August 1, 2013

G.O.P. Rifts Lead Congress to Spending Impasse

By JONATHAN WEISMAN and JACKIE CALMES

WASHINGTON — Hours before leaving on summer recess, Congress on Thursday hit a seemingly intractable impasse on government spending, increasing the prospects of a government shutdown in the fall and adding new urgency to fiscal negotiations between the White House and a bloc of Senate Republicans.

The group of eight lawmakers headed to the White House to find a way forward after Senate Republicans filibustered a housing and transportation spending measure, saying it violated a spending deal struck two years ago. The blockade of the Senate bill came after House Republican leaders on Wednesday gave up on a more austere version of the bill when moderate Republicans balked and said the cuts in the House measure were too deep.

For more than two and a half hours, the group met with the White House chief of staff, Denis R. McDonough, senior budget officials and, for nearly an hour, with President Obama. They emerged to say they would meet again at least once during the August recess.

Senator Bob Corker, Republican of Tennessee, said the president pressed the group to aim for a deficit-reduction deal that would be larger than simply replacing the across-the-board spending cuts known as sequester with savings elsewhere in the budget.

“Each time we meet there’s a little more clarity,” Mr. Corker said. But he warned, “Nobody should get overly excited.”

The collapse of the spending measures on both sides of the Capitol left leaders of both parties pointing fingers and a resolution up in the air until the House and Senate return after a five-week break.

“If we can’t recognize the reality of those failures, then we’ve got big problems,” said Senator Johnny Isakson of Georgia, the unofficial leader of the Senate Republican negotiators.

Representative Steny H. Hoyer of Maryland, the House Democratic leader, was pessimistic about avoiding another fiscal crisis in the fall.

“It’s a very difficult, dark path ahead, dark to the extent that I can’t tell you what the alternative is,” he said.

Congress appeared at a dead end, unable to pass spending bills at the levels mandated by the across-the-board spending cuts, but unwilling to retreat to higher numbers set by the 2011 Budget Control Act before those cuts went into force.

No one suggested a breakthrough was imminent, though Sylvia Mathews Burwell, the new White House budget director, said the rift within the Republican Party could be an opening for compromise. Large sections of the government will shut down on Oct. 1 unless Congress can find accommodation on new spending measures, and lawmakers will have little time to do so when they return on Sept. 9.

“We’ve got a $16 trillion debt,” said Senator Mitch McConnell of Kentucky, the Republican leader. “We’re spending hundreds of billions of dollars a year we don’t have. This is how you get Greece. This is how you get Detroit. So we can’t do this.”

Speaker John A. Boehner said he had no intention of retreating from the spending levels set by the sequester, and insisted that in September, Republican leaders would find the votes to pass spending bills at that level. “I’m sure our August recess will have our members in a better mood when they come back,” he said.

Other Republicans said the struggle would only get harder. Facing another rebellion, the House Appropriations Committee on Wednesday set aside the formal drafting of an interior and environmental program spending bill that would have cut the Environmental Protection Agency’s budget to $5.5 billion from $8.3 billion, slashed clean-water grants by 83 percent, and cut the national endowments for the arts and humanities by 49 percent.

The final domestic bill, which finances labor, health and education programs, would have the deepest cuts of all.

Moderate Republicans from the Northeast have found such cuts impossible to swallow, and when their numbers were combined with ardent conservatives who never support appropriations bills, leaders have found themselves short by dozens of votes. Representative Jim Gerlach, Republican of Pennsylvania, said he could not accept Amtrak cuts, which would have reduced rail financing by one-third, and cuts to Community Development Block Grants below the level set when the program began under President Gerald R. Ford.

For appropriators, “the frustration is, ‘Hey guys, you wrote the budget. We don’t do that. You asked us to produce the bills. We’re taking very difficult votes here. And at the end of the process, you’re not able to move these bills. You have to rethink your strategy,’ ” said Representative Tom Cole, Republican of Oklahoma, who sits on the Appropriations Committee.

The House Appropriations Committee chairman, Representative Harold Rogers of Kentucky, released a remarkable broadside against his own leaders.

“The House has declined to proceed on the implementation of the very budget it adopted just three months ago,” he wrote. “Thus, I believe that the House has made its choice: sequestration — and its unrealistic and ill-conceived discretionary cuts — must be brought to an end.”

The White House-Senate negotiations center on restoring domestic and military spending at least to the limits set by the Budget Control Act, and shifting those savings to entitlement programs and other “mandatory” programs not covered by the appropriations bills. Such a trade-off would be hard for the White House; Mr. Obama and senior advisers have said that he would not support reductions from the health-related entitlement programs, Medicare and Medicaid, unless Republicans agree to raise additional revenues.

Ms. Burwell called the public display of Republican division a potential “inflection point” that could force a change in their unyielding budget stand. And she rejected the conventional wisdom in Washington that even if the White House reached a deal with Senate Republicans, House Republicans would reject it. “You make the reality,” she said.

While Ms. Burwell echoed Mr. Obama in asserting that the White House had not given up on a comprehensive and long-term budget deal after two years of failures, administration officials lately have been consulting with Republicans about more limited accords to reduce deficits while investing now in programs to bolster the middle class.

The administration’s chief goal is to end the arbitrary sequester cuts and restore annual spending — other than for Medicare, Medicaid and Social Security — at least to levels agreed to in a July 2011 debt-reduction compromise.

In particular, Mr. Obama wants to make room for spending about $86 billion for one-time job-creation initiatives involving public works projects, community college programs and existing manufacturing-innovation centers.

That would include about $75 billion for infrastructure, covering road and bridge repairs, seed money for a public-private infrastructure bank and school construction bonds; about $8 billion for community college programs that prepare students for careers with local businesses, and about $3 billion for additional “hubs” for advanced manufacturing.

Two deadlines loom that could force a resolution. Because Congress will again fail to enact its spending bills on time, the government will run out of operating money Oct. 1 unless lawmakers approve a stopgap “continuing resolution” — or C.R. — to keep the money flowing. Then in November, Congress must raise the government’s borrowing limit.

“If you look at the C.R. and the debt ceiling, they’re challenges but they’re also deadlines, and in that sense, opportunities,” said Senator John Hoeven, Republican of North Dakota and a member of the group. “We’re going to have to solve it at some point, right?”