Congress

Congress Needs a Megadeal

One way to tackle the debt limit, the budget, military spending and health care -- all in September.

Polarized place.

Photographer: Andrew Harrer/Bloomberg

As Congress returns to work this week, its agenda is crowded with must-pass legislation. To avoid shutting down the government, lawmakers will have to vote for new spending bills. To avoid a debt crisis, they will have to increase the debt limit. To avoid depriving millions of low-income children of health insurance, they will need to reauthorize funding for it. And since the Trump administration on its own seems unwilling to make the Obamacare health-insurance exchanges work more effectively, Congress will need to make some fixes.

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All of this has to happen by the end of September. To further complicate matters, most of it will require some degree of bipartisanship. A megadeal in September, in which all these issues are handled together, may be the most likely path forward. But it will require the kind of deal-making that seems to have disappeared in a hyper-polarized Washington – so “most likely” is far from a sure thing.

Let’s start with the spending bills. Even if the president stops insisting on paying for the border wall, another hurdle looms: the increase in defense spending that Republicans want. Raising defense spending is more complicated than passing a partisan appropriations bill. Any defense spending above the levels agreed to in the 2011 budget deal would automatically be cut unless the rules are waived. That would take Democratic votes, and obtaining them would probably require an increase in non-defense spending, anathema to many Republicans. (It’s always possible to pass a short-term extension of existing funding, and that may well be what happens in the next couple weeks, but stop-gap measures can’t raise defense spending except on active military operations.)

The debt limit will be complicated in a similar way. The administration has apparently agreed to move beyond its internal disagreements over whether the debt limit should be used to bargain for spending cuts. The White House is now said to favor a “clean” debt limit increase, with no strings attached. But it’s not clear that congressional Republicans will have the votes to pass even a clean increase without Democratic help. The Democrats are, appropriately, skeptical of voting for an increase only to see the Republicans pivot to a big tax cut.

Health care involves other complex dynamics. Reauthorizing funding for the state Children’s Health Insurance Program, which covers millions of children in low-to-moderate-income families, has bipartisan support. But it could get tangled up in larger issues. There’s always a chance that Congress will be distracted by another attempt to repeal Obamacare. Thankfully the window for doing that with only 50 votes in the Senate expires at the end of September.

Even without another run at repeal, though, policymakers will have plenty to do in helping to contain premium increases and stabilize coverage on the Obamacare exchanges. The administration could act on its own to improve the situation, but thus far has done the opposite, and the various bipartisan efforts to revise the law face a very uncertain future. There’s not much time to finalize a set of reforms such as those embodied in the plan developed by Governors John Kasich of Ohio and John Hickenlooper of Colorado, or any that may come out of committee hearings to be held this month by Senators Lamar Alexander of Tennessee and Patty Murray of Washington. Even if a good package of reforms can be developed, how could Speaker Paul Ryan allow it to be introduced on the House floor, knowing that it would split his caucus?

Which brings me back to the megadeal: Republicans would get some increase in defense spending, while Democrats would get an increase in non-defense spending. The debt limit would be increased. The children’s health insurance programs would be reauthorized, and some Obamacare fixes would be included. The package could also include emergency funding to deal with the aftermath of Hurricane Harvey.

The Democrats would have to tolerate higher defense spending and being played on the debt limit (in the sense that the debate would indeed then turn to tax cuts), but the deal would help secure the future of the Affordable Care Act and insurance coverage for kids, and it would not only protect non-defense spending from cuts that might otherwise be made but raise such spending. The Republicans, for their part, would avoid a shutdown and a debt crisis and generate some increase in defense spending. That might be enough to persuade Ryan to bring up legislation that includes Obamacare fixes.

This is far from an ideal plan from multiple perspectives. But if there’s a better way forward through this mess, I’d love to hear it. In any case, we’re in for a dramatic September.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

    To contact the author of this story:
    Peter R. Orszag at porszag5@bloomberg.net

    To contact the editor responsible for this story:
    Mary Duenwald at mduenwald@bloomberg.net

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