Holy Smokes! Will Congress Really Start Working Again?

As a rule of thumb, it’s safe to assume that whatever the situation, Congress will do the wrong thing. Economy struggling to recover from recession? Let’s cut spending. Is the recovery picking up anyway? Shut down the government! Unemployment crisis? Meh, who cares.

So it’s a bit of a shock that smoke signals coming from Capitol Hill suggest that party leaders are on the verge of agreeing to a budget deal that not only would roll back some of the harmful sequestration spending cuts, but would last long enough to deliver some genuine budgetary stability – nearly two years.

Here’s how Roll Call’s David Hawkings describes the parameters of the deal:

The main provision would be a partial easing of the next two spending sequesters—not only the automatic curbs for the current budget year, set to take effect Jan. 15, but also the round of reductions set for the coming fiscal year, which starts in October. Negotiators are talking about a minimum of $30 billion and a maximum of $60 billion in sequester relief for both this year and next, sufficient not only to save the Pentagon from the coming round of cuts but to allow some domestic priorities to be reordered as well.

This is obviously light years from the $4 trillion “grand bargain” so heavily touted not all that long ago. But considered in context—in particular, Congress’s inability to agree on anything without first precipitating a crisis—a modest budget deal would count as a major achievement. All the more so because, in addition to providing mild stimulus, it would avoid the economic damage of another shutdown scare (or actual shutdown) when funding for the government expires on Jan. 15th. And if Republicans really do agree to a budget deal, it’s hard to imagine them threatening default again when Treasury hits the debt limit in February.

“The deal being described isn’t great in terms of magnitude,” says Michael Linden, the managing director for economy policy at the Center for American Progress, a left-leaning think tank, “but it would produce topline discretionary spending levels for the rest of 2014 and 2015, and the sheer fact that we won’t have to have a debilitating fiscal fight is a good thing.”

Almost sounds too good to be true, doesn’t it? Sadly, it probably is.

As Bloomberg’s Heidi Przybyla and Derek Wallbank note, while Republican and Democratic negotiators in the 29-member budget committee appear ready to embrace this deal, rank-and-file members of both parties sound like they’re not going to go along.

What appears to have happened here is that Republican leaders who’d like very much to do something positive gave a sunnier take to outlets such as Politico than was warranted, perhaps in an effort to build momentum toward a deal. Late on Monday, Bloomberg’s James Rowley and Roxana Tiron reported (in an article not yet online) that Democrats on the budget committee were much less sanguine that an agreement is imminent. “It’s a jump ball right now,” Democratic Representative Chris Van Hollen of Maryland told reporters.

This suggests that the budget negotiations may instead follow a much more familiar pattern—rank-and-file members rebelling against leadership; mounting panic and economic uncertainty; and finally, as the shutdown threat looms, a last-minute deal that leaves everybody angry and unsatisfied.

    Before it's here, it's on the Bloomberg Terminal.