White House, Democratic leaders begin budget talks

Top White House officials have begun talks on year-end budget matters with Democratic leaders, but there were no signs of a breakthrough Wednesday.

The Appropriations committees were plunging ahead on a massive omnibus spending bill for consideration next week, working through the give-and-take that characterizes endgame negotiations.

Issues ranging from Millennium Challenge Corporation funds for developing countries to labor agreements governing cargo carriers FedEx Corp. and United Parcel Service Inc. were vexing appropriators.

White House Chief of Staff Josh Bolten and Office of Management and Budget Director James Nussle ventured through the snow to the Capitol for meetings with Senate Majority Leader Harry Reid, D-Nev., and House Majority Leader Steny Hoyer, D-Md., as well as with their GOP counterparts on both sides of Capitol Hill.

None of the principals would comment, but sources said the meetings with Democratic leaders yielded no negotiations on overall spending levels or Iraq war funding.

Some aides said it was a positive sign that President Bush's two top advisers on the budget were at least talking to the Democrats.

On the other hand, Bolten and Nussle met with members of the House GOP whip team, and that meeting was an effort to buck up the troops for what might be a veto override fight during the next two weeks.

House Defense Appropriations Subcommittee Chairman John Murtha, D-Pa., was not in the meetings but has been leading his party's efforts on Iraq war funding.

He called it "a good sign" that Bolten and Nussle made the trip. But Murtha was not optimistic that this administration was ready to bargain, unlike the relationship between President Reagan and the late House Speaker Thomas P. (Tip) O'Neill, D-Mass.

"When I was Tip's guy with Reagan, Reagan's people would call. Reagan called me himself. Reagan had as good a staff as I've ever seen," Murtha said.

"I disagreed with Reagan philosophically, but he was a goddamn good president. He compromised."

In the current standoff, the parties are separated by about $11 billion in discretionary spending, after Democrats agreed to shave an equal amount off their original budget.

But Democrats are proposing to add nearly that much in "emergency" spending that does not count against budget caps, which Republicans say undermines the split-the-difference offer before it was seriously considered.

At the same time, Republicans want $70 billion in emergency spending for the military action in Iraq and Afghanistan, dwarfing the increases Democrats are seeking for domestic programs.

Somewhere in between there could be a deal, but House Speaker Nancy Pelosi, D-Calif., needs to satisfy anti-war forces in her Caucus who wield considerable clout.

Another option is to simply attach war funding to the short-term continuing resolution Democrats will need to pass next week, as negotiations are likely to drag into the week of Dec. 17.

Meanwhile, various interests are intently watching the outcome.

Even as the White House wants to cut overall spending, they are pressing for a minimum of $1.8 billion for the Millennium Challenge program, which works with developing countries on infrastructure and democracy-building.

The House approved that level, while the Senate cut that to $1.2 billion, and the State-Foreign Operations subcommittees were instructed to cut overall allocations by about $850 million to meet their new $33.4 billion spending target.

Given the weakness of the dollar versus other currencies and the rising costs of construction, anything less than $1.8 billion risks jeopardizing newly signed compacts with Burkina Faso and Namibia, after the U.S. has committed to giving funding to those nations, administration officials said.

Domestic interests are at work as well. The cargo giant UPS, backed by the Teamsters Union, is pushing language that would make it easier for employees at archrival FedEx to unionize.

The firms are covered under different labor laws, and FedEx wants to preserve its prior status. The measure was attached to the House's FAA reauthorization bill, but with that measure stymied, proponents are looking for another vehicle.

Aides said no decisions have been made. Senate Labor-HHS Appropriations Subcommittee Chairman Tom Harkin, D-Iowa, is supportive, as is Senate Minority Leader Mitch McConnell, R-Ky., with UPS headquartered in his home state.

Memphis, Tenn.-based FedEx could have difficulty fighting off the language, given the clout labor unions have in the Democratic Congress, and that the company lost a powerful patron with the retirement of former Senate Majority Leader Bill Frist, R-Tenn.