Budget negotiations will soon begin on Capitol Hill with House Budget Committee Chairman Paul Ryan (R-WI) and Senate Budget Committee Chairwoman Patty Murray (D-WA) leading the effort. The first official meeting of the 29-member House-Senate negotiating team is scheduled for Wednesday of this week.
Representative Ryan has said that, "if we focus on some big, grand bargain then we're going to focus on our differences," so the chances of a grand bargain on the nation's budget are highly unlikely in this very partisan era of divided government. Lawmakers and their aides have cautioned that long-standing, entrenched differences over taxes and entitlement cuts make a large-scale budget virtually impossible.
Senate Majority Leader Harry Reid (D-NV) told radio viewers on Thursday that until Republicans move off of their position against tax increases, there is no likelihood of "a grand bargain." The Associated Press reports that Republicans will not agree to further tax increases on top of the 10-year, $600 billion-plus tax increase on upper-income earners that was agreed upon in January of this year. Without higher taxes, Democrats say they will not agree to cuts in benefit programs such as Medicare and Medicaid.
For those reasons, Ryan says he is seeking a smaller, more achievable objective. He is focused on alleviating another round of automatic spending cuts involved in sequestration and replacing them with smarter, longer-term cuts. Upcoming sequestration cuts will carve $18 billion out discretionary spending next year--cutting the day-to-day budgets of the Pentagon and domestic agencies in 2014 from $109 billion to $91 billion. The Pentagon will absorb more than 60 percent of the cuts.
Both parties are reported to want to mitigate the sequester's impact. Ryan has noted that President Obama has proposed changes to "entitlements" which include the Medicare and Social Security programs for the elderly, Medicaid healthcare for the poor, and certain farm subsidy programs. Senate Budget Chairwoman Murray (D-WA) also has proposed ways in which to reduce healthcare costs by $275 billion over ten years through new inefficiencies.
Democratic Representative Chris Van Hollen (D-MD), another member of the budget panel, has stated that Democrats would not agree to significant cuts in social programs without increasing revenues by eliminating some tax cuts. Ryan, however, has made clear his long-standing opposition to further tax revenue increases, saying the major tax hike for the wealthiest Americans in January is already hurting the economy.