WASHINGTON -- With the government reopened and a debt default averted for now, congressional negotiators on Thursday plunged into difficult budget talks to avoid a repeat crisis within months, and quickly agreed to lower their sights from the sweeping grand bargain that has eluded the two parties for three years.
Following approval late Wednesday of the agreement ending the standoff, the deal-making mantle shifted overnight from leaders of the Senate to the Budget Committee chiefs, Sen. Patty Murray, D-Wash., and Rep. Paul Ryan, R-Wis. -- two less senior lawmakers who nonetheless could make effective salespeople, since they command loyal followings in their parties. The political pressure lifted as well, for now.
But the need for a bipartisan breakthrough, even a modest one, was amplified by the economic costs wrought by the 16-day shutdown and near-default on government obligations.
"The key now is a budget that cuts out the things that we don't need, closes corporate tax loopholes that don't help create jobs, and frees up resources for the things that do help us grow -- like education and infrastructure and research," President Barack Obama said Thursday from the White House, setting ambitious goals for Congress even as his own role in the bargaining was unclear.
The question of what a new House-Senate budget conference can deliver by its Dec. 13 deadline -- in time for Congress to act by Jan. 15 on funding to keep the government open -- remained the subject of deep skepticism, well earned by past failures at reaching so-called grand bargains for deficit reduction and spending investments in the past three years.
With the talks' scope narrowed for now, on the table are ideas left over from past, failed bargaining: possible reductions in other programs -- such as farm subsidies, federal pensions, the Postal Service and unemployment insurance -- and relatively minimal tax loophole closings, possibly as little as $55 billion.
While there is nonetheless hope on both sides for a defining budget deal, the three-week budget crisis scrambled Washington's power structure. Democrats, united throughout, believe that they enter this next round far stronger, backed by a president who proved his own resolve. Republicans, having played their trump card by shutting down the government, are weakened and more divided than ever.
Reflecting his party's chastened state heading into the next phase, Senate Minority Leader Mitch McConnell, R-Ky., on Thursday told the conservative National Review, "A government shutdown is off the table."
Even so, Republicans enter these new talks with one advantage: If the negotiations fail, the next round of across-the-board spending cuts known as sequestration will hit automatically, even deeper than the first. Democrats want to avoid that far more than Republicans do.
Both Mr. Ryan and Ms. Murray struck positive notes.
"Our goal is to do good for the American people, to get our debt under control, to do smart deficit reduction and to do things we think can grow the economy and get people back to work," Mr. Ryan said.
Ms. Murray added, "We believe there is common ground."
By definition, common ground suggests no grand bargain, which would require a much more difficult trade-off where they fundamentally differ -- higher tax revenues that Republicans oppose, in exchange for reductions in Medicare, Medicaid and Social Security that Democrats vow they will not entertain without curbs on tax breaks for wealthy individuals and corporations.
With the last-minute settlement, Washington found itself battered, exhausted and about where it was back in March in terms of budget progress. That month, congressional Republicans and the White House failed to prevent the sequestration cuts from taking effect across military and domestic programs.
The Republican-led House and Democratic-controlled Senate passed vastly different budgets, but Republicans blocked Democrats' repeated efforts to convene a conference committee to reconcile differences, until this week.
Congress on Wednesday not only reopened the government through Jan. 15 and raised the nation's borrowing limit effective to Feb. 7. It also mandated the formal budget negotiations in a separate parliamentary motion.
"Nobody can guarantee success, but what we can say is that if we don't make the effort and get together and talk, that would guarantee failure," said Maryland Rep. Chris Van Hollen, House Democrats' chief negotiator.
To improve prospects for some success, the negotiators largely agreed at a closed-door breakfast Thursday that a deal involving significant new tax revenues and large-scale changes to Medicare, Medicaid and Social Security -- whose growth in an aging population is driving long-term projections of growing debt -- is not going to happen.
Instead, they agreed, the talks will aim at a more modest confidence-building measure to replace the sequestration cuts in 2014. Negotiators could aim higher, for a deal saving at least $1 trillion over the next nine years to substitute fully for the arbitrary sequestration cuts. But neither side was hopeful of that.
Even with lower sights, negotiators face the same hurdle over taxes that ended a series of bipartisan talks in 2011 -- between Mr. Obama and Speaker John Boehner, R-Ohio; between Vice President Joe Biden and House Majority Leader Eric Cantor, R-Va.; and between lawmakers on a so-called supercommittee.
"The old bugaboo that has made other conferences fail is revenues," said New York Sen. Charles Schumer, his chamber's No. 3 Democrat.
Tea Party-infused lawmakers seemed unbowed and still uncompromising, despite their loss over the debt limit and government funding for the fiscal year that began Oct. 1. So did conservative groups such as Club for Growth and Heritage Action that goaded them on.
Like the congressional actors, the White House is not expecting a grand bargain, as much as Mr. Obama -- and Mr. Boehner, for that matter -- would like to have that as a legacy. But it is determined to see an end to sequestration, and is counting on cooperation from GOP leaders since the military is in line for greater automatic reductions than domestic programs in January.
The problem is, rank-and-file Republican lawmakers and the party base have come to see sequestration as a victory.
By his televised remarks at the White House, Mr. Obama sought to project a tone of compromise, aides said, though some Republicans heard some partisan gloating. He also described a budget goal more expansive than the congressional negotiators are setting, but one that neither party's leaders rule out.
"This shouldn't be as difficult as it's been in past years, because we already spend less than we did a few years ago," Mr. Obama said. "Our deficits are half of what they were a few years ago. The debt problems we have now are long term, and we can address them without shortchanging our kids, or shortchanging our grandkids, or weakening the security that current generations have earned from their hard work."
First Published October 17, 2013 8:00 PM