Congress faces deadline to reach a budget deal

Lawmakers return to Capitol Hill on Monday to begin a critical week of budget negotiations with wide-ranging economic implications for Maryland — on issues that include Baltimore harbor dredging, preschool classrooms and the Eastern Shore's poultry industry.

A bipartisan group of 29 House and Senate negotiators is working largely behind the scenes against a Friday deadline to strike a deal on spending. Otherwise, they risk a last-minute scramble in January to avoid another government shutdown.


The group has made progress, but few details of the plan are known. Lawmakers in both parties warned of the potential damage that could be caused if Washington gets dragged into another bruising political showdown over the budget.

"Last year it was a hurricane, but this year it has the potential to be a tsunami," said Sen. Barbara A. Mikulski, the Maryland Democrat and chairwoman of the Senate Appropriations Committee.

"The potential consequences for Maryland are significant," she added.

Many Marylanders are watching the negotiations closely. Head Start directors are concerned additional cuts could force more preschoolers from the program. Poultry farmers are worried about another battle over paying meat inspectors crucial to their livelihoods. Federal employee unions are fighting further cuts to their benefits rumored to be under consideration.

"We are already cut to the bone," said Shannon Burroughs-Campbell, executive director of Baltimore's Head Start program, which laid off 26 workers and cut 36 enrollment slots to accommodate this year's $1.6 million cut.

"I just don't know that that cycle can continue," she said.

Two months after a partial government shutdown furloughed tens of thousands of federal employees in Maryland for 16 days, lawmakers are hoping to end the cycle of budget crises with a modest, two-year spending plan. They have until Jan. 15 to avoid another shutdown, but many are skeptical a meaningful deal could be achieved if Congress waits until after the holidays.

Democrats and some Republicans want to use the budget proposal to roll back some of the across-the-board spending cuts known as sequestration. In the first year, agencies cut $85 billion. Without congressional action, they would face an additional $109 billion reduction in the fiscal year that ends next fall.


The effort to prevent those cuts would be complicated if Congress doesn't reach an agreement by Friday's deadline.

"If they don't get a deal by [Friday], yeah, sequester becomes more likely," said Stan Collender, a longtime fiscal policy analyst at Qorvis, a Washington-based public relations firm. "That doesn't mean that sequester can't be avoided."

Even some Republicans — who have fought hard for deficit reduction — say another year of sequestration could have a detrimental impact on key government operations such as defense.

And agencies are running out of one-time fixes to blunt the impact.

Eastern Shore poultry plants, for instance, won a temporary reprieve this year when Mikulski and other lawmakers found a way to cover the $55 million cost of keeping roughly 9,000 meat inspectors on the job. The U.S. Department of Agriculture inspectors are required to be on site. Had they been furloughed, poultry processing plants likely would have closed.

The inspectors check for diseased birds, salmonella and other production line problems.


"Our plants cannot operate without a USDA. inspector present — period," said Tom Super with National Chicken Council, an advocacy group that represents Salisbury-based Perdue. "We would do everything possible to make sure those inspectors stay on the job."

To cover the cost, lawmakers drew from a USDA facilities maintenance fund and reduced one-time grants for school kitchen equipment. It's unclear whether a similar budget maneuver would be possible for a second year in a row.

Those are the kinds of decisions that will come to a head across the government under a second round of sequestration, said Harry Stein, associate director of fiscal policy at the left-leaning Center for American Progress.

"A lot of agencies shifted funds around or pushed costs off into the future," Stein said. "You can't do that indefinitely."

The Rockville-based U.S. Nuclear Regulatory Commission, for instance, used cash reserves to cover 73 percent of its sequester cuts this year, Stein said. The Social Security Administration, based in Woodlawn, cut hours at service centers and reduced overtime to avoid furloughs.

The Army Corps of Engineers' budget took a $254 million hit this year — reducing funds for dredging projects in Maryland and elsewhere. Virtually every agency, the Army Corps included, would likely face stiffer cuts under a second round of sequestration. That would increase competition for money to dredge in places like Baltimore — an effort that is critical for maintaining shipping lanes.

President Barack Obama and congressional Democrats were criticized for overstating the impact of sequestration this year. Independent economists who predicted terrible consequences — particularly in Maryland, Virginia and Washington — later revised those estimates.

But this time, some Republicans — particularly centrists concerned about Defense Department reductions — support rolling back some of the cuts.

"If a timely agreement is not reached, the likely alternatives could have extremely damaging repercussions," wrote House Appropriations Committee Chairman Hal Rogers, a Kentucky Republican, in a recent letter to budget negotiators.

A second sequester, he added, "would result in more indiscriminate across the board reductions that could have negative consequences."

There is far less agreement about how to undo at least some of sequestration without adding to budget deficits.

The House is scheduled to begin its winter recess on Friday and the Senate is set to leave Washington Dec. 20. Some lawmakers, including Mikulski, have called on Congress to stay until a budget deal is reached.

As details of the talks have emerged, so has opposition. Federal employee unions and Maryland Democrats say they would fight rumored cuts to federal employee benefits. Federal workers have been working under a salary freeze that began in 2010.

Rep. Paul Ryan of Wisconsin, the top Republican budget negotiator, has previously proposed increasing employee retirement contributions by 5.5 percentage points, they point out. And they're worried a similar provision will be included in whatever deal emerges.

Maryland is home to roughly 300,000 federal workers.

"We don't think that is good policy," said Rep. Steny Hoyer of Southern Maryland, the No. 2 Democrat in the House. "The only working people that have paid a price so far in trying to bring down the deficit have been federal workers."