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Fighting Over Destination of Cuts, Baseline Bill Has Soured Hopes of Budget Deal

My post on Democrats offering additional budget cuts for Fiscal Year 2011 was pretty down on what the ultimate solution would look like. But that made the perhaps incorrect assumption that there would be a solution at all. Because Republicans certainly look ready to reject this so-called final offer from the Democrats, putting us down the likely path to a government shutdown.

Republicans are poised to reject a White House offer, TPM has learned, that would cut over $30 billion in current spending because of disagreements over whether the package should include cuts to mandatory spending programs. Democrats are pushing for such cuts, which include the big entitlement programs, though the specific cuts they’re proposing remain unclear. In an ironic twist, Republicans oppose those cuts and want to limit the negotiations to non-defense discretionary spending, a smaller subset of the federal budget.

Taken together, the last several days’ worth of developments bode very poorly for the goal of reaching a six-month agreement on spending. The parties have until April 8 to reach agreement, and the odds of a government shutdown are higher now than they’ve been since this process began.

Basically, it breaks down like this – Democrats want to expand the playing field for cuts, lessening their impact by putting them across a wider range of programs, including some mandatory ones, though not Medicare or Medicaid. Republicans really want to destroy some of these government programs and eliminate government involvement in a host of areas, so they want to confine cuts to the discretionary budget. But it’s well-documented that Republicans are going to propose an overhaul to Medicaid in their next budget. In fact, this proposal is likely to be released next week. So the rejection of anything to do with mandatory spending in the 2011 budget is pretty deeply cynical.

Meanwhile the recriminations keep flying. Here was Harry Reid today, in a statement that suggested we’ve moved well beyond the negotiation stage and into the blamestorm:

I am extremely disappointed that after weeks of productive negotiations with Speaker Boehner, Tea Party Republicans are scrapping all the progress we have made and threatening to shut down the government if they do not get all of their extreme demands. The division between the Tea Party and mainstream Republicans is preventing us from reaching a responsible solution on a long-term budget that will make smart cuts while protecting American jobs, and prevented negotiations from taking place over the weekend even as the clock ticks toward a government shutdown. Apparently these extremists would rather shut down the government and risk sending our economy back into a recession than work with Democrats or even their own leadership to find a responsible compromise.

“For the sake of our economy, it’s time for mainstream Republicans to stand up to the Tea Party and rejoin Democrats at the table to negotiate a responsible solution that cuts spending while protecting jobs.

This comes on the heels of a back and forth between Eric Cantor and Chuck Schumer late last week. I don’t see a road to getting anything passed by April 8, given the environment.

Of course, the White House could step in and negotiate the deal directly with House Republicans. The framework of that deal, between Chief of Staff Bill Daley and John Boehner, for $30 billion in cuts, was put into place. But that meeting last Tuesday, where Republicans wanted to work off their budget as the baseline, and Democrats did not, has basically been where this all broke down. And agreeing on the number is in many ways the easy part – you have to figure out where the cuts go, and this difference of opinion between mandatory and discretionary cuts has revealed a yawning gap.

Sam Stein has more on all of this. Suffice to say that, given the fact that there haven’t been formal negotiations in almost a week, the government shutdown is almost certainly on the way.

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David Dayen

David Dayen