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U.S. budget negotiators seek two-year funding deal: congressman

By Richard Cowan and David Lawder

WASHINGTON (Reuters) - U.S. budget talks are aiming for a two-year deal that would end divisive fiscal showdowns that have plagued Congress since 2011, while also easing the severe across-the-board spending cuts that otherwise would be triggered in 2014 and 2015, a Republican negotiator said on Wednesday.

In an interview with Reuters, Representative Tom Cole of Oklahoma said that the 29-member Senate-House negotiating committee "would like to achieve" a two-year budget. And while he said the talks were "close" to a deal, he emphasized that details were still being debated.

A two-year deal, Cole said, would help Congress pass spending bills in a more efficient manner and ease the series of government shutdown threats that have been in play since 2011. The threat turned into reality last month when many federal agencies were shuttered for 16 days after government funding ran out on October 1.

"It would ease a lot of the tension around here," Cole said.

The panel is racing against a December 13 deadline to reach a deal that would allow Congress to put funding in place before spending authority runs out again on January 15

While he would not provide specifics of the deal being negotiated, the six-term lawmaker characterized it this way:

"It's likely to be a pretty small deal, something that trades some relatively modest savings and perhaps some small entitlement reforms and maybe a little dab of revenue somehow."

Such a deal, Cole said, would "loosen up the sequester" that requires across-the-board spending cuts of around $100 billion a year. Those cuts would hit the Pentagon and an array of other agencies that oversee everything from environmental programs to medical research and national parks.

USER FEES, SPECTRUM SALES

The potential deal under discussion could reduce the sequester cuts by around $100 billion but would be spread over multiple years, Cole said.

"But that's still pretty fluid," he added.

The "dab of revenue," Cole said, might come in the form of non-tax user fees or other steps, such as the government sale of some communications spectrum.

Republicans have firmly opposed tax revenue increases as part of any deficit-reduction efforts. Instead, they have pressed for reductions in Medicare and Medicaid health care spending and the Social Security retirement and disability program as a way of replacing the automatic cuts that began in March.

Democratic leaders have refused to consider trimming those programs unless they get some tax increases in return.

Senate Budget Committee head Patty Murray, the Democrat who leads the special budget negotiating committee along with House Budget Committee Chairman Paul Ryan, told leaders of Hispanic groups on Wednesday that she still wants to raise revenues by ending some tax credits and deductions.

"While on our side we're scouring the federal budget for responsible savings, we also have to scour the bloated tax code, and we need to close wasteful tax loopholes that only benefit the wealthiest Americans and biggest corporations," Murray said.

Meanwhile, Ryan briefed Republican senators on the panel's progress in a closed-door meeting in the Capitol on Wednesday, and the reaction was mixed.

Senator Roy Blunt of Missouri emerged from the meeting and said Ryan "thought they might get something done."

But downplaying expectations, Blunt added: "I don't think anybody is walking in and placing big bets" that the panel will reach a deal.

"I wouldn't say they're any closer (to a deal) than the day they started, but you've got several weeks left in the talks and I think Republicans have made the promise that government shutdown is not an option," added Senator Richard Burr, a Republican from North Carolina. "So it's a question of whether you get a deal or whether you extend for the balance of the fiscal year at current levels."

The more moderate Senator Susan Collins of Maine, who would not characterize Ryan's presentation, told reporters: "I'm personally optimistic that there will be an agreement by December 13. I don't think it will be the grand bargain that everyone talks about, but it represents progress."

(Editing by Nick Zieminski, David Gregorio and Cynthia Osterman)

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