Squeeze Play on Spending Plan

“Only in Washington can a budget that spends more than it did the year before, with a larger deficit, be portrayed as ‘cutting.’”

-- Sen. Rand Paul, R-Ky., in a letter to colleagues about why he is voting against a fiscal compromise package

House Republicans didn’t produce a compromise spending package to fund the government for the remaining 25 weeks of the fiscal year until 2 a.m. today.

That means that under transparency rules, the soonest that the House can have a vote on the plan is Thursday, the same day that the current stopgap measure, passed Friday night in service of the larger deal, expires.

The margins for error are shrinking.

There were no major surprises in the spending package, except for the end of a backup engine for the F-35 fighter. The $3 billion engine, produced at a plant adjacent to House Speaker John Boehner’s district, was considered protected from on high, despite opposition from Defense Secretary Robert Gates. By goring his own ox, Boehner will enhance his clout in seeking concessions from others.

But laid out in black and white, the details of the plan may cause some conservatives in the House to blanche. Policy specific cuts will be galling to some on the right – for example, Republicans got only half of their desired $3 billion cut to the Environmental Protection Agency aimed at preventing the enforcement of new global warming regulations.

The legislation does have lots to soften the blow. For example, the law would eliminate four White House czars and czarinas – health care, automobile, global warming, and urban affairs – and prevent federal funding for abortions in the District of Columbia.

House Republicans seem to be in accord that the legislation represents the best deal that Boehner can get – another $28 billion in cuts beyond the $12 billion already obtained in earlier rounds of continuing resolutions. But for many of the fiscal hawks, the appeal of bucking the leadership on the spending plan will be irresistible.

The GOP holds a 24-seat majority in the House. The speaker lost 28 members in the vote Friday night to keep the government open, and will likely lose more on the final vote Thursday. But, there are at least 15 fiscally conservative Democrats who can be counted on to come along. That puts the safety zone at 39 Republican renegades. Any more, and it starts to get a bit dicey.

But it’s in the Senate where things really get interesting.

While Senate Majority leader Harry Reid may be able to count on most of the moderate members of his caucus (five or six members) to do the deal, liberals are unlikely to play along in order to help him save face on the deal. And the Republican caucus is no sure thing.

Sen. Rand Paul, R-Ky., and Sen. Mike Lee, R-Utah, are certain “no” votes, and one would expect South Carolina’s Jim DeMint to join his Tea Party caucus colleagues in voting no. Then there are other fiscally focused freshmen like Sen. Pat Toomey, R-Pa., Sen. Jon Boozman, R-Ark., and Sen. Ron Johnson, R-Wis., who might get cold feet about the deal.

And even if Reid can round up the 60 votes he needs to advance the bill, Paul, Lee or any other senator can bog down the process with an old-timey filibuster and hold the floor to delay a vote. Because the House has put the process so close to the deadline, the door is open for some high-stakes theatrics in the Senate on Thursday night.

One more complication: President Obama on Wednesday will outline his long-term debt reduction plan (more on this below) and the House is set to vote on its 2012 budget, which outlines major debt trims, but not at the depth that the hawkiest hawks want to see. This is complicating because it removes the possibility of promising future cuts in exchange for present practicality.

The deal is still heading for passage, but the last leg of the trip is going to be bumpy.

Obama to Make Small Counteroffer

"The consequences of not raising the debt ceiling would be Armageddon-like in terms of the economy."

-- White House Press Secretary Jay Carney finding a new way to denounce Republican efforts to link the requested increase in the federal debt ceiling to debt reduction

The details on President Obama’s opening bid in his deal seeking an increase in the $14.3 trillion federal debt ceiling are emerging, and he is certainly leaving himself lots of room to negotiate.

The details reported thus far include:

--A tax increase on high earners

--A Social Security tax hike

--Reduced Defense spending

--Changes to Medicare and Medicaid payments to encourage savings

Not mentioned specifically is an oft-discussed initiative by the administration to raise tax receipts by closing loopholes on the corporate code and lowering the rate in a bid to get multi-nationals to allow more of their income to be taxed in the U.S. Whether this idea will be part of Obama’s Wednesday afternoon speech at George Washington University or tackled on its own is unclear.

