WASHINGTON — As Democrats wait to see whether and how House Republicans will target the president’s health care law during ongoing budget negotiations, a fissure has developed within their own ranks over how hard to push back.
At issue is the level of spending that would be unacceptable for a resolution to keep the government funded into the next fiscal year. Progressives are eager to draw firm lines in the sand in favor of higher caps. But Democratic officials on the Hill say the current debate is less important than those that lie ahead, pointing to the bigger battles coming in a few months time.
The disagreement is complicated by ambiguity about what House Republicans will do -– GOP leadership has already had to pull a bill because conservative members didn’t think it sufficiently threatened the Affordable Care Act. But regardless, it underscores how Democrats are themselves uncertain over how best to approach the politics of deficit reduction.
Understanding the dispute requires a bit of background. The Budget Control Act of 2011 established caps on how much the government could spend during a given fiscal year. In fiscal year 2013, that number was $1.043 trillion. In fiscal year 2014, which begins in October, that number will be $1.058 trillion.
But sequestration effectively reduces those spending caps. In FY 2013, it lowered the $1.043 trillion spending cap to $988 billion. For FY 2014, it is set to decrease the $1.058 trillion spending cap to $967 billion.
Since sequestration is unlikely to be replaced anytime soon, spending in the coming fiscal year will likely be capped at $967 billion. But if sequestration is canceled down the road, the baselines will become important once again.
House Republicans want to lower the baseline for the next fiscal year to $988 billion — in other words, the spending cap in FY 2013 under sequestration — rather than the $1.058 trillion agreed to under the Budget Control Act.
Democrats are divided as to whether or not this would be acceptable, and conversations with sources on the Hill reveal two competing concerns. The first is that by acquiescing to this demand, Democrats believe they would be setting a terrible standard for budget fights to come and strengthening the hand of GOP leadership.
“Our argument is that it should not be ok to accept this spending level, not even in the short run,” said Michael Linden, Managing Director for Economic Policy at the Center for American Progress, a think tank with strong ties to the Obama administration.
“It seems to me it would be a real mistake for Democrats to help Republicans pass something that basically endorses the sequester … the continuing resolution should be agnostic on the sequester,” Linden said. “Let’s fund the government at the exact same levels as in 2013. At least in that case you have not skewed the ground toward the sequester. And I think that is what Democrats should be wary of.”
On the other side of that argument are Democrats concerned about mucking up the politics of the budget battles. Any continuing resolution that gets passed in September, they argue, will only last for a few months, after which the two sides will try to hammer out a longer-lasting agreement to fund the government. They believe the party can, and should, make its big demands then rather than now, when doing so could make them susceptible to charges that they were willing to risk a government shutdown for more spending increases.
“If they send us $988 billion for two to three months, we would probably go along with that if it is clean. But then we would reserve the fight over funding levels [for] when that expired,” said a top Democratic congressional aide, who requested anonymity to discuss party leaders’ thinking. “If we accept $988 billion in the short term, we are not marking ourselves there for the year long.”
“It is tempting [to push for more money now] because they are weak,” the aide added. “But they aren’t going to get any stronger.”
Where the White House comes down on this matter is a bit unclear. The administration has insisted that it will not sign a government funding bill that delays or defunds the president’s health care law. But on the more technical question of how much money should be spent, White House Press Secretary Jay Carney has only said that the president “would consider a clean CR that prevents a shutdown.”
The most likely outcome, it appears, is that Democrats will push hard against a $988 billion spending level while conceding privately that they can live with it, at least temporarily. Even Linden said he would not advocate that Democrats shut down the government if they don’t get their preferred budget baseline.
Rep. Chris Van Hollen (D-Md.) the ranking member of the House Budget Committee, introduced an alternate continuing resolution on Thursday that would set FY 2014 spending levels at $1.058 trillion while replacing the sequester for one year. But in an interview with The Huffington Post, he acknowledged that his proposal faced an uphill climb — GOP leadership has already prevented seven votes on Democratic proposals to replace sequestration. So he’s already eying the next big fight: over the need to raise the debt ceiling in late October.
“A government shutdown is bad enough, but defaulting on our country’s obligation would wreak havoc on our economy,” Van Hollen said. “You go from playing with fire to playing with the economic equivalent of a nuclear weapon.”