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 As a result, any major deficit reduction efforts are stalled in
Washington for at least a year, and perhaps until the next president
takes office in 2017.
The procedural vote, potentially toxic for some of the senators,
would have been considered heresy three years ago, when the
Republican Party made deficit reduction its top priority and the
debt limit its main lever.
But the bitter fiscal battles since 2011, culminating in a 16-day
government shutdown last October that was blamed on Republicans,
have worn down party leaders, who would rather move on to more
politically advantageous issues such as the problems plaguing
President Barack Obama's signature healthcare reform law.
Indeed, lawmakers from both parties showed they have no lasting
resolve to reduce entitlement spending, bowing to political pressure
this week and reversing even modest cuts to military pension
benefits.
WAIT UNTIL NEXT YEAR
Rank-and-file Republicans in both the Senate and House of
Representatives grumbled about their failure to attach spending
reductions to the debt ceiling extension, but the mood was that of a
defeated sports team vowing to win the title next year. They voiced
little appetite for another major showdown.
"There's a lot of frustration that this is our last moment to make
progress on debt and deficits in this session (of Congress) and the
moment's slipping away," said Representative James Lankford, a
conservative Republican from Oklahoma.
"The next time that this will come up will be after the next
election," he added. "Hopefully we can win the Senate and we can
have a completely different conversation at that point."
Republicans need to gain six seats in the Senate to wrest control
from Democrats, which would give them both chambers in Congress if
they retain their majority in the House.
But political analysts say Republicans risked being blamed for
another messy showdown over the debt limit, which could have
imperiled their electoral prospects in this year's elections.
Lawmakers elected this November will take office in January 2015,
three months before the newly approved borrowing extension expires.
Obama and his Democrats, who succeeded in their demands for a debt
limit hike that was free of conditions, will certainly take the same
defensive position.
They have shown little inclination to consider Republican demands
for cuts to popular federal benefit programs such as Medicare and
Social Security, which are consuming an ever larger share of the
federal budget. Instead, they would prefer to increase tax revenues
to ease deficits — a move consistently rejected by Republicans.
Hopes for an elusive "grand bargain" that would slash trillions of
dollars from U.S. deficits over the next decade and start to shrink
the $17.2 trillion federal debt have given way to political
expediency.
"You're fighting a combination of no political leadership, a really
hard issue, midterm elections and a complicit agreement between the
parties to put this off for the time being," said Maya MacGuineas,
who heads the Committee for a Responsible Federal Budget, a
Washington group advocating deficit reduction.
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Both Congress and Obama may be lulled into a sense of complacency by
the dramatic shrinkage of deficits in recent years. The
Congressional Budget Office forecasts that deficits for the next few
years will be about half that of the more than $1 trillion in each
of Obama's recession-shadowed first four years in office.
Treasury Secretary Jack Lew has said the United States now has some
time to tackle its long-term deficit problem and that measures to
boost economic growth should take priority.
FAST REVERSAL
Another sign of the waning appetite for tough budget decisions came
this week in the form of a swiftly passed measure to repeal modest
cuts to military pension benefits.
The 1 percent reduction to cost-of-living adjustments for
non-disabled military retirees of working age were only approved in
December and were hailed at the time as a small step toward dealing
with the heavy costs of "entitlement" programs.
But members of both parties clamored to reverse the cut, with votes
of 326-90 in the House and 95-3 in the Senate. The move will add
$6.9 billion to deficits through 2024, when offsetting savings are
scheduled to occur.
"They took a tiny, tiny try at dealing with budgetary trade-offs,
and they didn't like it. They repealed it at the very first
opportunity," MacGuineas said.
But a Congress that has only been able to pass major fiscal
legislation when faced with a crushing deadline, may get an actual
crisis to motivate it in 2016.
That is when the Social Security Disability Insurance trust fund,
which pays benefits to people who cannot work because of medical
conditions, is forecast to be depleted. If that occurs, some 11
million beneficiaries would lose 20 percent of their benefits.
"That would be the first time that we might be able to scare people
into doing the right thing for the long term," said Steve Bell, a
former Republican Senate Budget Committee staffer, who is now a
senior policy analyst at the Bipartisan Policy Center.
But in a presidential election year, Congress may be more likely to
enact a temporary funding fix that pushes the problem to the next
administration, he added.
If that does not work, the CBO forecasts that deficits will begin
rising again by 2017 as more of the huge baby-boom generation
retires and starts to draw benefits. Deficits will approach the $1
trillion range again in the early 2020s, according to the CBO.
(Reporting by David Lawder; editing by Peter Cooney and Ken Wills)
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