Speaker Boehner's last deal: 2-year budget, debt ceiling

WASHINGTON -- Speaker John Boehner is pressing ahead with one last deal as he heads for the exits, pushing to finalize a far-reaching, two-year budget agreement with President Barack Obama before handing Congress' top job over to Rep. Paul Ryan this week, congressional officials said Monday.

The budget pact, in concert with a must-pass increase in the federal borrowing limit, would solve the thorniest issues awaiting Ryan, R-Wis., who is set to be elected speaker on Thursday.

It also would take budget showdowns and government shutdown fights off the table until after the 2016 presidential election, a potential boon to Republican candidates who might otherwise face uncomfortable questions about messes in the GOP-led Congress.

Congress must raise the federal borrowing limit by Nov. 3 or risk a first-ever default, while money to pay for government operations runs out Dec. 11 unless Congress acts.

The emerging framework would give the Pentagon and domestic agencies two years of budget relief in exchange for cuts elsewhere in the budget.

The measure under discussion would suspend the $18.1 trillion debt limit through March 2017. After that, it would be reset by the Treasury Department to reflect borrowing over that time.

The emerging budget side of the deal resembles a pact Ryan himself put together two years ago in concert with Sen. Patty Murray, D-Wash., that eased automatic spending cuts for the 2014-2015 budget years. A lot of conservatives disliked the measure, and many on the GOP's right flank are likely to oppose the new one, which would apply to the 2016-2017 budget years.

The closely-held talks had appeared to be proceeding slowly but took on urgency over the weekend as House GOP leaders looked ahead to a debt-limit vote this week they feared they might not be able to pass as a stand-alone measure.

"Fiscal negotiations are ongoing," Majority Leader Mitch McConnell, R-Ky., said as he opened the Senate on Monday afternoon. "As the details come in and especially if an agreement is reached, I intend to consult and discuss the details with our colleagues."

Negotiators hoped to officially file the legislation Monday night, but it's not clear whether they'll meet the goal. House GOP leaders announced a closed-door meeting Monday night to gauge support among rank and file.

GOP defense hawks are a driving force, intent on reversing automatic budget cuts. Democrats and the White House are pressing hard as well, demanding increases for domestic agencies on par with any Pentagon hikes. The measure is aimed at undoing the automatic cuts, which are a byproduct of a 2011 budget and debt deal and the failure of Washington to subsequently tackle the government's fiscal woes.

"It is past time that we do away with the harmful, draconian sequester cuts," said Senate Minority Leader Harry Reid, D-Nev. "We must also ensure that there are equal defense and nondefense increases."

At the White House, press secretary Josh Earnest said: "Not everything has been agreed to. That means nothing at this point has been agreed to."

Obama wants roughly $74 billion in additional defense and nondefense spending this year. The measure wouldn't provide full relief demanded by defense hawks and would award equal increases to defense and domestic programs. Instead, aides said, the framework would permit $50 billion in additional spending in 2016, about a 5 percent increase, and $30 billion above current limits for 2017.

The pending talks focus on setting a new overall spending limit for agencies whose operating budgets are set by Congress each year. It will be up to the House and Senate Appropriations committees to produce a detailed omnibus spending bill by the Dec. 11 deadline. Policy riders on issues such as the Internet and travel to Cuba could trip them up.

Details were sketchy but the tentative pact anticipates designating increases for the Pentagon as emergency war funds that can be made exempt from budget caps. Offsetting spending cuts that would pay for domestic spending increases included reforms to the Agriculture Department's crop insurance program, curbing Medicare payments for outpatient services provided by hospitals and extending a 2 percentage point cut in Medicare payments to doctors through the end of a 10-year budget. New auctions of electromagnetic spectrum to communications companies and sales of oil from the Strategic Petroleum Reserve would provide new revenues.

Negotiators looked to address two other key issues as well: a shortfall looming next year in Social Security payments to the disabled and a large increase for many retirees in Medicare premiums and deductibles for doctors' visits and other outpatient care.

Social Security's disability trust fund is projected to run out of money in late 2016. If that is allowed to happen, it would trigger an automatic 19 percent cut in benefits for 11 million disabled workers and their families.

Congress and the White House have been discussing a temporary reallocation of payroll taxes from Social Security's retirement fund to the disability fund. The move would be paired with changes to the disability program to fight fraud and to encourage disabled workers to return to work.

Officials who described the discussions did so on condition of anonymity because they were not authorized to speak publicly about confidential negotiations.

Just days are left for the deal to come together before Ryan is elected on Thursday to replace Boehner, R-Ohio, who is leaving Congress under pressure from conservative lawmakers angered by his history of seeking compromise and Democratic votes on issues like the budget.

The deal would make good on a promise Boehner made in the days after announcing his surprise resignation from Congress last month. He said at the time: "I don't want to leave my successor a dirty barn. I want to clean the barn up a little bit before the next person gets there."