Republicans in lame-duck Congress look forward to next year

WASHINGTON — The nation’s divided Congress battled down to the wire this week over its budget for the rest of this fiscal year, hoping to avoid a government shutdown.

The $1.01 trillion spending bill must be passed before midnight Thursday, though at this writing few were placing any bets on meeting that deadline. Still, Congress has dodged budget deadlines before and may do so again — if for no other reason than to drive a stake through the heart of a bitterly divided, unpopular legislature that can’t seem to agree on anything except going home for the holidays.

This was the last gasp of a lame-duck Congress before the Republicans can welcome their strengthened majority in the House and take control of the Senate in January — and begin to chart a new agenda to deal with America’s most pressing problems.

So, with some exceptions, both sides seemed willing to deal without triggering another legislative stalemate at a time when Americans are sick and tired of them.

As budgets come and go, this one was full of trade-offs between the two parties on both sides of the Capitol, made up of 535 men and women who, if given the opportunity, would write 535 different budgets.

The House GOP budget would cut $60 million from the Environmental Protection Agency, signaling that the days of giving the EPA everything President Obama wants are over.

And it will slice $346 million out of the Internal Revenue Service, which Obama had turned into a political arm of his 2012 campaign. It prohibits the agency from targeting conservative groups applying for tax-exempt status based on their ideological views.

The Pentagon will get more than a half-trillion dollars in defense funds, including $128 billion to maintain an army of 1.3 million active-duty soldiers, and $73.7 billion to combat global terrorism, including $3.4 billion to continue bombing Islamic terrorists in Iraq and Syria.

But Republicans said all the budget cuts, big and small, were little more than a preliminary down payment on the future spending reductions they plan to make in the future.

One major GOP change in economic policy, which had the liberals screaming bloody murder, was the new deregulation in the 2010 Dodd-Frank law’s restrictions on the banking industry.

Leftist Sen. Elizabeth Warren of Massachusetts called the rule changes “the worst of government for the rich and powerful.” Former congressman Barney Frank, who co-authored the act, called it “an absolute outrage.”

Republicans and top Wall Street leaders said the stricter derivative transaction rules enacted in the aftermath of the 2008 banking crisis have significantly reduced the financial community’s ability to soften investment risks, and that has weakened economic growth.

But reaction was surprisingly muted in the White House, and even among some Democrats.

“I think the relaxation that is involved here is not as likely to generate abuse as is being suggested,” said Rep. James P. Moran, Democrat of Virginia, who had voted for similar rules changes in 2013 that drew the support of 70 Democrats.

Josh Earnest, the president’s press secretary, said that “it is certainly possible that the president could sign this piece of legislation” despite the removal of a key reform in the Dodd-Frank law.

In what was a clear signal from the White House that it wants a budget passed, even with the GOP’s Dodd-Frank changes, Earnest told reporters, “We certainly don’t want to see a government shutdown.”

A further sign the Republicans were flexing their political muscles well in advance of their takeover next year dealt with Obama’s disputed executive actions to allow children of illegal immigrants to remain in the U.S.

Notably, their budget bill would fund the Department of Homeland Security, which enforces U.S. immigration laws, only until Feb. 27.

That’s when House GOP leaders intend to press ahead with their own legislative response to Obama’s action, which could include withholding funds to carry out his illegal plan.

In short, this budget is a shot across the bow, declaring that Congress is no more Mr. Nice Guy. Republicans will be in charge of Congress for the next two years and beyond, and Obama had better get used to it for the remainder of his second term.

What this mean in terms of the big economic and fiscal issues that have plagued his presidency still remains to be seen.

The administration is still running annual budget deficits in the neighborhood of half a trillion dollars, and that’s led to a national debt of more than $18 trillion.

But Obama has been AWOL on this issue from the start. He didn’t seek the presidency to cut wasteful, uncontrolled and needless spending, but to build upon it by proposing one extravagant, spendthrift budget after another.

And in the first two years, the Democrats were happy to go along with him. That slowed a little when the GOP won control of the House in 2010, but with the Democrats still in charge in the Senate, spending was on automatic pilot.

Indeed, Senate Democratic leader Harry Reid, who is on record as saying “we don’t need a budget,” routinely sent the GOP’s House-passed bills into oblivion.

Beginning in 2015, the purse strings of Congress will be in the hands of the GOP, and Republicans have something to prove to the voters: that they can produce a budget for the next fiscal year that reins in the deficit, while overhauling the tax code to give us the kind of pro-growth, pro-investment reforms that will yield higher revenues through lower tax rates.

But Republicans will face one obvious legislative hurdle at the other end of Pennsylvania Avenue: a president who for the last six years has presided over record budget deficits and has persistently called for higher, job-killing taxes.

We may have to wait until after the 2016 election to deal with that one.