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No 'Grand Bargain' Talks as Debt Ceiling Complicates Timetable

Borrowing Limit Battle Could Force 2014 Sequester Cuts

Jul. 8, 2013 - 03:45AM   |  
By JOHN T. BENNETT   |   Comments
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WASHINGTON — US senators long have preferred to pass a sequestration-addressing “grand bargain” bill before battling over the nation’s borrowing limit. Yet senators tell Defense News the two parties have yet to begin talks even as the debt ceiling is being held together by bureaucratic duct tape.

Both chambers will be back in session this week and are slated to spend most of the rest of July in Washington. But the House and Senate will leave in mere weeks for the legislative branch’s annual August recess, leaving just two months to hammer out a grand bargain that would address the remaining nine years of slated defense and domestic cuts.

As little work is being done on a grand bargain bill, a Washington-constructed speed bump threatens to derail the on-again-off-again budget deal talks: a possible battle over the nation’s borrowing limit.

The timing of legislative action by both chambers on the so-called debt ceiling increasingly appears as if it will coincide with the start of work toward a grand bargain.

What once was an issue for May or June has slipped to one for this fall.

That’s because the Congressional Budget Office (CBO), in a June report, determined the US Treasury Department can utilize “extraordinary measures” for a few more months to avoid an American default.

“CBO projects that those measures will be exhausted in either October or November,” the report states.

“In one sense the CBO analysis is good news because the date is much later than had been projected earlier in the year,” federal budget guru Stan Collender wrote in a recent blog post. “But it’s also bad news in the sense that the same end-of-year budget scenario that was so destructive in 2012 is starting to emerge again in 2013.”

The Bipartisan Policy Center (BPC) projects the “X Date” for a borrowing-limit breach “will occur between mid-August and mid-October, with the most likely points in that range being early September or early October.”

One reason for the slightly differing CBO and BPC estimates lies in “the projection window remains nearly half a year away, leaving substantial uncertainty over economic conditions in the interim,” the latter organization noted in a recent report.

Using the CBO ceiling estimate, Collender predicts only one or two — if that many — annual appropriations bills will be passed by both chambers and enacted by the start of fiscal 2014 on Oct. 1, which will make necessary another government-wide continuing resolution (CR).

“The plan will be to time the end of the continuing resolution to the date when the extraordinary measures will run out and a debt ceiling increase will be needed,” Collender predicts.

But with the White House likely to make good on a threat to veto any debt-ceiling hike that contains other provisions, the longtime budget analyst sees hopes for a “clean” borrowing-limit hike and a sequester-addressing budget deal fading fast.

“Nothing will be resolved by the time the extraordinary measures run out and the first CR expires. With Thanksgiving approaching and members of Congress eager to get home, a second CR and a short-term increase in the debt ceiling will be enacted until Jan. 15, 2014,” Collender said. “That’s the date when a sequester will occur if spending exceeds the cap.”

Sen. Richard Shelby, R-Ala., shares that outlook. “There’s always hope there will be [a deal],” he said. “But as time moves on, it begins to wane.”

Bargain Talks Stalled

Meanwhile, there will be no grand bargain bill awaiting upper chamber members when they return this week. And, members and aides say, it will take weeks — likely months — for the two political parties and the Obama White House to cobble one together.

Senators say it is a virtual lock the Senate will not act on such a bill until well after the August recess.

Asked if senators have begun a serious effort to craft a big bipartisan budget bill, one GOP senator whom President Barack Obama has courted, John McCain of Arizona, replied: “No. There’s nothing going on but conversations.”

“And we know how productive those are,” he added during a brief interview, oozing sarcasm.

Senate Appropriations Committee member Chris Coons, D-Del., also pointed to informal “conversations.”

“I think there are some ongoing conversations about replacing the sequester,” Coons said during a brief interview. “It’s really difficult [to craft] an alternative.”

Despite widespread talk on Capitol Hill about the effects of the decade-spanning defense cuts, lawmakers are focused on other issues, including immigration reform, another try at gun control legislation and what to do about the Syrian civil war.

“There’s just a lot of other pressing debates that are occupying senators at the moment,” Coons said.

The top Republican on the Senate Appropriations Committee told Defense News that rank-and-file members remain largely on the sidelines in the budget-deal arena.

“You probably need to talk to Boehner and Leader Reid and McConnell and the president,” Sen. Richard Shelby, R-Ala., said. He was referring to GOP House Speaker John Boehner of Ohio, Democratic Senate Majority Harry Reid of Nevada and Senate Minority Leader Mitch McConnell of Kentucky, and President Obama — the four men who, for three years, have failed to strike a grand bargain.

Another anti-sequestration GOP senator whom Obama has wined and dined in his episodic pursuit of a budget deal, Lindsey Graham of South Carolina, told reporters June 27 that “these dinners are nice” but added formal talks that involve Obama are necessary.


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