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Ryan 'Relatively Optimistic' for Debt-Ceiling Agreement Before August Ryan 'Relatively Optimistic' for Debt-Ceiling Agreement Before August

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BUDGET

Ryan 'Relatively Optimistic' for Debt-Ceiling Agreement Before August

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Rep. Paul Ryan on December 1, 2010.(Chet Susslin)

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, said on Wednesday he was “relatively optimistic” Congress and President Obama would reach agreement to raise the nation’s debt ceiling before the August deadline for default. But, he added, any deal will likely turn more on establishing a process to reduce the federal deficit than on identifying the specific steps to doing so.

“We are not going to get a grand-slam agreement; we are not going to get a big comprehensive agreement,” Ryan told reporters at a breakfast sponsored by Bloomberg News.

 

“I’m relatively optimistic this can get done in that time frame,” Ryan added, referring to the new August 2 deadline Treasury has set for default.

Ryan sketched out a process for raising the debt ceiling similar to the scenarios senior administration officials have privately described. He said that as part of any increase in the borrowing limit Congress and Obama would need to agree on some reductions in both discretionary and mandatory spending. But he said any such agreement would probably provide only a down payment on deficit reduction and was unlikely to include Medicare and Medicaid, the two giant federal health care programs at the center of the deficit dilemma. Continuing the baseball metaphor, he said that in the scale of the possible agreement, “I hope we get a single or a double.”

In addition to specific spending cuts, Ryan said, the package would need to include longer-term goals for reducing the deficit and limiting federal spending. He said such limits could include a cap on discretionary spending, an overall limit on federal spending as a share of the economy (as proposed in Senate legislation by Democrat Claire McCaskill of Missouri and Republican Bob Corker of Tennessee), and a target for reducing the overall debt. Ryan said those targets would need to be enforced with a mechanism that would impose automatic spending reductions if Congress fails to meet them in future years.

 

In broad terms, senior administration officials have identified the same elements of a debt-ceiling agreement: a package of relatively modest spending cuts tied to longer-term deficit-reduction goals that would kick in after 2012. Such an approach, Obama has privately argued, would move to the center of the 2012 campaign a debate between his vision for controlling the long-term deficit and the GOP approach symbolized by the Ryan budget, which the House passed without support from a single Democrat on April 15. On Wednesday, Ryan said he envisioned a similar dynamic with a modest agreement now teeing up a larger debate through 2012.

But on some key details, substantial distance remains between the Republican approach Ryan sketched out and Obama’s preferences. Obama has talked solely about a target for deficit reduction and relies on both spending cuts and revenue increases to meet it; Ryan, whose plan would impose much deeper spending reductions and not raise any new revenue, is asking for spending caps as well. And while Obama says any enforcement mechanism should target both spending and taxes, Ryan said Wednesday such a plan should apply only to spending reductions.

Both of those ideas are red flags for the White House, a senior administration official said on Wednesday afternoon. A spending cap at the level Ryan discussed, the official said, would require cuts so deep that it would be “almost like a backdoor way of doing the House Republican budget plan.” And an enforcement mechanism for long-term deficit reduction that applied only to spending, and not tax expenditures, the official added, “ignores how we got into this problem, where our deficits mainly became huge because of” tax cuts under former President Bush.

But, the official, who declined to be identified while discussing White House strategy, said the convergence between Obama’s vision of how the debate may unfold and Ryan’s expectation was encouraging. “We have successfully had two rounds on very difficult issues where no one thought we would find any consensus, and we found a consensus, both on a tax deal in December and the continuing resolution [to fund the government through September],” the official said. Ryan’s latest comments “are good signs and what we can do is look at the different plans and find areas where we can agree,” he added.

 

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This article appears in the May 4, 2011 edition of National Journal Daily PM Update.

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