The White House and a lame-duck Congress are locked in a struggle to resolve key issues of taxation and spending, with funding for federal agencies and checks for the long-term unemployed set to halt this week if lawmakers fail to take action.
Typically, the deadlines at the end of a Congress help drive compromise. But with Republicans set to control the House in the new Congress – and to increase their minority in the Senate – there is incentive to punt all but the most urgent items into 2011.
At the top of the "most urgent" list is funding for fiscal year 2011, which expires on Friday. Congress has completed none of the annual spending bills for the fiscal year that began on Oct. 1. In years past, the way out has been to pass a single, vast spending bill that covers all federal agencies and is riddled with earmarks.
But candidates with tea party links have criticized that process being slipshod, resulting in no real scrutiny of what is in the budget. This year, GOP leaders are under pressure from the robust incoming class to hold the line on earmarks and spending, and so far they are resisting the so-called "omnibus bill" solution in favor of completing work in a new Congress.
Fiscal responsibility will continue to be an issue this week as the president’s National Commission on Fiscal Responsibility and Reform prepares to release its recommendations on Wednesday. President Obama announced Monday that he is proposing a two-year pay freeze for civilian federal workers – a move expected to save $5 billion through 2012.
House Republicans, caught by surprise by the announcement, applauded the move, which is included in the GOP Pledge to America, released in September. “Republicans and Democrats don’t have to wait until January to cut spending and stop all the tax hikes. We can – and should – start right now,” said House Republican leader John Boehner of Ohio.
Other issues at the top of Congress's agenda include:
Bush tax cuts. Democrats are divided over how far to compromise over extension of the 2001 and 2003 Bush tax cuts, now set to expire on Dec. 31. The White House proposes extending the tax cuts for all but those families making more than $250,000, but the president says he is open to a temporary extension of the entire tax cut. Speaker Nancy Pelosi, recently reelected to head Democrats in the new Congress, wants to hold the line at $250,000, with votes as early as this week likely.
But on the Senate side, Democrats are signaling elements of a possible compromise. Sen. Charles Schumer (D) of New York, recently tapped to head policy and messaging for Senate Democrats, is calling to lift the cutoff point to $1 million, a plan backed by caucus moderates such as Sen. Claire McCaskill (D) of Missouri and the Senate’s newest freshman, Sen. Joe Manchin (D) of West Virginia.
Republican leader Mitch McConnell (R) of Kentucky is calling for an up-or-down vote on making all the tax cuts permanent. He says that Republicans will oppose raising taxes for any American in a recession.
GOP leaders are set to meet with President Obama in a White House meeting Tuesday on a way forward. "We’re going to have to come to an agreement ... or taxes for the middle class are going to go up, something the president absolutely doesn’t want to see,” said White House press secretary Robert Gibbs Monday.
Unemployment benefits. Any compromise that extends tax breaks for the wealthiest Americans should also include a $12.5 billion measure to extend jobless benefits for the unemployed through Feb. 28, said Sen. Richard Durbin (D) of Illinois, the deputy Democratic leader, NBC's "Meet the Press" Sunday. The House failed to pass the measure in November. If a bill isn’t passed by Dec. 1, some 2 million Americans will lose unemployment coverage. Senate Republicans are calling for spending cuts to offset the cost.
START treaty. On other issues that Democrats hope to push through before a new Congress, Republicans are unlikely to lend support – especially in the absence of an agreement on tax cuts. At this late date, it’s not simply conflicts over policy, but also over time, Republicans say. Ratification of a new nuclear-arms reduction treaty with Russia will require weeks of floor debate, which will not be possible with spending and tax decisions still pending, said Sen. Jon Kyl (R) of Arizona, the deputy Republican leader, on Sunday.
DREAM Act. Republicans also promise robust opposition to plans to bring new immigration legislation to the floor, notably the DREAM Act, which would open a path to citizenship to illegal immigrants who came to the US as children and now serve in the military or attend college. During his tough reelection campaign, Senate majority leader Harry Reid pledged to bring the DREAM Act up for a vote in the lame-duck session.
'Don't ask, don't tell.' A proposed repeal of the Clinton-era “don’t ask, don’t tell” policy will also be tough sledding. The Pentagon is expected to release its 10-month survey of the views of military personnel on the issue Tuesday. GOP critics say the survey focused too much on implementation of a proposed reform and not on the policy.
Sen. Lindsey Graham (R) of South Carolina, the top Republican on the Armed Services Committee’s personnel subcommittee, said on “Fox News Sunday” that a repeal of the ban on gays serving openly in the military is “not going anywhere.” The Senate Armed Services Committee begins two-days of hearings on the issue Thursday.
Food Safety Act. The Senate Monday takes up the broad Food Safety Act, which gives the Food and Drug Administration expanded powers to order recalls and inspections. It passed the House in 2009 but has been delayed in the Senate. The final amendments, unrelated to the main bill, include proposals to reduce reporting requirements for small business in the recent health reform bill and to ban earmarks through 2013.