Reuters
Top News
Q+A: Congress nears confrontation over budget
Mon, Apr 04 01:30 AM EDT

By Andy Sullivan

WASHINGTON (Reuters) - Congress faces a series of confrontations over spending, borrowing and other fiscal policies when it resumes work on Monday.

Following are some questions and answers about the topic that has dominated the Congress even as the United States contends with the conflict in Libya.

WHAT IS BEHIND THE BUDGET DEBATE?

As the United States emerges from the worst economic downturn since the 1930s, it faces mammoth long-term budget deficits and a rapidly growing debt load. Some experts say the country could be headed for a Greece-style debt crisis if lawmakers do not bring spending in line with revenues.

Republicans are pushing for sharp cuts to domestic spending as a first step to reining in deficits that are projected to hit $1.4 trillion this fiscal year by the non-partisan Congressional Budget Office.

Democrats, who control the Senate, agree on the need to reduce deficits over the next several years, but warn that the fragile economic recovery could be damaged if government spending is curtailed abruptly. They also point out that the domestic discretionary spending that Republicans are targeting accounts for only 13 percent of the $3.7 trillion budget.

HOW IS THE DEBATE PLAYING OUT?

Congress faces at least three separate budget battles over the coming weeks.

* Lawmakers must finalize spending levels for the current fiscal year, which is already halfway through. They must act by April 8, when temporary funding expires, or the government will be forced to shut down.

* They must begin work on a budget for the next fiscal year, which starts October 1. By law, Congress must agree on a broad budget outline by April 15, though that deadline is frequently missed. After that, they need to pass the 12 separate spending bills that actually release the money that funds federal operations.

* Congress also is going to have to hold a vote on whether to raise the country's debt ceiling. The Treasury Department says the country will bump up against its statutory $14.3 trillion borrowing limit in mid-April or May. Without an increase, the government faces a possible default on its loans.

* Finally, many in the Senate are calling for a comprehensive effort to stabilize the country's balance sheet by examining taxes, annual discretionary spending and a possible overhaul of benefit programs like Social Security and Medicare. Nearly two-thirds of the chamber's 100 members signed a letter asking President Barack Obama to get more involved.

WHY IS CONGRESS FIGHTING OVER A BUDGET FOR THE CURRENT FISCAL YEAR?

Democrats did not pass any of the 12 spending bills needed to keep the government running last year when they controlled the House of Representatives and the Senate.

Republicans, who won control of the House in November, are now trying to fulfill a campaign promise to roll back domestic spending to 2008 levels by cutting $61 billion from current spending levels. That would require agencies to throttle back spending by an average of 25 percent.

The Senate, which is still controlled by Democrats, rejected that bill. After weeks of bluster, the two sides are now assembling a bill that would tentatively cut $33 billion.

WHAT'S GOING TO HAPPEN THIS WEEK?

Negotiators must resolve which programs would come under the knife.

Democrats want to protect education, scientific research and aid to the needy, and cut defense and programs like crop subsidies that normally lie outside the yearly budget process.

Republicans hope to prevent Obama from implementing his healthcare reform and regulating greenhouse gases by choking off funds for those efforts. Their bill includes dozens of such restrictions.

Republicans say that they will push for deeper cuts beyond the $33 billion figure if these restrictions are left out. In the end, some are likely to make it into the final bill.

After negotiators craft a final bill, it will have to pass through the House and the Democratic-controlled Senate.

House Speaker John Boehner could face a defection from his right flank as many conservatives have indicated little appetite for compromise. He may have to rely on Democratic votes to get the bill passed, which could complicate his ability to govern the chamber going forward.

He can point out to restive Republicans that they will get a chance for further cuts when House Budget Committee Chairman Paul Ryan unveils his spending bill for the next fiscal year, likely on Tuesday.

Funding runs out at midnight on Friday. Congress could opt to keep the government running for a few more days if negotiators need more time. Or they could allow the government to shut down.

WHAT WOULD HAPPEN IF THE GOVERNMENT SHUTS DOWN?

If Congress fails to pass a spending bill by April 8, or Obama vetoes their final product, government operations deemed nonessential would have to shut down.

While the military would continue its wars in Iraq, Afghanistan and Libya and retirees would still get their Social Security checks, passport offices and national parks would close and those waiting for new benefits would have to wait longer. Hundreds of thousands of federal workers would stay home, and contractors working for private companies would be thrown out of work as well.

It would result in a massive disruption to the economy with unpredictable political results. Neither Republicans nor Democrats want that to happen.

Republican leaders are painfully aware that the public largely blamed them for the last shutdown which occurred in late 1995 and early 1996. It led to the downfall of Republican House Speaker Newt Gingrich and helped Democratic President Bill Clinton win reelection.

Democrats, meanwhile, are mindful of polls that show they would not necessarily benefit from a shutdown this time after losing the battle for public opinion on the 2009 stimulus spending package and last year's healthcare overhaul.

A shutdown would also undercut the Republican goal of reducing costs.

"Let's all be honest, if you shut the government down, it'll end up costing more than you save because you interrupt contracts. There are a lot of problems with the idea of shutting the government," Boehner said on Friday.

(Editing by Paul Simao)


Email Article
Next Article in Top News