RPT-Q+A-Congress nears confrontation over U.S. budget

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WASHINGTON, March 28 (Reuters) – The U.S. Congress faces a
series of confrontations over spending, borrowing and other
fiscal policies when it resumes work on Monday.

Following are some questions and answers about the topic
that has dominated Capitol Hill even as the United States
contends with the conflict in Libya.

WHAT IS BEHIND THE BUDGET DEBATE?

As the United States emerges from the worst economic
downturn since the 1930s, it faces mammoth long-term budget
deficits and a rapidly growing debt load. Experts say the
country could be headed for a Greece-style debt crisis if
lawmakers do not bring spending in line with revenues.

Republicans are pushing for sharp cuts to domestic spending
as a first step to reining in deficits that are projected to
hit $1.4 trillion this fiscal year by the non-partisan
Congressional Budget Office.

Democrats, who control the Senate, agree on the need to
reduce deficits over the next several years, but warn that the
fragile economic recovery could be damaged if government
spending is curtailed abruptly. They also point out that the
domestic discretionary spending that Republicans are targeting
accounts for only 13 percent of the $3.7 trillion budget.

HOW IS THE DEBATE PLAYING OUT?

Congress faces at least three separate budget battles over
the coming months:

* Lawmakers must finalize spending levels for the current
fiscal year, which is nearly halfway through.

* They must begin work on a budget for the next fiscal
year, which starts Oct. 1. By law, Congress must agree on a
broad budget outline by April 15, though that deadline is
frequently missed. After that, they need to pass 12 separate
spending bills that actually release the money that funds
federal operations.

* Then, Congress is going to have to hold a vote on whether
to raise the country’s debt ceiling. The Treasury Department
says the country will bump up against its statutory $14.3
trillion borrowing limit in mid-April or May. Without an
increase, the government faces a possible default on its
loans.

* Finally, many in the Senate are calling for a
comprehensive effort to stabilize the country’s balance sheet
by examining taxes, annual discretionary spending and a
possible overhaul of benefit programs like Social Security and
Medicare. Nearly two-thirds of the chamber’s 100 members signed
a letter asking President Barack Obama to get more involved.

WHY IS CONGRESS STILL FIGHTING OVER A BUDGET WHEN THE
CURRENT FISCAL YEAR IS NEARLY HALFWAY THROUGH?

Democrats did not pass any of the 12 spending bills needed
to keep the government running last year when they controlled
both the House and the Senate.

Republicans, who won control of the House in November, are
now trying to fulfill a campaign promise to roll back domestic
spending to 2008 levels. The bill they passed in February would
do that by cutting $61 billion from current spending levels,
which would require government agencies to throttle back
spending by an average of 25 percent.

That bill has failed in the Senate, which is still
controlled by Democrats, and lawmakers have extended a
temporary spending measure through April 8 to give themselves
more negotiating time.

WHAT’S THE LIKELY OUTCOME OF THE STANDOFF?

Support is waning for another extension, so leaders are
under increased pressure to pass a permanent bill. They have
already agreed to about $10 billion in mostly non-controversial
cuts, but that’s still a long way from the Republicans’ $61
billion figure.

Observers say House Speaker John Boehner faces a difficult
decision. He could forge a coalition of moderate Republicans
and Democrats to pass a compromise measure that includes some
cuts, but that could alienate the conservative Tea Party
activists who enabled him to win control of the chamber.

Tea Party-aligned Republicans have already shown that they
are growing increasingly impatient with the standoff, and 54 of
them voted against the last stopgap measure.

If Boehner keeps his party united and pushes for further
confrontation with Democrats, that could risk a government
shutdown.

“Speaker Boehner has got to figure out how he brings his
troops along,” said Joe Minarik, a former budget official for
Democratic President Bill Clinton.

WHAT ARE THE ODDS OF A SHUTDOWN?

Somewhere between “unlikely” and “increasingly possible.”
Republican and Democratic leaders have repeatedly said they do
not want to let government funding expire, which would force a
shutdown of non-essential services such as passport offices and
national parks.

Republican leaders are painfully aware that the public
largely blamed them for the last shutdown in 1995 and 1996,
which led to the downfall of Republican House Speaker Newt
Gingrich and helped Democratic President Bill Clinton win
re-election.

Democrats, meanwhile, are mindful of polls that show they
would not necessarily benefit from a shutdown this time after
losing the battle for public opinion on the 2009 stimulus and
last year’s healthcare overhaul.

“Democrats must face the reality that it has been years
since they have won any messaging fight,” political analyst
Charlie Cook wrote in the National Journal last week.

At the same time, the two sides remain far apart on both
the size of the cuts and the restrictions they would have on a
range of government activities, from healthcare reform to birth
control. With Tea Party activists digging in their heels, a
shutdown may be on the horizon.
(Editing by Eric Beech)

RPT-Q+A-Congress nears confrontation over U.S. budget