–But Democrats and Republicans Still Differ Sharply On Final Package
–Senate Majority Leader Reid, House Speaker Boehner Discuss Deal
–Reid Wants To Expand Talks, But Boehner Seeks Narrow Focus
–Admin, Hill See April 8 As Deadline To Reach Agreement

By John Shaw

WASHINGTON (MNI) – As it pertains to the 2011 fiscal year budget,
there is an overwhelming bipartisan consensus on only one thing: that it
is time to bring months of fiscal positioning and posturing to an end.

The White House and Congress, Democrats and Republicans, agree that
it’s time to negotiate a final agreement on the FY’11 budget.

Both the House and Senate passed this week a stop-gap spending bill
that will fund the government until April 8.

The stop-gap bill, largely drafted by House Republicans, includes
$6 billion in spending cuts. These cuts are acceptable to congressional
Democrats and the White House.

The 2011 fiscal year began on Oct. 1 and the federal government has
run on five short-term funding bills. The stop-gap that passed this week
is the sixth short-term spending measure.

There have been growing calls from the White House and Congress
to make this the last temporary spending bill for FY’11.

Senate Majority Leader Harry Reid said Thursday that he’s begun
negotiations with House Speaker John Boehner in an attempt to reach an
agreement on the fiscal year 2011 budget.

At a briefing, Reid said he has had “very good conversations” with
Boehner on how to complete work on the FY’11 budget. He said their two
staffs had a 90 minute meeting Wednesday.

“We’re doing just fine,” he said when asked to characterize the
talks with Boehner.

Reid offered no specifics, but did say he is pushing hard to expand
the talks beyond the current focus on the non-defense discretionary
budget for FY’11.

“We can’t balance the budget with 12% of the budget,” he said,
referring to the size of the non-defense discretionary budget.

“We believe that to get to a number that can resolve this issue,
there’s going to be some mandatories,” Reid said, referring to
entitlement programs.

Reid said he’s urging Boehner to expand the talks beyond the FY’11
discretionary budget to include both entitlements and revenues.

Sen. Chuck Schumer, the third ranking Senate Democrat, also said
that the talks should expand, declaring “it’s a pretty universal feeling
on our side that you have to go beyond domestic discretionary (spending)
to get to a number that would be compromise number.”

Schumer called on Republicans to drop a number of policy riders
that they have placed on their version of the FY’11 budget.

Boehner continues to say that expanding the talks into entitlements
and revenues would “muddle” the needed focus on cutting spending in
FY’11.

The Speaker has also made the point that the issue that needs to be
resolved is the FY’11 discretionary budget and that it is both
unnecessary and unwise to bring in other fiscal issues.

He said that after the FY’11 budget has been concluded, a broader
fiscal debate will naturally occur over the FY’12 budget which will be a
multi-year plan that will include entitlements and revenues as well as
discretionary programs.

House Appropriations Committee Chairman Hal Rogers said this week
that he is confident that a final accord on the FY’11 budget will be
ready by April 8.

“We will have the final bill in time to meet the April 8 deadline,”
he said.

Rogers has been meeting with White House budget director Jack Lew
to explore the parameters of a budget agreement.

As the FY’11 battle appears to be entering its endgame, there has
been some commentary that congressional and administration energies
would have been better spent trying to assemble a long-term deficit
reduction agreement.

Former Senate Budget Committee Chairman Pete Domenici said this
week he doubts the wisdom of a strategy that is focusing so much energy
to secure $60 billion in FY’11 savings.

Domenici said reductions in discretionary programs cause the
“biggest pain for the littlest gain.”

He said if the entire $1 trillion annual discretionary budget was
eliminated, the U.S. would still run “significant deficits as far as the
eye can see.”

Domenici and former Federal Reserve Board Vice Chairman Alice
Rivlin served as co-chairs of a deficit reduction task force sponsored
by the Bipartisan Policy Center. Late last year, they released a fiscal
overhaul plan that would secure nearly $6 trillion of budget savings by
2020.

The plan by Domenici and Rivlin would restructure major spending
programs such as Social Security and Medicare, place a multiyear freeze
on many domestic and defense programs and fundamentally overhaul the
U.S. tax system.

There continues to be behind the scenes efforts in the Senate to
draft a bipartisan deficit reduction plan that models the work done by
both the Domenici-Rivlin panel and the Simpson-Bowles deficit reduction
panel which endorsed $4 trillion in ten year savings.

A number of senators have signed a letter to President Obama urging
him to commit to supporting a comprehensive deficit reduction plan.

Meanwhile, House Budget Committee Chairman Paul Ryan said again
this week that he will present a bold deficit reduction plan when he
unveils his FY’12 budget in April. He added that the House GOP will
offer a bold fiscal plan, despite the political peril it might cause.

“I think everybody knows that we are walking into I guess what you
would call a political trap that arguably we are setting for ourselves,”
he said.

“But we can’t wait. This needs leadership,” he said.

** Market News International Washington Bureau: (202) 371-2121 **

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