There is a lot of potential money there, to be sure. But the sources of the funds are not likely to win many plaudits from Republicans.

The Republican budget plan, meanwhile, comes without tax increases and finds its biggest savings by making cuts. Medicaid, a welfare program for poor Americans, would become a block grant system operated solely by states. Medicare, an entitlement program for senior citizens, would become a subsidy program that helps seniors buy private insurance.

Obama’s modest counteroffer reinforces the notion that Democrats mean to use the Republican plan as a blunt object in 2012.

On Monday, the Democratic Congressional Campaign Committee warmed up its talking points on the Ryan budget in a fundraising email that said the plan would “end Medicare as we know it and force seniors to clip coupons if they need to see a doctor.”

The current $14.3 trillion debt limit will be exhausted sometime in the next month. By making his counter-offer so far afield from Ryan’s, Obama is guaranteeing that the negotiations will fill all of that time, and maybe then some.

Neither will the entitlement changes to be proposed by Obama – increased taxes on upper incomes to shore up Social Security and pay-for-performance reimbursements on Medicare and Medicate treatments – are not likely to generate much excitement among the centrist hawks.

Medicare and Medicaid are the most pressing matters on the fiscal slate and it looks likely that the president will be proposing an expansion of ideas already laid out in his controversial national health care law.

Remember, Obama found funding for his law in part by slashing $500 billion from Medicare. On Wednesday, we will likely hear how Obama plans to make that $500 billion a reality by new payment structures that will pay doctors for positive outcomes not the number of treatments. It’s hard to imagine, though, that Obama could actually find cuts beyond those he has already sought to finance his signature law.

He might promise future savings, but it would strain the president’s already stretched credibility on entitlements to lean too heavily on untested savings from non-existent programs.

As Obama prepares to go low in his counter-offer, all eyes are on a group of Senate Democrats working up their own proposal based on the findings of Obama’s debt commission, findings Obama ignored in his own 2012 budget.

The hope among Senate moderates will be that since Obama is opening so low against the House Republican plan, their proposal could be the bridge between the two sides.

Romney: Rushed or Ready?

“… President Obama’s policies have failed. He and virtually all the people around him have never worked in the real economy. They just don’t know how jobs are created in the private sector. That’s where I spent my entire career.”

-- Former Massachusetts Gov. Mitt Romney in a web video announcing the formation of a presidential exploratory committee

Insiders say the Monday announcement of a presidential exploratory committee by automatic Republican frontrunner Mitt Romney was right on schedule.

The campaign strategy has always been to launch in the first half of the second quarter of the year in order to rack up some potent fundraising numbers, but not dangle so long in the public eye as to become tiresome – “Not too early, not too late,” as one Romneyite told Power Play.

Other Republicans, though, say that Romney was stampeded into the race by Donald Trump’s unlikely bid gains increasing attention and Democrats work ever harder to remind voters of the former Massachusetts governor’s mandate-based health care law.

“He thought he could set the timetable himself. Now he has to accept reality,” said an adviser to another incipient Republican campaign. “His rushed entry shows that.”

But Romney’s launch may suggest otherwise. By kicking off with a low-key web video Romney didn’t enter the race trying to get attention, but instead seemed to be working to keep his visibility low. No speech, no round of TV appearances, no commercials, just a guy in a windbreaker talking about job creation.

Romney’s committee comes four months later than his 2008 version and certainly reflects the more deliberate pace he and his advisers have foretold. He and former Minnesota Gov. Tim Pawlenty are the only two top tier candidates already in the race, representing a general slowing of the schedule since 2008.

Still waiting to jump in are Mississippi Gov. Haley Barbour, who seems mostly constrained by the lingering legislative session in his home state, and former House Speaker Newt Gingrich, whose situation seems, well, very complicated.

The question now for Romney is whether he will join the field for the first GOP presidential debate, hosted by FOX News and the South Carolina Republican Party on May 5 in Greenville, S.C.

Team Romney was non-committal on that count, but allowed that the idea was “under discussion.”

And Now, A Word From Charles

“[President Obama] is now leading from the rear. He is catching up and he is going to give a speech. But unless it has got details in it, it's worth the air he inhales in giving it.”

-- Charles Krauthammer on “Special Report w/ Bret Baier