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Congress Negotiators Near Funding Accord Before Deadline

Photographer: Andrew Harrer/Bloomberg

U.S. House and Senate appropriations leaders today held their first face-to-face negotiations since lawmakers returned to the Capitol from a holiday break. Close

U.S. House and Senate appropriations leaders today held their first face-to-face... Read More

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Photographer: Andrew Harrer/Bloomberg

U.S. House and Senate appropriations leaders today held their first face-to-face negotiations since lawmakers returned to the Capitol from a holiday break.

Congressional negotiators are working to settle final sticking points over military and health-care spending in a plan to finance the U.S. government and avoid a second shutdown in four months.

Current government funding runs out in a week, on Jan. 15. Republican efforts to block President Barack Obama’s 2010 health-care law were at the center of a dispute that caused a 16-day government shutdown in October.

“We’re looking at narrowing the differences, looking at what’s the negotiation space and how we can compromise without capitulation on both sides,” Senate Appropriations Chairwoman Barbara Mikulski of Maryland told reporters in Washington yesterday. Environmental rules also are among the final issues.

Top House and Senate appropriators met face-to-face yesterday for the first time this year. The encyclopedic spending bill would finance the government through Sept. 30, the end of the fiscal year. Lawmakers are working from a December budget deal that set a spending total at about $1.01 trillion.

While the goal is to write spending bills covering all parts of the government, lawmakers also are discussing a backup plan to avoid a shutdown.

Representative Steny Hoyer, the second-ranking House Democrat, said there has been talk of a short-term spending bill -- perhaps covering a couple of days -- “because they may not be able to get a deal done in time.”

Another option, which top appropriators say they want to avoid, would be to essentially keep current funding for some of the 12 sections of the spending bill. That would be a sign that even with an agreed spending target, Congress couldn’t do its job of funding the implementation of laws already on the books.

Obamacare Funding

Negotiators are near agreement to fund implementation of the Affordable Care Act, Obama’s health-care law, said Senator Tom Harkin, an Iowa Democrat and chairman of the panel that sets spending for the Department of Health and Human Services.

While there’s less appetite among congressional Republicans now to force a shutdown over Obamacare, they remain deeply opposed to the law. The House has voted to repeal it numerous times and scheduled votes on separate bills later this week that would address what they say are security problems with the law.

“We’re hopefully about to make a breakthrough on appropriations,” Harkin told reporters yesterday. “There’s a lot of impetus to do that.”

He said “a couple of” sticking points remained. “Hopefully in the next day or two or three those will get resolved,” Harkin said.

Stopgap Spending

Since Republicans took control of the House three years ago, dividing control of Congress between Democrats and Republicans, the government has been funded almost exclusively through a series of stopgap spending measures.

HHS funding has been politically contentious. In 2007, three years before the health law and when Democrats controlled both chambers of Congress, President George W. Bush vetoed a funding measure for HHS, education and labor. He said it spent too much money and was loaded with special-interest items.

Defense funding remains a sticking point in the new bill, Maine Republican Senator Susan Collins said. One reason is that negotiators must cut more than $26 billion below the Pentagon’s base defense request, even though lawmakers’ budget deal late last year provided some relief from automatic spending cuts.

Defense cuts may affect government contractors, including Lockheed Martin Corp. (LMT), Boeing Co. (BA) and General Dynamics Corp. (GD), the top three federal contractors for 2012. Each of those firms spent at least $11.1 million lobbying in 2013, according to disclosures compiled by the Center for Responsive Politics.

Top Customers

The top customer for each of the top 10 federal contractors was a unit of the Department of Defense, according to a Bloomberg compilation of contracting records. Many of the spending fights that would affect them don’t break down along party lines.

The Senate’s original spending proposal would cut General Dynamics’s Virginia-class submarines by 8.8 percent. The House wanted to spend almost 21 percent more. The Senate proposed paring back Boeing’s ballistic missile defense program based in California and Alaska by about 9 percent, while the House would increase spending by 13 percent.

Another contentious issue in the State Department and foreign operations section is whether to allow $1.3 billion in military aid to Egypt after its military deposed former president Mohamed Mursi. Obama suspended such assistance to Egypt in October.

Richard Shelby of Alabama, the ranking Republican on the Senate Appropriations panel, said negotiators “made a lot of progress” on the defense provisions.

EPA Funding

Lawmakers must also decide whether to include House-proposed restrictions that would block Environmental Protection Agency regulations opposed by coal companies such as Arch Coal Inc. (ACI) and agriculture industries.

House Appropriations Chairman Hal Rogers’s district includes much of Kentucky’s coal country. Rogers, the top House Republican in the talks, has said that while members of his party won’t insist on all their policy provisions, they will demand inclusion of some of them.

Lawmakers voiced optimism a deal could be reached on EPA funding. The interior, environment and related agencies portion, which includes EPA, is in “conceptually” good shape, said Senator Jack Reed, the Rhode Island Democrat who leads that subcommittee panel.

Several other provisions have been resolved.

Collins said the section she works most closely on, funding for transportation and housing programs, is essentially finished. Committee leaders “have to bless our work,” she said, “but we’re finished with our recommendations.”

Three sections have been wrapped up, according to a congressional aide who wasn’t authorized to speak publicly. They are the Commerce-Justice-Science section, including the National Aeronautics and Space Administration; military construction and Veterans Affairs, and the provision governing Congress’s own budget, the aide said.

To contact the reporters on this story: Derek Wallbank in Washington at dwallbank@bloomberg.net; Kathleen Hunter in Washington at khunter9@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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