Bloomberg News

Rancor Hangs Over U.S. Supercommittee as Budget-Cut Talks Start

September 06, 2011

Sept. 6 (Bloomberg) -- As the U.S. Congress returns to work, the budget-cutting supercommittee is expected to take center stage amid no signs the August break eased raw relations between Republicans and Democrats.

President Barack Obama and House Speaker John Boehner, an Ohio Republican, clashed anew last week over the scheduling of a presidential speech outlining a jobs agenda, a spat that could help set the tone among the 12 lawmakers on the bipartisan committee.

“They have given tremendous amount of leeway and power to the supercommittee, that’s where all the eyes are,” said John Feehery, who advised former Republican House Speaker Dennis Hastert, of Illinois. “Republicans and Democrats have to decide whether they are comfortable with the status quo going into the election or if they need a game changer.”

The supercommittee’s work will start as more immediate skirmishes loom over competing job-creation plans and federal funding for highways, air travel and federal disaster aid.

Confrontations over those issues could feed the public’s discontent in advance of next year’s elections. Obama’s approval rating, at 42 percent in yesterday’s Gallup tracking poll, has been as low as 38 percent since he signed into law the agreement passed in early August to raise the federal borrowing limit and instruct the six Republicans and six Democrats on the supercommittee created by the accord to find $1.5 trillion dollars in budget savings by Nov. 23.

Automatic Cuts

As the supercommittee approaches that deadline, the specter of automatic, across-the-board spending cuts will heighten pressure for a deal. The law that raised the debt limit calls for those cuts to domestic and defense programs if the committee deadlocks or Congress fails to adopt its plan.

The debt-limit deal hasn’t improved attitudes toward lawmakers, who fare even worse than Obama in public opinion polls. According to an Aug. 17 to 21 Pew Research Center poll, public approval of Congress has dropped to 22 percent, down 9 points from June.

While the supercommittee begins negotiations, an initial spotlight will be on jobs.

After Boehner and Obama jockeyed over the date of the president’s jobs speech to Congress, the address was set for Sept. 8. Obama’s prescription for more infrastructure spending, tax incentives to spur hiring, and other measures stands in contrast to the Republican vision for job growth, which will be outlined by Boehner next week.

“The political passions will be ratcheted up” over the issue, said Ross Baker, a political scientist at Rutgers University in New Brunswick, New Jersey. And it’s unlikely a large-scale jobs initiative will become law, he said.

‘Leftovers’ Agenda

“Anything that costs money is not going to get through the House,” Baker said. “It’s a dinner of leftovers.”

In a memo last week to Republican lawmakers, House Majority Leader Eric Cantor of Virginia said the party will focus on limiting government regulations, including environmental and labor rules, in its jobs plan. The proposal will include repealing or scaling back Environmental Protection Agency rules on power plant pollution, ozone standards and greenhouse gas emissions, Cantor said in the Aug. 29 memo.

Another dispute is over funding for the Federal Aviation Administration, which Obama has warned could carry dire consequences for the nation’s construction workers.

Congress has until Sept. 16 to agree on an extension that will allow the FAA to continue funding airport construction projects and collecting airline ticket taxes.

FAA Shutdown Losses

The agency was forced to partially shut down on July 23, furloughing about 4,000 employees and losing what a Bloomberg analysis estimated was $448 million in uncollected taxes before resuming normal operations Aug. 8.

Though the House and Senate each passed versions of long- term bills allowing FAA to operate, the chambers have been unable to reach agreement on labor provisions, FAA funding levels and financial assistance for airline flights to rural airports.

Representative John Mica, the Republican chairman of the House Transportation and Infrastructure Committee, and Senator Jay Rockefeller, the Democratic chair of the Senate Commerce Committee, have signaled that they aren’t close to reaching agreement on the long-term bill. Even passage of a short-term extension remains in doubt.

Hurricane Irene

Disaster relief is also expected to spark a spending fight. A Senate committee is poised to seek more funding for the government’s disaster fund as officials assess damage from Hurricane Irene, which left flooding and destruction from North Carolina to Vermont. Cantor is demanding budget cuts to offset any increase in the disaster fund, while Senate Democrats say funding shouldn’t be delayed by political disputes over the budget.

There are potential areas of agreement, including pending legislation on trade and patent policy.

In Obama’s weekly radio address broadcast on Aug. 20, he repeated his call for Congress to pass free-trade agreements with South Korea, Colombia and Panama.

While the White House hasn’t formally sent up the accords negotiated under President George W. Bush, Senate leaders agreed last month to end an impasse when they return by taking up the agreements and a benefits program for workers that the Obama administration has championed.

Senate Majority Leader Harry Reid, a Nevada Democrat, and Republican Senate leader Mitch McConnell of Kentucky on Aug. 4 pledged to consider the worker aid program, called Trade Adjustment Assistance, and then take up the accords.

Korea Pact

Senate Republicans including Orrin Hatch of Utah, the party’s senior member on the Finance Committee, had balked at the administration’s plan to combine worker aid, which some Republicans oppose, and the Korea trade deal, which they support, into a single bill. That plan was dropped.

In the House, opposition is expected from Tea Party-backed Republicans who oppose the spending on the worker assistance and from Democrats who want stronger worker protections in the trade deals.

Senate action is also expected on a measure that would mark the most sweeping changes to U.S. patent law in more than 50 years.

Patent Legislation

The legislation, approved in the House, would allow the U.S. Patent and Trademark Office to set its own fees and have greater control over its budget. The agency, which is funded entirely by user fees, has sought an end to lawmakers’ practice of steering some of that money toward non-patent purposes. The Senate version would put the agency outside Congress’ normal appropriations process, which the House bill wouldn’t do.

The administration has supported giving the agency more flexibility in its funding, saying that’s needed to reduce a backlog of some 700,000 applications awaiting a first review by examiners.

Supporters say speeding up the application process would help attract venture capital dollars that help fund new or expanding businesses.

--With assistance from Eric Martin, Susan Decker, Catherine Dodge and Alan Levin in Washington. Editors: Jeanne Cummings, Don Frederick.

To contact the reporter on this story: Heidi Przybyla in Washington at hprzybyla@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net


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