Analysis: Budget deal is epitaph for bid to control spending

WASHINGTON (AP) — Eight years ago, Washington's power players reluctantly sealed a pact to curtail federal spending and the debt. Now, with help from President Donald Trump, they are writing its epitaph.

The budget deal reached this week by Trump, Speaker Nancy Pelosi and Republican leaders represents the last gasp of the 2011 Budget Control Act, a complex experiment aimed at forcing lawmakers into tough fiscal decisions that they couldn't arrive at on their own. The verdict on the law, including from its authors, is stark: it was a colossal failure.

"A law that was originally conceived to drive deficit reduction is instead driving two-year by two-year deal making irrespective of deficit concerns," said Mike Spahn, a former Senate Democratic aide. "Now, for the fourth time over, in every different version of divided government, everyone has decided just to blow right past that particular concern."

The law was itself a retreat from promising but ultimately failed "grand bargain" negotiations between then-Speaker John Boehner and former President Barack Obama aimed at attacking trillion-dollar deficits. But it was what Washington could then produce in a capital bitterly divided by a tea party-driven House and a Democratic president seeking to cement re-election.

The law had two central elements: a "supercommittee" assigned to find $1 trillion-plus in deficit cuts, and a harsh mechanism called sequestration that would trigger wrenching cuts to both the defense and nondefense sides of the federal budget, as a backstop.

But the supercommittee never got close to an agreement. Neither negotiating side ever unveiled anything to draw their counterparts into a "hold hands and jump" moment that was a feature of the politically perilous but successful deficit-cutting efforts of the 1990s.

Then the backup failed, too.

The idea had been that the threat of sequestration would be so awful that it would compel lawmakers to swallow cuts to popular benefit program or tax increases that they otherwise wouldn't accept. But the resulting jolt to the Washington ecosystem actually increased pressure for more spending over time.

For six years lawmakers wrestled with it, with each successive deal adding more to future deficits — in 2013, 2015, 2018 and now — to stop the spending cuts from taking effect.

"When it came right down to it, sequestration was supposed to be such an awful alternative that we would do responsible things instead," said Sen. Dick Durbin, D-Ill., who served on Obama's 2010 deficit commission and is a veteran of budget wars dating to the 1980s. "And we didn't do the responsible things that we needed to do from the budget viewpoint. And we're kind of stuck with the outcome."

One of the most important dynamics that emerged from the 2011 law was that it empowered then-Minority Leader Nancy Pelosi — and she made the most of it, leveraging her support for must-do debt and spending measures to gain a seat at the table to demand spending increases for domestic appropriations.

But pressure against the cuts also came from the Republican side of the aisle, where there was little support for reductions in defense spending.

The first deal to replace sequestration came in 2013, after the sequestration cuts started to take effect. That jolted the powerful defense lobby, ultimately resulting in a follow-up pact by then-Budget Chairman Paul Ryan, R-Wis., and Sen. Patty Murray, D-Wash., to blunt the impact of the sequester cuts, paid for — mostly, sort of — by cuts elsewhere in the budget.

"The defense hawks were especially vocal that we need to raise the defense caps and we are willing to give away the farm on nondefense to get it," said Brian Riedl, a longtime GOP budget expert both on and off Capitol Hill. "And once you raise the caps the first time, you can't ratchet them back down ... The BCA was essentially dead."

Two more rounds of talks of small-scale budget deals, with far less rigorous attention paid to the accompanying cuts, passed in 2015 and 2018.

All along, Pelosi saw the appetite of GOP defense hawks for more Pentagon funding as leverage to overwhelm the demands of Republican deficit hawks to live within its super-strict defense levels. Democrats used the leverage to demand comparable "parity" treatment for domestic programs they favor. That was just fine with GOP appropriators seeking to ease passage of their bills through the politically treacherous waters of Washington.

"It just turned out to be easier to override the sequester than it was to actually replace it with spending cuts or deficit reduction," said Neil Bradley, a House GOP leadership at the time. "If you're trying to sustain an impossible position you're going to end up with a worse deal ... because rather than being a brake on wherever Pelosi would want to go for example, there's no brake because there's no realistic alternative."

In short, the Budget Control Act punished defense and domestic programs — at least those agency budgets funded annually by Congress and known collectively as "discretionary" spending — so deeply that it provided the impetus for both sides to gang up to overturn it.

The only way out under various iterations of divided government was a bipartisan reprieve, with Pelosi, despite eight years in the minority, always delivering a critical bloc of votes and retaining leverage because of divisions among Republicans.

Ultimately, bipartisan pressure for more spending overcame the desire to pay for it. Efforts to accompany spending hikes with real, biting spending cuts faded over time as lawmakers ran out of relatively easy options and gravitated to gimmickry.

Trump's budget team assembled lots of cuts, but nothing that ever gained momentum or was taken seriously. Instead, most of the deficit cuts associated with recent deals simply renew provisions with distant expiration dates like a two percentage point cut to Medicare providers or customs user fees.


EDITOR'S NOTE — Andrew Taylor has covered Congress for The Associated Press since 2005.