Washington's Dueling Budget Battles

With a federal shutdown appearing likelier by the minute, Washington is now engaged in two very different discussions about federal spending. Right now, they appear to have little to do with each other.

On the one hand, Republican and Democratic negotiators are seeking a deal to avoid a government shutdown -- a discussion that involves relatively little money, spent (or not spent) over a relatively short amount of time.

On the other, House Budget Chairman Paul Ryan's grandiose 2012 budget proposal has sparked a much broader debate about long-term, big-picture spending levels.

The one thing they have in common: rhetoric.

In the last few hours, debate over a government shutdown has largely devolved into mud-slinging about Planned Parenthood money. It's the only sticking point that remains, Democrats say: "Republicans have made this about women's health ... not about money or anything else," Senate Majority Leader Harry Reid said at a press conference Friday afternoon, in reference to the GOP's requests the bill in question will strip federal funds from Planned Parenthood/

That's not true at all, according to Republicans. While they've demurred on whether or not they'll give up the Planned Parenthood "rider," House Speaker John Boehner has reiterated that matters of policy are mostly settled. It's about where the cuts will be made, his office said this morning: Democrats want to cut from mandatory programs, while Republicans want to shave from discretionary appropriations, shrinking the discretionary baseline so that future budgets will see less spending outside mandatory entitlements.

Regardless, the shutdown fight has something -- but nothing drastic -- to do with the nation's long-term fiscal picture. Both sides have agreed to total cuts in the range of $35 billion - $40 billion -- about one tenth of the entire amount of money the U.S. will spend in 2011, which the Office of Management and Budget projects at $3.8 trillion.

Since last week, Republicans have fought their way from $33 billion in cuts to a reported $38 billion today -- meaning that the bottom-line discrepancy, not counting the location of the cuts, amounts to less than 1.3 percent of all federal spending.

Earlier this week, meanwhile, the Republican House Budget chairman, Paul Ryan, released a long-term budget plan that has people talking about big-picture spending and entitlements. Ryan's plan would drastically reduce the amount of money the federal government is projected to spend over the next few decades.

It would do so partly through a drastic reinvention of Medicare, shifting the program from its current form (under which Medicare acts as a coverage provider and pays doctors directly for covered expenses) to a modified voucher system (under which Medicare would give people money to buy their own private coverage from a list of Medicare-approved insurance plans).

Ryan's plan would not reduce spending much below current levels -- but it would reduce spending by a quarter over the next 10 years, according to the Congressional Budget Office (CBO), compared to what the CBO predicts will get spent. It would reduce spending by 36 percent over the next 20 years.

Here's a CBO chart that shows what Ryan's plan would do, expressed as percent of GDP, compared to the current law and the "alternative fiscal scenario," which is what the CBO predicts as likely:

Ryan's plan may not be to palatable, politically. He's suffered a wide-reaching liberal backlash against his Medicare proposal, as seniors would have to pay more -- a lot more -- for their own care under his plan.

These debates have not, thus far, overlapped. A spokesman for John Boehner said last night that no longer-term spending issues or entitlement reforms are being used as bargaining chips in the shutdown negotiations.

But the different issues at play -- broad-based entitlement reform vs. Planned Parenthood funding and the gerrymandering of cuts equaling a tenth of the budget -- highlight the difficult truth that Congress and the White House have bigger spending problems than those being hashed out today.