WASHINGTON — Congress last week extended yet another “debt ceiling” fight until May.
Now the Louisiana delegation and congressional leaders will spend most of February attempting to work out a way to avoid across-the-board, automatic spending cuts.
Louisiana Republicans contend the focus must rest almost entirely on carefully cutting down the nation’s $16.4 trillion deficit.
Sen. Mary Landrieu, D-La., and other Democrats insist any deal must include increased revenues through closing corporate tax loopholes and other measures.
The debt ceiling dictates how much the federal government can borrow to pay its expenses.
The 2011 Budget Control Act compromise ended the debt ceiling standoff that year.
The act required Congress to make a budget-cutting agreement or face $110 million in cuts to spending on government services beginning on Jan. 1.
A last-minute deal on New Year’s night, which increased taxes on wealthy Americans, postponed that trigger date until March 1 for the across-the-board cuts to defense and other discretionary spending.
The automatic cuts are called “sequestration.”
They were always intended as a last resort and incentive to forge a larger budget compromise between Democrats and Republicans on how to pay for federal government programs: increase revenues or decrease the services.
“We’re having the tax increases. Now we’re having the debt increases,” Sen. David Vitter, R-La., said Thursday on the Senate floor. “When are we going to have any spending decreases?”
Cuts and revenues
Landrieu, however, argued that any deal must include Republicans accepting more revenues by eliminating some of the corporate-desired credits, such as “closing offshore tax havens” for corporations.
“There is no doubt that we have a budget challenge on our hands and that revenues are not in line with spending,” she said. “I have been saying consistently for years now that, in order to correct it, you’ve got to have both additional revenues and spending reductions.”
Landrieu blamed Fox News and Republicans for focusing on nondefense discretionary spending as out of control. She noted the spending includes paying for veterans’ benefits, transportation infrastructure, education and more.
The real spending problem is with mandatory spending for “earned benefits” programs like Social Security, she said. There are a lot more retirees. Social Security, Medicare and Medicaid combine for more than 40 percent of federal spending, she said.
“Those are programs that are driving up spending, but that’s the way it should be when the recession is going on,” Landrieu said. “That’s why unemployment insurance is there and that’s why food stamps are there, when people lose their jobs to provide the safety net.”
At the same time, she said, federal revenues as a percentage of the gross domestic product are the lowest they have been since before President Dwight Eisenhower in the 1950s was in office because Republicans would not consider any new revenues until President Barack Obama won re-election.
Landrieu argued that the past Congress resulted in more than $1.5 trillion in budget cuts over 10 years compared with $600 billion in new revenues.
“What there’s no explanation for is the falloff on revenues. Other than, you know, Republicans I guess are against all taxes being paid under any circumstance for any reason,” she said.
But that argument is not going to win over many, if any, Republican members of the Louisiana delegation.
Rep. Steve Scalise, R-Jefferson, who now chairs the conservative Republican Study Committee caucus, said the Democrats already won their tax hikes on Jan. 1.
“The problem with liberals is they have no end to the appetite to get more tax increases,” Scalise said. “These cuts happen (on March 1) whether liberals in Washington want them to happen or not.”
Federal spending on things like food stamps is way up under Obama and must be reined in, Scalise said.
The dean of the Louisiana House delegation, Rep. Rodney Alexander, R-Quitman, said the next couple months will make for an “interesting time” as the aforementioned arguments are hashed out.
Alexander has argued it is time to make cuts where possible, but also on the “sacred cows” such as defense spending and raising the age of Medicare qualifying without impacting those about to retire.
“I certainly hope we can look at things open-mindedly,” Alexander said.
Debt ceiling caveat
While Congress opted to extend the debt ceiling limit on federal borrowing through May 18 — intentionally pushed back after the March 1 spending cuts trigger — House Republicans only agreed to do so after adding a “no budget, no pay” provision that would withhold pay for House and Senate members, if their chamber fails to pass a budget plan by April 15.
That was a direct shot at the Democratic-controlled Senate, which has not passed a budget blueprint since 2009. The Senate has approved only short-term fixes like the Budget Control Act.
“I’m so pleased the Senate will finally have to pass a budget,” said Rep. Bill Cassidy, R-Baton Rouge.
Cassidy said it is virtually impossible for the House to compromise with the Senate when the Senate has yet to put forth a budget proposal.
The Senate must learn to pass the “kitchen table test” of only spending what you have just as families must, he said.
“Sure, it’s going to be a fight just as it is at the kitchen table, but at least they know what they’re fighting about,” Cassidy said. “At some point, you’ve got to rein in the spending.”
While House Democrats mostly balked at the April 15 target as “gimmick politics,” the Democratic Senate leadership called it a sign of Republican compromise.
The Senate leadership claimed they will pass a budget.
But Rep. Cedric Richmond, D-New Orleans, was among those voicing frustration with the Republican “gimmicks.”
“The Republicans did exactly what they wanted to do and created another fiscal cliff,” Richmond said. “The Republicans are still talking about the same talking points from before the election they lost.
“Let’s deal with the facts and not be in campaign mode still,” he added.
Richmond said it is “hogwash” for the House’s Republican majority to blame the Senate, where Democrats hold the majority, when all the House does is pass slight variations of the budget plan authored by Rep. Paul Ryan, R-Wis.
The Ryan plan, he said, makes most cuts on the backs of the middle class and working poor.
“It’s a nonstarter. It doesn’t get us to the point of negotiating because it’s such an awful budget,” Richmond said.
Closer than they sound
Despite a lot of sharp disagreements and strong rhetoric, most of the Louisiana members still say they are “cautiously optimistic” deals will come to fruition on sequestration and more.
Cassidy, Alexander and Scalise all said they are willing to implement more defense budget cuts.
They would just prefer that the cuts coincide more with the drawdown of the wars in Iraq and Afghanistan, and not the draconian, across-the-board sequestration cuts.
Richmond, for instance, took a more conservative posture in expressing a willingness to cut the federal budget more on foreign aid.
“We need to take a hard look at foreign aid and whether countries are our true allies or not,” he said.
Louisiana Republicans and Democrats alike also are willing to look at cuts — or “reforms” — on spending for programs like Social Security, Medicare and Medicaid, in order to make them more viable for future generations.
Where they may not agree is on exactly how.
Cassidy said most everyone agrees they want to approach like a surgeon, focusing on specific cuts rather than using a “blunt ax” that chops broadly.
“But it might turn out no one can agree on what to put the scalpel,” Cassidy said.
Landrieu said she will consider all proposals on the table, including increasing the Medicare qualification age, but she insists more revenues must have a place on the same table.
“The Republicans had a wakeup call this election, and they seem to be much more willing to meet in the middle ground,” she said, “and that’s where we need to be working together for a common result.”