Larry Abramson. And let's begin with our Congressional correspondent, Tamara Keith.

Hi, Tamara.

TAMARA KEITH, BYLINE: Hi.

INSKEEP: OK. So is an agreement close, since time is short?

KEITH: You know, it's hard to know. The committee, as a whole - this whole conference committee hasn't met since last month. But the two chairmen are talking. They aren't saying what they're talking about. I've spoken to members of the conference committee, who don't even really know where they stand. But these two chairmen are the Senate Budget Committee Chair Patty Murray and House Budget Committee Chairman Paul Ryan. They're expected to meet face-to-face early this week. And they've reportedly had some good discussions.

INSKEEP: Of football, perhaps, or Thanksgiving dinner or something like that.

KEITH: Who knows?

INSKEEP: Oh, these are serious people. Serious people, here.

KEITH: Serious people trying to come up with a solution. What we're told is that these good discussions have led them to even further narrow their goal. When this started, some people talked about maybe a grand bargain. Then they were talking about maybe a mini-grand bargain. Now the goal here is simply to come up with a top-line budget number for the next year...

INSKEEP: OK.

KEITH: ...maybe the next two years.

INSKEEP: So, a bargain with no adjectives, perhaps.

(LAUGHTER)

KEITH: Right. They're just trying to find a way to avoid another government shutdown and potentially to put off the sequester, those automatic, across-the-board spending cuts.

INSKEEP: Any chance of a government shutdown again, given that the current spending authority they passed after the last shutdown only goes through the middle of January?

KEITH: No one wants a government shutdown, a least no one I've spoken to on either side of the aisle. It's pretty universally agreed that the shutdown was not a good thing. It cost a lot of money, actually. And congressional approval - which was already in the tank - went further into the tank.

INSKEEP: I want to ask our White House correspondent Scott Horsley, here. Scott, why is it so hard to reach an agreement right now? What is the overall situation that's making it difficult to do this thing the government is supposed to do every year, which is just to agree on a budget?

SCOTT HORSLEY, BYLINE: Well, the Republicans don't want to spend as much money as the Democrats do. And the Democrats are unwilling to make the kind of draconian cuts that the Republicans want to make.

INSKEEP: And they're both under pressure, because they've already previously agreed to budget cuts, the sequester, as it's called?

HORSLEY: Well, the sequester was never really an agreement. It was sort of cudgel that was supposed to force a different agreement. And when they couldn't reach that, the sequester went into effect by default.

INSKEEP: And these are mandatory spending cuts, or at least restraints on spending on every government agency, including the Pentagon, which has one of the biggest budgets of all. NPR's Pentagon correspondent Larry Abramson covers that. And what are the implications for the military, of this situation?

LARRY ABRAMSON, BYLINE: Well, they're big, Steve. It would mean $20 billion in cuts over what the Pentagon spent last year, but it would be $50 billion if you compare it to what the Pentagon requested for their budget. And even at the Pentagon, that's serious money that we're talking about. And so, for a long time, the Pentagon has been acting as though sequestration would not happen. It was too stupid, too impossible. But now that they're going into a second year of this, they're actually starting to slow down their spending and resign themselves to the fact that they may have to live with this for many years - for a decade, basically.

And the challenge for them is that they have to cut spending, but they don't want Congress to know that it's possible to cut spending, because then Congress may say oh, well, then go ahead and just accept it.

(LAUGHTER)

ABRAMSON: So they continue with this rhetoric of saying, it's impossible. We cannot keep a ready force that does the mission that you've assigned us under these budget cuts.

INSKEEP: Well, let's be real. Would the military be fundamentally different if these mandatory spending cuts remain the law for several more years?

ABRAMSON: You know, right now, it's really impossible to say what the military would look like in 10 years, because there's so much disagreement about how to implement these cuts. Congress is saying, look, cut your budget 10 percent, to the Pentagon. But you can't cut health care benefits, and you can't cut the pay of service members. You cannot close bases.

INSKEEP: Huge parts of the budget here, the Pentagon budget.

