Go to the Globe and Mail homepage

Jump to main navigationJump to main content

President Barack Obama and Senate Majority Leader Harry Reid of Nev. arrive for a meeting with Senate Democrats on Capitol Hill in Washington on July 31, 2013. (Susan Walsh/AP)
President Barack Obama and Senate Majority Leader Harry Reid of Nev. arrive for a meeting with Senate Democrats on Capitol Hill in Washington on July 31, 2013. (Susan Walsh/AP)

Washington nears budget peace Add to ...

Washington is on the verge of budget peace for the first time in four years.

The momentum of the House of Representative’s overwhelming endorsement of a two-year fiscal plan last week should push the Senate to do the same this week, ending a protracted period of ad hoc spending arrangements and fiscal brinksmanship.

More Related to this Story

The test could come Tuesday, when Senate Majority Leader Harry Reid is expected to call a procedural vote that would stop opponents for delaying the bill’s progress. He will need 60 votes to do so and he commands only 55 in his Democratic caucus. That means rounding up at least five Republican votes over the next couple of days.

John McCain, the senator from Arizona who challenged Barack Obama for the presidency in 2008, told CNN Sunday that he would vote for the budget proposal and Politico reported that three other Republican senators have said they would do the same. However, Mr. Reid’s chief vote counter resisted declaring victory.

“We have a handful but we need more,” Dick Durbin, a senator from Illinois and the majority whip, said Sunday on the CBS program Face the Nation.

The budget agreement crafted by the Democratic head of the Senate budget committee, Patty Murray of Washington, and her Republican counterpart in the House, Paul Ryan of Wisconsin, is far from the “grand bargain” that Mr. Obama and others have pursued in recent years.

It softens spending cuts scheduled for this year and next, setting discretionary spending at a little more than $1-trillion in the fiscal year that began on Oct. 1 and the fiscal year that follows. (The federal government’s spending limit had been scheduled to drop to $967-billion.) The budget plan still would reduce the deficit by $23-billion over the next decade by containing spending and increasing user fees on plane tickets to cover airport security and the contributions of federal workers to their government pension plans.

Absent from the agreement are changes to the tax code and measures to restrain the growth of federal health and pension programs. Nor does it raise the debt ceiling, which which will be breached again by the spring. Yet the impact of the budget compromise could be bigger than the tally of its line items. The prospect of fiscal certainty could encourage the Federal Reserve to ease its extraordinary stimulus program -- perhaps as early as this week. The agreement also is reconfiguring Republican politics, as the party’s leaders move away from the brinksmanship advocated by conservice pressure groups.

The Murray-Ryan budget passed 332-94 in the House. In a joint interview with Ms. Murray on NBC that aired Sunday, Mr. Ryan called their achievement “symbolically large,” as it represents a fresh start for a Congress divided by hyper-partisanship since the hardline Tea Party movement helped restore Republicans to power in the House in 2010.

The inability of Washington to agree on even the most basic functions of government -- appropriating funds and paying the bills -- has resulted in inelegant fiscal arrangements that have impeded the economic recovery and have contributed to a sense of uncertainty that has kept America’s profitable companies from investing.

In September, the Federal Reserve said its surprise decision to leave stimulus measures unchanged was due in part to the prospect of more budget wrangling on Capitol Hill. Lawmakers failed to agree on a budget by Oct. 1, leaving government departments without spending authority for almost three weeks.

The Fed’s policy committee ends a two-day meeting on Wednesday. Some Wall Street analysts say the combination of stronger economic data and a budget resolution could be enough to prompt policy makers to slow their monthly purchase of $85-billion (U.S.) of bonds. The program, called quantitative easing, puts downward pressure on interest rates -- but at the risk of creating asset-price bubbles and inflation.

That failure -- and the public’s intensely negative reaction -- caused the House’s Republican leaders to rethink their tactics. House Speaker John Boehner relented in the shutdown battle, breaking with hardliners and allowing a vote a compromise worked out in the Senate. Last week, Mr. Boehner attacked Tea Party groups publicly for “misleading” Republican lawmakers and voters.

Mr. Ryan attempted to calm the waters, saying in the NBC interview that Mr. Boehner “got his Irish up” after groups such the Club for Growth called on Republicans to oppose the budget. “I see the Tea Party as indispensable,” he said.

The politics over the budget proposal are different in the Senate than they were in the House. While Mr. Boehner could count on the cooperation of his Democratic counterpart, Nancy Pelosi, the Senate leaders are working alone.

Senate Minority Leader Mitch McConnell, who said last week that he will vote against the budget, is one of a half dozen Republicans who are up for reelection in 2014 and facing challenges from Tea Party candidates for the Republican nomination.

In the know

Most popular video »

Highlights

More from The Globe and Mail

Most Popular Stories