Budget deal? Big obstacles, New Year's deadline

WASHINGTON (AP) — With hopes of a "grand

bargain" long gone, congressional negotiators now are seeking a more

modest deal

before year-end to ease the automatic spending cuts that are

squeezing both the Pentagon and domestic federal programs. But

the going is getting rougher.

House Democratic leader Nancy Pelosi said Thursday she would withhold support from any compromise to ease across-the-board

cuts until Republicans also agree to renew expiring unemployment benefits for America's long-term jobless, adding a major

complication.

At the same time, conservatives are balking at a proposal to raise fees on airline tickets to pay for TSA agents as part of

an agreement, another hurdle.

GOP leaders, meanwhile, are preparing a backup plan for averting another government shutdown in January if there's no budget

deal by then.

Negotiators on Capitol Hill are trying hard

to close out a deal but are facing resistance from Pelosi and other

Democrats

determined to add $25 billion to extend federally-paid jobless

benefits. Those benefits average $269 a week to people whose

26 weeks of state-paid unemployment benefits have run out.

"We cannot, cannot support a budget

agreement that does not include unemployment insurance in the budget or

as a sidebar in

order to move it all along," Pelosi said Thursday at a hearing to

publicize the plight of people set to lose the jobless benefits.

Her statement was significant because she is

going to have to supply Democratic votes if any deal is going to pass

the Republican-majority

House. Many conservatives are likely to abandon a compromise

agreement over fee proposals such as increasing Transportation

Security Administration charges that could add $5 to the cost of a

typical round-trip airline ticket.

"If it looks like a duck, quacks like a duck and walks like a duck, it's a duck," said Rep. Mo Brooks, R-Ala. "This is a tax

increase, nothing more."

The budget talks are just one item in a

packed year-end agenda for Congress. House Speaker John Boehner insists

the House

will exit Washington by next Friday, leaving little time to pass a

budget bill, a defense policy measure and renewal of food

stamps and farm programs.

With the massive defense policy bill stalled in the Senate, leaders of the House and Senate Armed Services committees have

been working on a backup plan to move quickly on a pared-back version in which all disputes have been resolved in advance.

The House hopes to vote next week on the

new, pre-cooked defense bill and then send it to the Senate, which would

clear it

and send it to President Barack Obama, extending lawmakers streak

of passage of an authorization bill to 52 years, according

to House and Senate congressional aides.

The bill would include some of the more

controversial elements on new rules to stem sexual assaults in the

military and provisions

on handling terrorist suspects at Guantanamo Bay, Cuba. The

fallback plan, however, is contingent on Senate Democrats and

Republicans abandoning their push for amendments on new sanctions

on Iran, National Security Agency spying, Afghanistan and

other issues.

Separately, negotiators reported progress on the farm and food stamps bill, but Boehner said Thursday that a temporary extension

through the end of January may be required to give negotiators more time to complete their work.

As for the overall budget, talk of a "grand

bargain" to stabilize the government's spiraling debt is no longer

heard. Taxes

and cuts to Medicare benefits are off the table. House and Senate

negotiators are trying to seal a small-bore budget pact

that would take the roughest edges off of automatic spending cuts

that threaten a second wave of furloughs of federal workers

and damage to military readiness.

Exact details are tightly held, and days of negotiations likely remain. But House Budget Committee Chairman Paul Ryan, R-Wis.,

and Senate Budget Committee Chairman Patty Murray, D-Wash., are focusing on a potential pact that leaves politically toxic

proposals like taxes off the table and instead focuses on less controversial proposals left over from prior budget rounds.

Aides following the talks say any agreement

is likely to include the increased airline ticket fee, a proposal to

require both

military and civilian federal workers to contribute more to their

pensions, and higher premiums on companies whose pension

plans are insured by the government. Hospitals that treat a

"disproportionate share" of people without medical insurance could

see their Medicaid payments trimmed and the government may be able

to squeeze a few billion dollars from leases of government-controlled

electromagnetic spectrum.

The idea is to lift the painfully low "cap"

on the day-to-day operating budgets of federal agencies for the 2014

budget year

by $35-$45 billion or so and ease cuts for the 2015 budget year as

well. The cap for 2014 was supposed to be $1.058 trillion

but was automatically cut by $91 billion because of the failure of

Congress to reach a follow-up deficit-cutting agreement

to the hard-fought 2011 Budget Control Act.

Spokesman for Murray and Ryan are cautiously hopeful that a pact can be sealed.

"Conversations continue and a number of open

items remain, but Chairman Murray is hopeful that they can continue

making progress

and can reach a bipartisan deal," said Murray spokesman Eli

Zupnick. "They are making progress," said Ryan spokesman William

Allison.

But other sectors of the Capitol are less

optimistic. Top House Democrats like Steny Hoyer and Chris Van Hollen of

Maryland

are upset about requiring higher pension contributions for the

many federal workers living in their districts. Top Senate

Republican Mitch McConnell of Kentucky has staked out a position

in support of the $967 billion cap required by the 2011 budget

pact. And the amount of relief coming the Pentagon's way might not

even restore the military's budget to 2013 levels, which

is hardly generating excitement among defense hawks.

If the talks fall apart, House Speaker John

Boehner says he'll advance a short-term spending bill known as a

continuing resolution

before the current stopgap spending bill expires on Jan. 15, but

there's real anxiety among Republicans as to whether such

a measure could pass without additional money to attract Democrats

and GOP defense hawks.

Also Thursday, Boehner held the door open for possibly extending the emergency unemployment benefits program.

"If the president has a plan for extending unemployment benefits I'd truly entertain taking a look at it," he said.

"It doesn't have to be in the same

legislative bill as a budget agreement, but we want to see a commitment

and a way that

we're going to get (jobless aid) done by the end of this year,"

said Rep. Van Hollen of Maryland, Pelosi's top representative

in the budget talks.