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U.S. budget talks show no sign of progress, CBO urges small deal

November 14, 2013

By David Lawder

WASHINGTON (Reuters) – U.S. budget negotiators offered no concrete signs of progress in their second public meeting on Wednesday, despite the urgings of the head of the Congressional Budget Office who told them that even a very small deal would aid the economy.

The 29-member congressional negotiating committee that is trying to find a way to ease the pain of automatic spending cuts by December 13 adjourned with no specific plans for a third meeting.

“We’ve spent a lot of time talking about our differences,” said Representative Paul Ryan, who is leading Republicans on the panel. “That’s the easy part. The hard part is figuring out where we agree.”

Ryan said that he and the panel’s Democratic leader, Patty Murray, would keep talking about the “parameters of a potential agreement” but offered no specifics on what that could entail.

A senior Republican aide said those discussions would continue in private and it was unclear whether another public meeting of the full panel would be scheduled before the House of Representatives starts a 10-day Thanksgiving break on November 22.

Ryan raised the possibility that the panel may not meet the December 13 deadline for an agreement, telling reporters: “It is not considered a hard-and-fast deadline.”

The panel has been tasked with setting spending levels for fiscal 2014 under an October congressional deal to end a 16-day government shutdown and extend federal borrowing authority.

There are no immediate consequences if the December 13 deadline is missed, but on January 15 a government spending extension expires, raising the threat of another shutdown for federal agencies.

SMALL STEPS

CBO director Douglas Elmendorf told the committee a larger budget deal that shrinks long-term U.S. deficits would be beneficial to economy, but added that a small deal that provides some short-term fiscal certainty would still help.

“Big steps are better than small steps, but small steps are better than no steps at all,” Elmendorf said. “And no steps at all would be better than steps backwards.”

Many Republicans in Congress, including Ryan, say they are willing to keep the $109 billion in across-the-board “sequester” spending cuts in place for 2014 rather than raise tax revenues.

Murray said she was “very encouraged” by her conversations with Ryan, but offered no specifics of where these may find common ground.

“They are going to continue in the days ahead and I’m hopeful we will get to a bipartisan compromise very soon,” Murray added.

The only specific proposal put on the table at Wednesday’s meeting came from Senator Angus King, who proposed replacing half the sequester cuts over 10 years with about about $255 billion in cuts to benefits programs and $200 billion in increased revenues from closing corporate tax deductions and credits.

Eliminating these tax breaks would provide another $325 billion in revenues to reduce corporate tax rates and provide a $50 billion infrastructure fund, he said.

Ryan said he had not yet reviewed King’s proposal, but would consider it.