Republicans, Democrats look to seal modest budget

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WASHINGTON -- House and Senate negotiators Thursday closed in on a budget deal that, while modest in scope, could break the cycle of fiscal crises and brinkmanship that has hampered the economic recovery and driven public opinion of Congress to an all-time low.

But the leaders of the House and Senate budget committees -- Rep. Paul Ryan, R-Wis., and Sen. Patty Murray, D-Wash. -- encountered last-minute resistance from House Democratic leaders who said any deal should be accompanied by an extension of expiring unemployment benefits for 1.3 million workers.

"This isn't interparty bickering," said Rep. Nancy Pelosi of California, the House minority leader. "This is a major policy disagreement."

It was not clear Thursday how serious a threat the demand posed to a deal largely worked out by Mr. Ryan and Ms. Murray alone. With conservative Republicans in the House likely to balk, Democratic votes will be needed to pass an agreement, and Democrats have not said whether they will make their support contingent on an extension of benefits.

Democrats were confident that if they held their ground, Republicans would agree next week to extend unemployment compensation -- and House Speaker John Boehner left open that possibility.

"If the president has a plan for extending unemployment, I'll take a look at it," he said.

The deal would increase revenue by raising some fees and would shift some cuts away from domestic and defense programs, partly alleviating the squeeze of across-the-board spending cuts imposed last year, which are set to worsen in 2014.

Spending on defense and domestic programs would rise to about $1 trillion for the current fiscal year from $986 billion, the fiscal 2013 level that remains in effect under the continuing resolution passed in October. Absent a deal, further cuts would go into effect in January, and discretionary spending would be cut to $967 billion for fiscal 2014.

But the agreement would leave to future negotiations the big issues of curbing future spending increases in the fast-growing entitlement programs and the proper level of tax revenues. It also would not extend unemployment benefits set to expire Dec. 28, or deal with impending cuts to Medicare health care providers.

Still, a deal would have a major psychic benefit to an economic recovery that seems to be gaining some momentum. With new "top-line" spending numbers in place for the next two fiscal years, the recurring threat of government shutdowns would recede for a time, providing more certainty to the private sector and room for budget negotiators to reach a broader deal.

But both parties clearly have an incentive to reach a final agreement before the House adjourns for the year Dec. 13. Democrats are eager to alleviate a growing spending squeeze and head off the next round of across-the-board spending cuts, known as sequestration, set to take effect next month. Republican leaders, anxious to keep the political focus on President Barack Obama's health care law, want to avert another budget showdown -- and possible government shutdown -- on Jan. 15, when parts of the government will again run out of money.

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