James Pethokoukis

“To attract any Republican votes to a debt ceiling increase, you’re going to have to come up with some serious spending reductions and some budget process reforms. There is going to have to be a significant incentive.”

That is from my chat yesterday with Senator John Thune.  Now I think it is even more evident that getting a 2011 budget will be easier than increasing the debt ceiling to pay for it. I will add, however, that I think it is smart to try and use whatever leverage is out there to gain more spending cuts and budgetary reforms.

1. But right now the two issues are on separate tracks — and it looks likely that it will stay that way. The GOP-controlled House, with its complement of small-government Tea Party members, has already passed a bill that would cut domestic spending by $61 billion this year. Such a reduction would slash discretionary programs — everything other than defense and mandatory social spending — by an average of 25 percent. The Senate, run by Democrats, prefers to keep such spending flat.

2. Democrats may have the president in their camp, but more of them face re-election campaigns in 2012 than their Republican opposite numbers. Although another short-term fix is possible, after the give-and-take of a final deal to fund the government could include cuts of around $30 billion.

3. But Republican sources say there’s a long way to go before finding common ground, even within their party, on raising the debt ceiling. Adding to the uncertainty are new polls showing the American public unwilling to accept significant cuts in Social Security and the like. Another variable is a bipartisan group currently conducting closed-door talks to fashion a 10-year “grand compromise” on the budget. Their plan could emerge smack in the middle of the debt ceiling debate.

Bottom line: The path to avoid a debt default remains murky, though both sides know it would be a disaster.

Sen. John Thune isn’t running for president (at least this time around), choosing instead to fight big, wasteful government from his outpost on Capitol Hill.

He’s just reintroduced a sweeping budget reform bill that would make it easier to cut discretionary spending and bring some honest accounting for so-called entitlements. I chatted with the South Dakota Republican earlier today about his bill and the current budget debate. Some excerpts:

First, will the Senate come close to matching the 2011 budget cuts passed by the House?

I hope we can, but it’s really hard to handicap that one because the Democrats haven’t put anything out yet and the president has gone radio silent. I think what Democrats may do is come up with something along the lines of the president’s [discretionary spending] freeze proposal and maybe start there. But I think the Republican House level was reasonable and something we should try to get to in the Senate.

How about raising the debt ceiling?

To attract any Republican votes to a debt ceiling increase, you’re going to have to come up with some serious spending reductions and some budget process reforms. There is going to have to be a significant incentive.

How would the budget process be different under your proposal? Would it have affected the passage of healthcare reform?

It would make it more difficult to abuse the emergency designation which is how a lot of spending has been put through the last couple years. They just waive pay-go and declare an emergency. There’s a lot of abuse of the rules we have today. Clearly what we’ve been doing doesn’t work. We’ve only had four years in the past 34 when all the appropriations bills have been passed on time.

[Regarding healthcare], what we do is prevent the double counting of trust fund revenues, which is how they were able to fund [the plan]. [Democrats] were able to say they were extending the lifespan of Medicare at the same time they were using Medicare payroll tax increases and spending reductions to finance their new entitlement program. So it would have dramatically changed that debate and forced them to come up with real revenue sources instead of the phony revenue sources they used.

Reuters has lots of readers outside the country who must look at this process and think it insane.

The budget process really is a national embarrassment. I was a staffer out here back in the mid-1980s and even at that time I looked at [the budget process] and thought it made no sense whatsoever. You can get through an entire year with a $3.7 trillion enterprise called the federal government and not pass a budget. And there is a pileup with trying to get through 12 appropriations bills every single year. You don’t have any oversight to make sure the money is spent wisely and well. So going to a two-year, biennial budget would help address that.

And right now the budget process actually makes it easier to spend more than to spend less, right?

There is a forward momentum to spend more. When we passed this two-week [continuing resolution] to cut spending by $4 billion, it may be the first time we actually cut spending. [My proposal] requires every budget cycle that Congress actually ratchet spending down. For the first time, [the budget process] would put a straightjacket on Congress and force it to make some of these decisions.