Deep Divide Lingers After Impasse Ends; Pessimism Greets Lawmakers as They Start Negotiations on Broad Budget Deal

Deep Divide Lingers After Impasse Ends

Pessimism Greets Lawmakers as They Start Negotiations on Broad Budget Deal

DAMIAN PALETTA

Updated Oct. 17, 2013 8:01 p.m. ET

WASHINGTON—Eight hours after President Barack Obama signed a bill to reopen the federal government, top congressional budget leaders from both parties gathered over breakfast to try to find common ground in coming weeks. But differences between the two sides remain stark, and a number of congressional aides said the chances of devising a budget that both parties can live with are low. The conference committee the lawmakers head faces a Dec. 13 deadline under the package Congress approved late Wednesday.Republicans are pushing for deep changes and cost reductions to Medicare and Medicaid, and a rollback of Pentagon cuts that are part of the so-called sequester. Democrats have demanded that tax increases and a reduction in other sequester cuts be part of any package.

The breakfast session of four senior lawmakers, including House Budget Committee Chairman Paul Ryan (R., Wis.) and Senate Budget Committee Chairman Patty Murray (D., Wash.), came as hundreds of thousands of workers returned to the job at federal agencies, restarting government data analysis on unemployment and crop prices, reopening national parks and resuming scientific research.

The lawmakers who met Thursday are part of a 29-person budget conference committee that will work to reconcile differing tax and spending goals approved by the House and Senate earlier this year. Mr. Ryan and Ms. Murray said they would try to move past the acrimony surrounding the 16-day government shutdown and find areas of agreement in coming weeks, but made no assurances of success and avoided setting goals.

Mr. Ryan and Ms. Murray plan to lead a series of public and private meetings starting in two weeks.As part of the legislative package that ended the shutdown, political leaders directed the new committee to issue a bipartisan report. The mid-December deadline, if met, would enable Congress to pass spending bills and avoid the specter of another shutdown when government funding expires again on Jan. 15.

Potentially helping the new effort were assurances from Republican leaders, including Senate Minority Leader Mitch McConnell of Kentucky, that they wouldn’t allow the government to shut down in January, as they saw the recent closure as a political loser for the party.

“We are going to try to figure out if we can get an agreement,” Mr. Ryan said. Ms. Murray said “all issues are on the table. We’ll be talking about all of them.”

Despite the odds, top Democrats have pointed to the budget conference committee as an opportunity to end the incessant budget battles that have pushed the country up against repeated fiscal deadlines since 2011.

Mr. Obama, in remarks Thursday, said the effort could succeed if it didn’t become an “ideological exercise” between the two parties.

“The issue is not growth versus fiscal responsibility—we need both,” Mr. Obama said. “We need a budget that deals with the issues that most Americans are focused on: creating more good jobs that pay better wages.”

Instead of a broader effort to tackle tax and entitlement changes, Democrats and Republicans are expected to use the conference committee to focus more narrowly on ways to replace some of the across-the-board spending cuts that began in March and will intensify in mid-January under the sequester.

Ms. Murray said a priority is to “replace some of the damaging sequester” cuts and reach an agreement on spending levels “for the next year or two or further if we can.”

For many Republicans, the automatic reductions that will hit the Pentagon next year are a particular concern.

“The big issue we’re going to have to deal with is concerns about the defense cuts in sequestration,” said Rep. Charles Boustany (R., La.), who isn’t on the budget conference committee, in an interview. “That’s going to require offsets with mandatory spending and that’ll be a tough fight.”

Ms. Murray’s budget calls for $1.058 trillion in defense and nondefense discretionary spending for the year that began Oct. 1, while Mr. Ryan’s budget puts the spending at $967 billion.

One central issue facing the group is how committed political leaders will be to striking a deal. Past deficit-reduction groups have faltered, often over disagreements about tax policy and Medicare.

Mr. Ryan and Ms. Murray deflected questions from reporters about whether they would push for an overhaul of the tax code.

The two politicians never have led a budget conference and it is unclear whether the White House plans to join the negotiations or defer to the lawmakers.

Mr. Ryan bucked Republican leaders and voted against the bill the House approved late Wednesday that raised the debt ceiling and reopened the government, saying it did nothing to address the country’s growing debt.

But he vowed Thursday to try to make the budget conference with Ms. Murray work.

Traditionally, budget conference committees set spending targets that are intended to instruct congressional appropriators on how much money they can spend on different programs and agencies. The conference committee can issue a report only if a majority of the House and Senate lawmakers on the panel agree to the terms. The final product then would face votes on the House and Senate floors.

Such exercises were common until recent years, when wide differences between Democrats and Republicans over tax and spending policy prevented agreements.

The two chairmen were joined at breakfast by the ranking members of their committees, Rep. Chris Van Hollen (D., Md.) and Sen. Jeff Sessions (R., Ala.). Both said they would try to help the panel succeed but cautioned there are no assurances a deal would be reached.

“We don’t want to raise expectations above reality, but I think there’s some things we could do,” Mr. Sessions said.

“Talking doesn’t guarantee success, but if you don’t get together obviously you can’t move forward,” Mr. Van Hollen said.