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White House and Republican leaders reach budget deal

The White House and congressional Republican leaders reached a budget agreement late Monday that would resolve the stalemate over paying for federal programs and could end the threat of another government shutdown for the rest of President Obama’s term.

The $80-billion, two-year budget accord would increase spending somewhat on defense and domestic programs, rolling back some of the automatic cuts known as sequesters that Obama repeatedly has denounced.

The deal is likely to face opposition from both right and left. Earlier in the evening, as news of the possible accord spread, some conservative groups denounced the additional spending as a betrayal, while some liberal groups warned against the possibility that trims in benefits would be agreed upon to pay for parts of the agreement.

The package also would raise the nation's borrowing limit and avert the risk of a credit default, which could come as early as Nov. 3. In addition, the deal is expected to block price increases on seniors who use Medicare Part B, halting forthcoming boosts in their premiums and deductibles.

A vote on the deal could come as early as Wednesday.

Progress came as a surprise; many had doubted the White House and Republicans could come to terms. It would be one of the final legislative acts of House Speaker John A. Boehner (R-Ohio), who is preparing to retire this week after repeated confrontations with his party’s hard-right flank.

Boehner met with his leadership team Monday afternoon and convened rank-and-file lawmakers for a hastily called private evening session.

“Fiscal negotiations are ongoing,” said Senate Majority Leader Mitch McConnell (R-Ky.) as he opened the Senate. “As the details come in, and especially if an agreement is reached, I intend to consult and discuss the details with our colleagues.”

The White House praised the deal Tuesday as a “responsible agreement” aimed at economic growth and security for the middle class.

An administration official said the deal, which would all but end the threat of another government shutdown during Obama’s time in office, is a “compromise” that proves bipartisan cooperation is possible.

“It is promising that Democrats and Republicans in Congress were able to come together to reach a strong agreement that would break the cycle of shortsighted, crisis-driven decision-making,” the official said in a statement.

After abruptly announcing his retirement last month, Boehner had vowed to “clean up the barn” for his successor. Resolving the budget standoff would clear one of the most divisive issues from the agenda of Rep. Paul D. Ryan (R-Wis.), who is expected to be elected the next House speaker this week.

The more legislation Boehner can muscle through the testy GOP-led House in the days ahead, the smoother the transition will be for Ryan.

The measure to lift the nation's debt limit, currently at $18.1 trillion, through March 2017 would be tacked on to the budget deal, according to congressional aides, who did not want to be identified speaking about the sensitive negotiations.

Boehner’s critics on the right quickly sought to galvanize Republican opposition, and conservative lawmakers left the evening meeting fuming that the speaker was cutting a last-minute deal before stepping aside.

“The only reason you negotiate in the dark is because Republicans won’t accept it,” said Rep. Tim Huelskamp (R-Kan.). One lawmaker stood up during the private session and asked why Boehner, not Ryan, was at the negotiating table. Ryan, according to those in the room, did not address the issue.

“In Washington, cleaning the barn is apparently synonymous with shoveling manure on the American people,” said Heritage Action Chief Executive Michael A. Needham. “John Boehner is clearly a rogue agent negotiating on behalf of well-connected special interests, not the voters that gave him the gavel.”

Liberal groups voiced their own concerns.

“The White House needs to know that any budget deal that cuts Social Security, Medicare or Medicaid benefits, or eligibility for those benefits, is unacceptable to the American people and roughly equivalent to declaring a holy war on struggling working families,” said Jim Dean, chairman of Democracy for America.

For weeks, aides to congressional leaders and the White House have been meeting behind closed doors on a possible budget deal. The aim has been to roll back some of the steep sequester cuts that were agreed to after a 2011 debt ceiling showdown. Both parties have wanted to undo the sequester cuts, for different reasons.

Republicans have wanted to halt cuts to the Pentagon, while Democrats have sought to ease reductions to domestic programs.

Talks had dragged, though, as the two sides tried to figure out how to pay for the increased spending.

The deal probably would be paid for with a combination of budget cuts elsewhere, new fees and partial reliance on an overseas contingency fund set aside for military operations.

The deal would adjust spending caps for two years by a total of $80 billion — $50 billion the first year and $30 billion in the second — equally divided between defense and nondefense spending, according to a person familiar with the negotiations.

An additional $32 billion in spending over the two years will come from the overseas contingency account, which brings the total package to $112 billion. Republicans had suggested tapping that account before to boost military funding, but Democrats and even some Republicans argued it was an accounting gimmick because the emergency war fund was not intended for such a purpose.

The bulk of the costs would be paid for by clipping government programs and raising fees on others in ways that would cause political discomfort on both sides of the partisan line.

Democrats probably will object to cuts in the Social Security Disability Insurance program that would lower part of the benefits individuals receive based upon any wages they earn. Republicans probably will pan new tax-filing fees.

The GOP will score a victory with another provision that would do away with an Affordable Care Act requirement that larger companies automatically sign up workers for healthcare unless the workers specifically opt out. Businesses have fought the requirement.

“I hope that Democrats and Republicans will come to a resolution soon that is good for our country,” said Senate Minority Leader Harry Reid (D-Nev.). “As I have been saying for years, it is past time that we do away with the harmful, draconian sequester cuts.”

Passage is a multi-step process, giving opponents ample opportunity to derail the deal. Even if the deal is approved this week, Congress still would need to pass a separate spending bill to keep the government running after the Dec. 11 deadline. If it fails to do so, the specter of a government shutdown could reappear.

This final effort by Boehner could result in a politically heroic act to resolve looming crises despite deep resistance from the GOP majority in the House — or it could cement his reputation among hard-right Republicans that his willingness to compromise with Obama makes him insufficiently conservative.

“Listen, this is not about us,” Boehner said last week. “Our job is to do the right thing for the American people every day. You have heard me say this multiple times, and I will say it one more time: If you do the right things for the right reasons every day, the right things will happen for our country.”

Also Monday, the House advanced legislation to salvage the Export-Import Bank, a Depression-era financing entity that big business says is vital for exports but conservatives deride as crony capitalism.

This year, conservatives succeeded in beginning to close the bank by failing to authorize new lending. A brutal lobbying campaign over the bank has been underway on both sides of the issue.

A bipartisan majority in the House that wants to revive the bank pushed the vote forward with a rare “discharge petition” procedure, which hasn't been fully deployed since the 1970s. Boehner did not stand in the way.

lisa.mascaro@latimes.com

Times staff writer Christi Parsons in Washington contributed to this report.

For the latest from Congress and 2016 campaign follow @LisaMascaro

For more, go to www.latimes.com/politics.

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UPDATES

Oct. 27, 5:22 a.m.: This article has been updated with comment from the White House.

11:08 p.m.: This articles has been updated with a report that a budget agreement has been reached.

8:57 p.m.: This article has been updated throughout with additional details and background.

6:17 p.m.: This article has been updated with additional details.

3:04 p.m.: This article has updated with additional reaction and background.

11:45 a.m.: This article has been updated with White House reaction.

11:03 a.m.: This article has been updated with additional details and background.

This article was originally at on Oct. 26 at 10:33 a.m.

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