A model for hold-your-nose dealmaking in Congress

In October, the US legislative process hit rock bottom in setting fiscal policy.

Yes, there have been other low points: the downgrade of the US credit rating after the 2011 debt-limit debate, nearly going over the “fiscal cliff” last January, and then allowing the mindless “sequester” cuts to go into effect in March. But the combination this past fall of Congress’ failure to fund federal programs for 2014 – leading to a two-week government shutdown – and another round of debt-limit brinkmanship took the cake.

More than ever, the two parties were talking past each other, and Congress had failed to perform its most basic function. The American public was caught in the middle.

Policymakers eventually came to their senses and reached an agreement to reopen government. That deal contained the first baby steps toward returning to regular order – a stark contrast to the crisis-driven policymaking that had become the norm. The legislation effectively initiated a conference between the House and Senate budget committees over the opposing budgets each had passed earlier – a conference that had not happened in more than four years.

From the moment that bipartisan, bicameral committee was announced, naysayers began to predict its demise – not a bad guess given recent experience. But House Budget Chair Paul Ryan (R) of Wisconsin and Senate Budget Chair Patty Murray (D) of Washington were determined to prove their skeptics wrong.

By working closely together and avoiding the red lines that serve as self-imposed barriers to success, the two veteran lawmakers forged a compromise by their Dec. 13 deadline: the Bipartisan Budget Act of 2013. The bargain was neither sufficient in its boost to economic growth nor in cutting the deficit, but as the first bipartisan progress on fiscal policy in years, the bill’s symbolic importance might set the stage for further bipartisan successes.

In particular, the agreement will bring some near-term relief to the havoc that the sequester’s across-the-board cuts have wreaked on defense and domestic agencies – cuts that have also been limiting economic growth. But the deal did not produce a comprehensive solution to those reductions, which continue through 2021. And it still requires a funding bill by Jan. 15 for the current year. Nor did the legislation contain real provisions to boost economic recovery. But it is a much needed start.

A number of small deficit-reduction provisions were included in the deal. As a whole, these are welcome and, in some cases, much-needed changes that will save taxpayer money and help pay for the bill’s sequester relief.

Perhaps most important, the Bipartisan Budget Act establishes top-line levels for annually appropriated (nonentitlement) defense and domestic spending not only for 2014, but also for 2015. This allows the appropriations committees to begin their work on determining 2015 spending allocations and priorities well in advance. This is how Congress is supposed to function – not with shutdowns or last-minute agreements to continue the status quo, but with thoughtful, deliberate discussions about funding for thousands of government programs.

But lacking from the legislation are significant reforms to the drivers of America’s long-term debt problem – rising entitlement costs and an inefficient tax code that raises insufficient revenue – or an increase in the country’s borrowing authority (debt limit), which will be needed this coming spring.

Wary observers are looking ahead to a potential sequel to the contentious debt-limit debates of the past few years. And on broader economic and budgetary issues, the two parties remain deadlocked. Republicans staunchly oppose any tax increases or short-term stimulus while Democrats resist even minor changes to entitlements like Medicare and Social Security. Retreating to corners and repeating those mantras are what led to the utter dysfunction this past October.

How can we move past these impasses? Lawmakers should build on the foundation of the Murray-Ryan budget deal and learn from what worked. First, serious policy dialogue took the place of political posturing. Either party could have found an excuse to “stand its ground” and pander to its base, but strong leadership from the chairs and a desire to get something done trumped those partisan instincts.

Second, these were serious give-and-take negotiations; both Mr. Ryan and Ms. Murray have made clear that they held their noses and swallowed certain aspects of the deal. But so goes the nature of bipartisan compromise.

With the economy still operating well below its potential and the looming debt problem far from resolved, Congress and the president have just started their climb toward fiscal sanity. Yet the one good thing about having hit rock bottom is that there’s nowhere to go but up. 

G. William Hoagland, Steve Bell, and Shai Akabas are senior vice president, senior director, and associate director, respectively, at the Bipartisan Policy Center.