What's a balanced budget?

David Espo / The Associated Press /

WASHINGTON — To House Republicans, “balanced budget” means a balanced budget in a decade, achieved by $4.6 trillion in spending cuts and without any tax increases.

To Senate Democrats, “balanced budget” means a balanced plan, about $975 billion in higher taxes and a spending reduction of about $875 billion, not counting cancellation of $1.2 trillion in existing across-the-board-cuts.

That makes the two plans polar opposites as President Barack Obama and the two political parties begin maneuvering toward yet another round of deficit-reduction negotiations.

“Ultimately the key to this lock is in (Republican) hands and they’ve got to decide if they want to turn it, and that means taking a balanced approach,” said Rep. Chris Van Hollen, a Maryland Democrat who is his party’s chief budget strategist in the House.

Across the Capitol, Senate GOP leader Mitch McConnell offered a rebuttal. He said that under the plan Democrats favor, “We won’t get more jobs or a better economy or sensible reforms to prevent Medicare or Social Security from going bankrupt. And we certainly won’t get a balanced budget.”

Obama and Democrats want Republicans to agree to higher taxes as part of any deal that wrings savings from Medicare. That was a tough sell before Jan. 1, the date Congress raised rates on upper-income taxpayers with votes of some Republicans and the acquiescence of others. It will be an even tougher one now.

Obama’s own budget

In April, Obama will present a budget of his own. It is long overdue, to the disappointment of Republicans who had hoped to make it an object of ridicule in the just-completed budget debates in the House and Senate.

It gives Obama the chance to align himself entirely with his Democratic allies, or possibly to edge away when it comes to government benefit programs that have largely escaped cuts in earlier compromises. Republicans will watch to see what steps, if any, the White House is willing to recommend to slow the growth of Medicare or perhaps Social Security.

Given Obama’s recent series of meetings with Republicans, some GOP lawmakers say privately it would be a positive sign for him to include a proposal curtailing the rise in cost of living increases in benefit programs. It’s a change he has supported since his aborted deficit-reduction negotiations with House Speaker John Boehner nearly two years ago. But many Democrats in Congress oppose it, and the administration has never included it in its budget.

Republicans also are hoping Obama will back steps to slow the long-term growth in Medicare, even if they phase in gradually and produce relatively little deficit savings in the next decade.

The president’s 2013 budget called for $305 billion in Medicare savings, but only a fraction of that would come directly from patients or seem likely to change the demand for care.

In his State of the Union address in February, the president said he would change “the way our government pays for Medicare, because our medical bills shouldn’t be based on the number of tests ordered or days spent in the hospital — they should be based on the quality of care that our seniors receive.”

Considerably more sensitive is a suggested increase in the age of eligibility for Medicare. During the recent round of meetings, Republicans asked Obama if he would support it, and he sidestepped, according to officials who spoke on condition of anonymity because they were discussing private conversations. It’s another idea that the president supported once before, when he was negotiating with Boehner, and one that congressional Democrats oppose strenuously.

Senate passes its first budget in 4 years

After an all-night debate that ended just before 5 a.m., the Senate on Saturday adopted its first budget in four years, a $3.7 trillion blueprint for 2014 that would provide a fast track for passage of tax increases, trim spending modestly and leave the government still deeply in the red a decade from now. The 50-49 vote in the Senate sets up contentious — and potentially fruitless — negotiations with the House in April to reconcile two vastly different plans for dealing with the nation’s economic and budgetary problems. No Republicans voted for the Senate plan, and four Democrats seeking re-election in red states opposed it.

Comparing congressional budget plans

• The House plan ostensibly brings the government’s taxes and spending into balance by 2023 with cuts to domestic spending even below the levels of automatic across-the-board cuts roiling federal programs now, and it orders up dramatic and controversial changes to Medicare and the tax code.

• The Senate plan, by contrast, includes $100 billion in upfront infrastructure spending to goose the economy and calls for special fast-track rules to overhaul the tax code and raise $975 billion over 10 years in legislation that could not be filibustered. Even with that tax increase and prescribed spending cuts, the Senate plan would leave the government with a $566 billion annual deficit in 10 years, and $5.2 trillion in additional debt over that window.

The Senate ‘vote-a-rama’

Final passage of the Senate budget was upstaged by the process that got the senators to it, a marathon session known since 1977 as the budget “vote-a-rama.” More than 500 amendments were filed, and 70 were voted on. Those numbers dwarf previous marathon voting sessions. The amendments were advisory only, but they put the Senate on record backing a dizzying variety of subjects, including limiting the regulation of sage grouse, preventing the U.N. from infringing on Americans’ right to bear arms, repealing a tax on medical devices that helps finance the president’s health care law and building the Keystone XL pipeline.

What’s next

Regardless of the final outcome, Saturday’s action does advance a more orderly budget process after nearly three years of crises and brinkmanship. The president will submit his own budget, and if negotiators can agree on a framework for overhauling the tax code and entitlements, Congress’ committees could go to work on detailed legislation, possibly under special rules that protect the bills from a Senate filibuster. There is a deadline, though: The next crisis looms this summer when Congress must again raise the debt ceiling or risk defaulting on the federal debt.

— New York Times News Service