Race Against Time to Reach an Agreement on the Budget
Published in Il Sole 24 Ore
(Italy) on 7 April 2011
by Marco Valsania (link to original)
(Italy) on 7 April 2011
by Marco Valsania (link to original)
Translated from
by Lorel Wilhelm-Volpi.
Edited by Hoishan Chan.
As expected, the American House of Representatives, with its Republican majority, approved a temporary measure with 247 votes for and 181 votes against to give Congress one more week to reach an agreement on the 2011 budget to avoid a government shutdown and the suspension of basic services. The bridge measure must now pass the Senate, with its Democratic majority (majority leader Harry Reid called the short term solution “a fantasy”) and, if it were to pass, it would go to American President Barack Obama, who has declared his intention to exercise his right to veto. Without a long term agreement by midnight tomorrow, a federal shutdown remains a possible option.
There are many consequences, caused by great risks and difficulties, from late payment of soldiers’ salaries to closed national parks. From nearly 800,000 employees suddenly sent home — and at least two million without a paycheck — to a White House that would have to make do with a skeleton crew to face global crises. But in Washington, the countdown to the shutdown has begun because of the lack of an agreement on the budget between the Republicans and the Democrats — between those who want drastic spending cuts and those who resist them.
The deadline is imminent, tomorrow, Friday, at midnight: either an agreement will be reached or after the weekend America will wake up to a public paralysis. (A few organizations are immune, such as Social Security and health care for the elderly. Also the Federal Reserve, whose resources are not in the budget).
Tensions are through the roof; government departments are preparing for the worst. Late yesterday evening President Barack Obama had a 90-minute meeting with congressional leaders Harry Reid, Democratic senator, and Republican John Boehner, speaker of the House. They came closer but did not reach an agreement. The next day the winds of compromise did not blow still.
Obama expressed optimism for last minute success: “I remain confident that if we're serious about getting something done we should be able to complete a deal and get it passed and avert a shutdown,” he said. Boehner echoed him, “There's an intent on both sides to continue to work together to try to resolve this... no one wants the government to shut down.” Reid, too, said, “I am hopeful that we will be able to announce a compromise agreement soon.”
But there are still differences to overcome: $40 billion in reductions in expenditures for the current year, 2011, for now financed with temporary measures. At least, that is what the Republicans want. Up to now the Democrats have accepted negotiating over no more than $33 billion. There are strong differences about where to cut: the Democrats want to save education and health care.
As if this wasn’t enough, this is actually the first battle of a long war. Items in negotiation one after the other include the 2012 budget, the need to raise the government debt ceiling and the possibility of long term expenses and deficits. In other words, a conflict between big political strategies that could complicate the efforts to reach a compromise: The House Republicans, pushed by a new generation of elected officials from the conservative tea party movement, recently presented an aggressive plan to eliminate nearly $6 trillion in spending in the next 10 years by reductions in health care and tax relief. They believe they can build their identity on this program, leveraging Americans’ anxiety over big government during the years of the financial and economic storm, up to the presidential elections of 2012. In contrast, the Democrats are convinced the opposite is true: Their adversaries’ radical proposals can play to their favor.
Moreover there is a historical precedent: In 1995 a similar budget discussion — Democratic President Bill Clinton and a Republican Congress — brought about the temporary closure of government offices. The hypothesis of a shutdown worries Americans, even if confusion about the responsibility for a new shutdown dominates public opinion: A survey by the Wall Street Journal and NBC found that 37 percent would blame Republicans, 20 percent Democrats and 20 percent Obama. Time will tell if similar pressures are enough to push everyone — White House and congressional leaders — down the path of a last minute compromise.
There are many consequences, caused by great risks and difficulties, from late payment of soldiers’ salaries to closed national parks. From nearly 800,000 employees suddenly sent home — and at least two million without a paycheck — to a White House that would have to make do with a skeleton crew to face global crises. But in Washington, the countdown to the shutdown has begun because of the lack of an agreement on the budget between the Republicans and the Democrats — between those who want drastic spending cuts and those who resist them.
The deadline is imminent, tomorrow, Friday, at midnight: either an agreement will be reached or after the weekend America will wake up to a public paralysis. (A few organizations are immune, such as Social Security and health care for the elderly. Also the Federal Reserve, whose resources are not in the budget).
Tensions are through the roof; government departments are preparing for the worst. Late yesterday evening President Barack Obama had a 90-minute meeting with congressional leaders Harry Reid, Democratic senator, and Republican John Boehner, speaker of the House. They came closer but did not reach an agreement. The next day the winds of compromise did not blow still.
Obama expressed optimism for last minute success: “I remain confident that if we're serious about getting something done we should be able to complete a deal and get it passed and avert a shutdown,” he said. Boehner echoed him, “There's an intent on both sides to continue to work together to try to resolve this... no one wants the government to shut down.” Reid, too, said, “I am hopeful that we will be able to announce a compromise agreement soon.”
But there are still differences to overcome: $40 billion in reductions in expenditures for the current year, 2011, for now financed with temporary measures. At least, that is what the Republicans want. Up to now the Democrats have accepted negotiating over no more than $33 billion. There are strong differences about where to cut: the Democrats want to save education and health care.
As if this wasn’t enough, this is actually the first battle of a long war. Items in negotiation one after the other include the 2012 budget, the need to raise the government debt ceiling and the possibility of long term expenses and deficits. In other words, a conflict between big political strategies that could complicate the efforts to reach a compromise: The House Republicans, pushed by a new generation of elected officials from the conservative tea party movement, recently presented an aggressive plan to eliminate nearly $6 trillion in spending in the next 10 years by reductions in health care and tax relief. They believe they can build their identity on this program, leveraging Americans’ anxiety over big government during the years of the financial and economic storm, up to the presidential elections of 2012. In contrast, the Democrats are convinced the opposite is true: Their adversaries’ radical proposals can play to their favor.
Moreover there is a historical precedent: In 1995 a similar budget discussion — Democratic President Bill Clinton and a Republican Congress — brought about the temporary closure of government offices. The hypothesis of a shutdown worries Americans, even if confusion about the responsibility for a new shutdown dominates public opinion: A survey by the Wall Street Journal and NBC found that 37 percent would blame Republicans, 20 percent Democrats and 20 percent Obama. Time will tell if similar pressures are enough to push everyone — White House and congressional leaders — down the path of a last minute compromise.