ABRAMSON: And the things that are going up the fastest. And so the Pentagon says, well, what exactly are we supposed to cut? And they're basically being left with weapons systems that they're going to have to cut that are still, you know, seen as useful.

I'll give you an example. The Air Force is saying, well, we have this old plane, the A-10, that is used to protect troops on the ground. Everybody loves this plane. But it's old, and the head of the Air Force says we may just have to shut down this plane, because if we just cut 100 planes or 200 planes, we still have to maintain the rest that are there. This has caused a huge amount of outrage from the members of Congress, who have these planes in their districts, who depend on these planes for local jobs. So that's just one small example of how difficult it's going to be to implement these cuts in this really important department.

INSKEEP: OK. So, a steadily shrinking pie, or what feels like a steadily shrinking pie, because increases are not as much as they would be. And, of course, this means that the budget chairs we were talking about have balancing acts to perform, decisions to make. It's not just about military spending. It's also about every other part of the government, Scott Horsley.

HORSLEY: Well, that's right. And Steve, we're not actually talking here about smaller increases. We're talking about an actual, absolute cut in spending.

INSKEEP: OK.

HORSLEY: Now, for the non-military parts of the discretionary budget, they're not necessarily looking at a lot of big cuts in the coming year. They're instead just going to have to limp along at what they were at in 2013. But they say that's going to be a lot tougher, because, you know, when your grocery budget gets cut, for a while you can raid the freezer. You can eat up the canned goods in pantry. They did that to survive 2013. You remember the FAA, for example, avoided furloughing air traffic controllers by raiding some money that was for airport improvements. They can't do that again this year. That money is spent. The pantry's empty. The freezer's bare. Now they'll just have to listen to the stomachs grumble.

INSKEEP: Tamara Keith, just so that we're clear on this, are both Republicans and Democrats worried about where spending levels are at right now, if they don't agree on some changes?

KEITH: I think that there are some Republicans who say let the sequester cuts go forward. Let those levels be in place. In fact, House Speaker John Boehner said that if they can't come to an agreement, they'll just do a short-term spending bill at those lower levels. But there are a whole lot of people - including some powerful people on the Appropriations Committees, the ones that actually in charge of writing the bills that spend the money - who say that these numbers do not work. What they say is that these discretionary spending pools in the budget, they've just been raided and raided and raided, and that there would be smarter ways to either raise revenue, Democrats would say, or make cuts, Republicans would say. So, the plea coming from the Appropriations Committees and a lot of other people in Congress is: Give us a new number, but just give us a number so we can work on this.

INSKEEP: Are some Republicans willing to accept higher revenues in some form in order to get to that new number?

KEITH: I think that some are. I think that they are not willing to accept new taxes, and in most cases, they're not willing to even accept closing what you'd call tax loopholes. But there are other ways to raise revenue, like possibly fees or, you know, put a different name on it. There are some people would be open to that on the Republican side. And one question is whether that would be enough for Democrats.

INSKEEP: Scott Horsley, I guess another option here would be just to worry less about the deficit, which is coming down pretty substantially.

HORSLEY: Well, the deficit is coming down, partly as a result of the cuts we've made to this point, and also because the economy's getting better. But you know what's funny is none of this discussion is really focused on the parts of the federal budget that are driving the long-term deficit. While we've got relief in the short-term, we're still looking at some real fiscal challenges in the long term, and those are driven by health care costs. But right now, it's a lot easier politically to talk about raiding Head Start slots or cutting aid for winter heating bills than it is to tackle something like Medicare.

One good piece of news is that health care costs have been growing now at the slowest rate on record for the last three years. There's some disagreement about what's behind that, whether part of it's the recession. But the White House Council of Economic Advisors says it's not just the recession there. They think there's been some real structural changes in the way we're doing health care in this country that could produce some long-term savings.

INSKEEP: NPR's Larry Abramson, Scott Horsley and Tamara Keith, thanks to all of you.

KEITH: Thank you.

ABRAMSON: Thank you.

HORSLEY: You're welcome.

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