Negotiators might be close to bridging resolution gaps

House and Senate Republicans are closer to agreement on a $2.6 trillion fiscal 2006 budget resolution than it appeared before the Easter recess, congressional aides and outside analysts said, with a deal likely this month if not by the April 15 statutory deadline.

That would contrast with last year, when differences over pay/go budget enforcement rules stymied for months and eventually killed the fiscal 2005 budget resolution, contributing to a lengthy delay in the appropriations process and eventual omnibus spending bill.

The stakes are high since it would be a major embarrassment for Republicans if, for the second year running and with control of both chambers and the White House, they could not agree on a budget. It also could jeopardize top legislative priorities such as opening the Arctic National Wildlife Refuge to oil exploration and extensions of business-friendly tax cuts. Without a budget, GOP leaders cannot later use reconciliation bills to push legislation through the Senate on simple majority.

With minor differences on tax cuts and discretionary spending, the biggest budget hurdle will be mandatory spending cuts to be included in a filibuster-proof reconciliation package, and those differences are not insurmountable, observers on both sides said.

"I do think there will be an agreement," said Robert Greenstein of the liberal Center on Budget and Policy Priorities. "It will be substantially easier to get a deal this year," added Brian Riedl of the conservative Heritage Foundation.

The House is proposing a five-year, $69 billion package of spending cuts and other deficit-reduction measures, while the Senate is at $17 billion in spending cuts after an amendment by Sen. Gordon Smith, R-Ore., eliminated a proposed $15 billion in savings, mostly from Medicaid. "There's always middle ground on spending," Riedl said. Senate Budget Chairman Judd Gregg, R-N.H., said last week on CNBC that an amendment adopted on the Senate floor to increase the tax cut reconciliation figure to $129 billion probably will not survive. That would bring the Senate number back to $70 billion, closer to the House's $45 billion, although it could end up approaching $100 billion in conference.

With the Bush administration and the House each backing $843 billion in fiscal 2006 discretionary spending, GOP negotiators are unlikely to support an additional $5.4 billion added in a close Senate floor vote.

The House Appropriations Committee, seeking to avoid a replay of last year, is already discussing allocations for its spending bills based on the $843 billion figure and will begin markups the first week in May, an unusually early start. Critics say this year's reconciliation exercise would increase CBO's baseline $1.2 trillion deficit forecast over the next five years by $104 billion in the president's budget, $127 billion in the House version and $217.6 billion in the Senate.

In the 1997 balanced budget agreement, when reconciliation was last used for spending cuts, lowered the deficit by $118 billion over five years, according to the Congressional Research Service. "They aren't using reconciliation for deficit reduction; they're using it in a way that makes the overall situation worse," said Robert Bixby of the nonpartisan Concord Coalition.