MARGARET WARNER: The budget battle took another turn today. The Congressional Budget Office produced new economic forecasts that are more optimistic than its earlier assumptions. To explain what this means for the prospects of a balanced budget deal, we have Norman Ornstein, veteran congressional watcher and scholar from the American Enterprise Institute. Welcome back, Norm.
NORMAN ORNSTEIN: Thanks, Margaret.
MARGARET WARNER: Here we are five days away from this temporary funding running out once again. Where do things stand?
MR. ORNSTEIN: Well, we're moving closer towards negotiating, at least, and we haven't been negotiating. We've seen a lot of posturing movements, independent movements on either side. In a way, frankly, to try to understand this better I was tempted to call the woman from the San Diego Zoo who's always on with different animals, because it's begun to resemble the mating dance of one of these exotic birds, where they both kind of go around another and make a nice, friendly gesture that's followed by a nip or a slap of the beak. And that's what we've seen happening here. The administration will come out with a new budget proposal, and then follow that by ripping apart the Republicans on Medicaid and the Republicans would rip his budget proposal, and then say they would come up with their new budget. Frankly, we've just been waiting for these new Congressional Budget Office, numbers that finally put us in a field where now in the next few days they can really negotiate their differences.
MARGARET WARNER: So you're saying if they have the political will, these more optimistic budget numbers which, what, narrow the gap, a hundred, a hundred and thirty billion?
MR. ORNSTEIN: Well, let---to put it in simple terms, we have a budget over seven years that in the end, it's a budget that now is about $1.6 trillion. The total over seven years will be about 12 or 13 trillion. The differences between the White House and the Congressional Republicans are about $400 billion roughly. Some of those differences can be made up by new economic assumptions of growth that will bring in more revenues and presumably cut the expected costs of programs probably to the tune of about $135 billion. That leaves us with about $265 billion roughly that we're going to have to negotiate. But now because we have those numbers on the table, they can actually begin to put the other components which will include making their figures on Medicare and Medicaid, on the Earned Income Tax Credit, on education, come closer together, and also will probably have to include another economic adjustment which is in the Consumer Price Index, the measure of inflation.
MARGARET WARNER: And are both sides, the White House and the Congressional Republicans, now agreed on that adjustment of that Consumer Price Index?
MR. ORNSTEIN: No, they aren't, and in fact, that may end up being a real critical element here. Nobody's been willing to overtly put that on the table. It is billed as a technical adjustment. We measure these prices. We use it to measure--as a measure of inflation, and it affects how much revenue you get coming in, because the tax breaks are tied to inflation, they index them, and also how much you spend on things like the cost of living adjustment for Social Security or for pension programs. It's a very tricky thing. Technical adjustment, but now it's become a major political issue, and groups that represent the elderly, for example, have said we're not going to take a back-door cut in Social Security payments to balance the budget. They have to do it together. Now, they can probably do that, and we know, for example, that in the budget that was put forward earlier by conservative Democrats, the coalition, it adjusted the Consumer Price Index downward by 1/2 of 1 percent, and that's about $140 billion that would make the task of a budget agreement much easier.
MARGARET WARNER: Okay, as people are looking ahead to say the coming week, what do you think the White House strategy is?
MR. ORNSTEIN: Right now, we're going to see a continuation of a kind of public "keep the Republicans on the defensive" and private, let's see what we can work out, and the same on the part of the Republicans. But right now, probably the White House, the Congressional leadership of the House and Senate want to move towards an agreement. All we can get, very likely, practically, by December 15th, the deadline, is an agreement on the larger bounds here and an agreement that we will extend government, keep the workers there, keep the programs in place, so we can work out the details over the next few weeks.
MARGARET WARNER: So are you saying you don't think we'll see a partial shutdown after Friday?
MR. ORNSTEIN: It is now much less likely that we will see a partial shutdown, but we've got to remember that there are still big differences, including substantive differences, remaining. The Medicaid issue remains a very significant difference, perhaps part of the bridge from the Medicare one and the Consumer Price Index still has to be put on the table, and we have to agree on a number that's going to pass muster with some of these groups out there.
MARGARET WARNER: But do you think that the White House and the President have decided it's definitely in their interest to have a deal? You know, some are talking about, well, maybe it's a good election issue.
MR. ORNSTEIN: Not everybody in the White House has decided that they want to have a deal, and there are still significant disagreements going on there, and we've got to remember as well that any deal is going to have perhaps fifty or seventy-five Republicans in the House who say too much compromise and probably a hundred Democrats who say too much compromise on the other side. So each side has to be able to lose some part of its coalition, and the same kinds of calculations are going on in Speaker Gingrich's office--disagreements--as there are in the White House. But I think it's clear now that the bulk of the political advisers to the President, the President, himself, and those around the Congressional leaders see grounds for a deal, and we will move forward probably more rapidly over the next few days.
MARGARET WARNER: Great. Well, I'm sure we'll move back to this again. Thanks, Norm, very much.
MR. ORNSTEIN: Sure, Margaret.