New talks in Congress focus on sequester

WASHINGTON — One week after concluding a bruising battle over the federal budget, Washington policymakers began lowering expectations for the next round of talks, with both sides proposing Thursday to concentrate simply on replacing sharp spending cuts known as the sequester.

“Let’s focus on goals that are hopefully achievable,” said House Budget Committee Chairman Paul Ryan, R-Wis., dismissing the years-long pursuit of a “grand bargain” to raise significant new taxes and restructure federal retirement programs as “ultimately destined for failure.”

“It’s more appropriate to the moment we have to focus on common ground to see if we can produce some advancements there,” Ryan said. “We’ve got automatic spending cuts coming. There are smarter ways of cutting spending — whether you’re a Republican or a Democrat.”

Ryan will be the lead negotiator for House Republicans on a budget conference committee that was created as part of last week’s agreement to end a 16-day government shutdown and raise the federal debt limit. That accord also established a new round of budget deadlines early next year.

On Thursday, Ryan held out hope that the panel would strike a deal to replace the sequester for fiscal 2014 and perhaps beyond — averting another shutdown in January and a fresh crisis over the debt limit sometime next spring.

Ryan’s counterpart in the Senate, Budget Committee Chairman Patty Murray, D-Wash., has expressed similar sentiments. On Thursday, Senate Majority Leader Harry Reid, D-Nev., confirmed that he, too, wants to focus on fixing the sequester, dismissing as “happy talk” speculation about another shot at a grand bargain.

And Treasury Secretary Jack Lew listed sequester replacement as his top priority Thursday in a speech at the Center for American Progress, which is closely aligned with the Obama administration.

“If we can agree on sensible medium- and long-term policies to replace these short-term cuts,” Lew said, “we can do something good for the economy and our national security.”

The newfound consensus on the scope of budget talks buoyed hopes that policymakers might finally forge a compromise that could rebuild confidence around the world in the effectiveness of the U.S. government. For nearly three years, lawmakers have limped from crisis to crisis, doing little more than averting disaster until the next showdown.

Republicans, in particular, have suffered from that pattern, with their standing in public opinion polls plummeting to historic lows during the most recent impasse.

This time has to be different, Ryan said.

“I would like to think that, even in this very partisan climate, we can get smarter debt reduction to show that Americans can get a down payment on their fiscal problems,” he said. Getting “some minimal accomplishment in divided government” would be “good for the economy, good for confidence and good for credit markets.”

But the two parties remain far apart on the question of how to replace the sequester cuts, which are scheduled to slice about $100 billion a year out of agency budgets through 2021.

Democrats are insisting that even a partial replacement of the cuts – which are set to hit the Pentagon particularly hard next year – must include new revenue raised by closing tax loopholes for corporations and the wealthy.

Republicans want to replace the agency cuts by trimming spending on Medicare and other long-term expenses, such as pensions for federal workers. House Speaker John Boehner, R-Ohio, Senate Minority Leader Mitch McConnell, R-Ky., and on Thursday, Ryan, have ruled out new taxes, saying they would rather stick with the sequester.

“We’re not in this to raise taxes. If this conference is used as an excuse to raise taxes, then I fear we will not be successful,” Ryan said. “We’ll take the spending cuts we have if that’s all it’s going to be.”

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