Senate Democrats could agree to a two-week resolution to keep government operating that contains $4 billion in spending cuts, but a long-term budget deal is still elusive, the Senate's top Democrat on the budget said Sunday.
"It is acceptable to me to have $4 billion in savings in a two-week package, sure. The makeup of that, you know, is up for discussion and negotiation. That negotiation is ongoing. And I'm confident we'll achieve conclusion on that," Sen. Kent Conrad told CNN's "State of the Union."
But Conrad, D-N.D., chairman of the Senate Budget Committee, said he's not willing to support the Republican proposal to chop $100 billion in spending for the rest of the fiscal year because it could cut employment rolls, which are already struggling under a near jobless recovery. He gave highway spending as an example of a place where Republicans want to cut back but could create more joblessness.
"Highway spending, which I think most everybody says is badly needed in this country, creates American jobs, and also makes America more competitive. Does it make sense to be cutting there? Many of us don't think so," he said.
Conrad pointed to a recent Goldman Sachs study that indicates that if you do that large cuts in government spending in the second and third quarter of this year could reduce economic growth 1.5 to 2 percent.
"That's a million jobs. So does that make sense when you -- one in every six Americans is unemployed or underemployed? I don't think so," Conrad said.
But Rep. Joe Walsh, R-Ill., said the Goldman analysis makes a fundamental flaw.
"Every dollar we take out of the public sector will go into the private sector, and it will go to grow the economy," he said in an interview that aired on ABC.
Congress has failed to secure a budget for the 2011 fiscal year, even though it began on Oct. 1, 2010. As a result, it has been spending for government expenditures at the 2010 level, which foresaw a $1.3 trillion deficit before it was even passed.
Now, with a $1.5 trillion deficit for this year, and an expected $1.65 trillion deficit in the budget proposed by President Obama for next year, lawmakers are realizing they must start looking beyond discretionary spending and focus on entitlements.
"If we're going to ultimately solve this problem, we're going to have to do much more than consider only 12 percent of the budget," Conrad said, adding that balancing the budget could take 10 years.
"The only way we are going to deal with this problem is a 10-year plan that is comprehensive," he said.
Speaking on NBC's "Meet the Press," Rep. Emanuel Cleaver, D-Mo., said a temporary agreement to extend the budget for two weeks doesn't recognize that the tax rate structure is the ongoing problem with balancing the budget. He said keeping down the top rate has "created this much more serious deficit situation going forward."
"We've been ignoring for years the reality of what has happened in the super rich level of income in this country. We should have several higher top tax brackets. It shouldn't stop at a couple hundred thousand dollars. We have incomes -- we have shortstops making $15 million who are paying the same tax rate as, you know, two UCLA married professors. This is outrageous. ...And so we're ignoring this massive revenue possibility in the high end of incomes in this country," he said.
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