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 If the accord comes together, it would blunt some of the automatic
"sequester" spending cuts and set funding levels at around $1
trillion for fiscal 2014 and 2015 for government agencies and
programs from the military to national parks.
Such a deal would not address an increase in the federal borrowing
limit, which is expected to come up again by the spring, leaving
conservatives a pressure point to try to exploit.
However, it might restore some order to the federal budget process,
which broke down years ago and has been replaced by stopgap funding
measures, accompanied by brinkmanship and shut-down risks.
"If this holds together, it is a very good story," said Greg
Valliere, chief political strategist at Potomac Research Group,
which advises institutional investors.
"The chances of another Washington budget crisis have diminished
greatly, and I think it increases the chances that the economy
surprises to the upside," he said.
Two U.S. senators on Sunday expressed optimism that a two-year
budget deal could be reached soon. Republican Senator Rob Portman,
who sits on the House and Senate negotiating panel, told the ABC
program "This Week" that he was hopeful an agreement could be struck
"by the end of this week."
Richard Durbin, the second-ranking Senate Democrat, said the talks
were "moving in the right direction."
Some argue that the deal, which would trade some of the sequester
cuts — perhaps $30 billion to $40 billion a year — for a mix of
fee-based revenues and other savings, would mark the death of
ambitious efforts to reduce deficits.
"I don't really see a natural way for there to be a grand bargain
during the rest of the Obama presidency," which ends in January
2017, said Robert Bixby, executive director of the Concord
Coalition, a nonpartisan group that urges fiscal responsibility.
NEGOTIATIONS STILL UNDERWAY
The negotiations under way stem from the deal that ended the
government shutdown in October, which set up a House-Senate
conference committee led by Republican Representative Paul Ryan and
Democratic Senator Patty Murray.
They are still struggling to pin down the final details of their
modest compromise before the House ends its session for the year on
December 13.
Among the proposals under discussion are a doubling of airport
security fees levied on airlines to about $5 per ticket, and a plan
to require federal workers to contribute a higher percentage of
their income towards their pension plans, according to people
familiar with the talks. Other items include funds raised by
auctioning some government-held telecommunications airwaves or
hiking corporate fees for the U.S. agency that protects workers'
retirement funds.
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Democrats have objected to the hike in federal employee's pension
contributions, which they view as a benefit cut.
Republicans backed by the conservative Tea Party movement also are
objecting to the idea that a Ryan-Murray deal could push spending
levels above the $967 billion cap set by the sequester, sacrificing
what they view as essential savings.
If no House Democrats vote for a Ryan-Murray deal, the Tea Party
group is large enough to prevent its passage.
After the public relations disaster suffered by Republicans as a
result of the October shutdown, few conservatives are showing any
interest in a repeat performance.
"I don't think there's any use of government shutdown threats if we
can get something out of the conference committee," Representative
Blake Farenthold of Texas, a Tea Party supporter, told reporters on
December 3. "I think we'll get bipartisan support on something a
conference committee comes up with."
Obama and his fellow Democrats in Congress also have warned that
they want a one-year extension of federal unemployment benefits that
are set to expire the end of this month. A Senate Democratic aide
said on Saturday it was still unclear whether such an extension
would be included in the deal.
While the savings would be small, the deal would bring some
much-needed order to a chaotic budget process in Congress that has
broken down over the past few years, leaving Congress lurching from
one stopgap funding resolution to another.
House Appropriations Committee Chairman Harold Rogers, a Republican
critic of the deep sequester cuts, said he is now willing to live
with only modest relief, and is determined that Congress pass annual
spending bills for the first time since 2009.
"We need to get the train back on the tracks," said Rogers, who is
from Kentucky. "If we get a 2015 number, we can do that."
(Additional reporting by Caren Bohan and Aruna Viswanatha;
editing
by Fred Barbash and Christopher Wilson)
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