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FY 2011 SPENDING DISCUSSIONS CONTINUE: Pressure Mounts as April 8 Deadline Approaches and Possibility of Government Shutdown Increases

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“This is an historic level of spending cuts, it is the halfway mark between the two sides, and the speaker has already agreed to this number privately.”

The possibility of a government shutdown is becoming more likely after negotiations between House Republicans and Senate Democrats appeared to break down on a spending bill that would fund the government through the rest of Fiscal Year (FY) 2011, which ends on September 30.

Previously, House Republicans and Senate Democrats were able to agree on two separate short-term spending bills, or continuing resolutions (CR), that cut a total of $10 billion while keeping the government running. An agreement on a permanent solution, however, has been much more difficult to reach. With the most recent CR set to expire on April 8, there is little time for the parties to negotiate a compromise. Over the weekend, it was believed that congressional staff from both parties were working on a long-term solution that would make $33 billion in additional cuts, but it is now unclear whether Republicans are on board with that figure.

The $33 billion figure is the approximate midpoint between Senate Democrats’ desire to keep spending at FY 2010 levels and the $61.5 billion in cuts that House Republicans included in the Full-Year Continuing Appropriations Act, or H.R. 1, which passed the House in February. As it has been for the last few months, a compromise has been difficult to reach because Senate Democrats have balked at the level of cuts contained in H.R. 1 as well as the policy provisions it includes that would block environmental regulations and the implementation of the health care overhaul that was signed into law last year.

During his speech in Maryland on Friday, President Obama seemed to think an agreement was close. “After a few weeks of negotiations between Democrats, Republicans, and my team at the White House, it appears that we’re getting close to an agreement between the leaders of both parties on how much spending we should cut,” Obama said.

However, after meeting on Monday, April 4 with members from his caucus, House Speaker John Boehner (R-OH) issued a statement saying there is “no agreement on a number until everything—including the important policy provisions from H.R. 1—is resolved.” Boehner added that the $33 billion figure is “not enough” and “unacceptable.”

In an effort to extend the deadline, House Republicans introduced another short-term CR that would fund the U.S. Department of Defense for the rest of the fiscal year, but would only fund the rest of the government until April 15. At the same time, the bill would make an additional $12 billion in cuts, including a $100 million cut to the Enhancing Education Through Technology program and a rescission of $186 million in unobligated FY 2010 funds from the Striving Readers program. Several other education programs would be cut under the measure. More details are available from Education Week’s Politics K–12 blog.

Some Democrats believe that Boehner could be taking a hard line in an effort to hold together his caucus, which includes eighty-seven freshman Republicans who were elected on promises to dramatically cut federal spending. They see Boehner’s rejection of the $33 billion figure and the introduction of the latest short-term CR as a negotiating ploy designed to appeal to the Tea Party.

“This is an historic level of spending cuts, it is the halfway mark between the two sides, and the speaker has already agreed to this number privately,” said Senator Charles Schumer (D-NY). “At this point, we are so far down the road towards an agreement, and so little time remains before Friday’s deadline, that it would be a dramatic about-face for the speaker to suddenly let things devolve into a shutdown, as many in the Tea Party are urging,” Schumer said.

Pressure for Additional Spending Cuts Expected in FY 2012

On Tuesday, April 5, House Budget Committee Chairman Paul Ryan (R-WI) unveiled a budget proposal for FY 2012 that would cut approximately $6 trillion in spending over the next ten years and reduce the top income tax rate for individuals and corporations from 35 percent to 25 percent.

Ryan’s budget plan would cut overall domestic discretionary spending to below fiscal 2008 levels and freeze it there for five years. Senate Democrats are unlikely to accept such large spending cuts to domestic programs, but Ryan’s proposal will certainly trigger a vigorous debate on spending and tax priorities going forward.

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