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Continuing Resolution Clears Way for Other Battles

Leadership Comes to Early Agreement to Avoid Showdown Before Elections

Tuesday’s deal to take a government shutdown showdown off the table clears the September schedule for a month of pre-election maneuvering on the expiring Bush-era tax cuts and the budget sequester.

And it makes the final fight over both issues in the post-election lame-duck session a purer test of wills over whether either party can actually stomach tax increases and/or deep defense cuts in order to make their broader ideological points about the nation’s fiscal policy.

Senate Majority Leader Harry Reid announced an agreement-in-principle to fund the government for six months beyond Sept. 30 at a Tuesday press conference.  The Nevada Democrat signaled that he, Speaker John Boehner (R-Ohio) and President Barack Obama decided to make the agreement early to prevent either side from using government funding as a hostage going into the November elections and the lame-duck session.

“It will provide stability for the coming months. It will be free of riders,” Reid said in reference to troublesome policy provisions often attached to appropriations bills by one party or the other.

Reid did not comment specifically on the possibility of including supplemental disaster relief in response to the historic drought ravaging the Midwest if it has not been addressed before the continuing resolution comes to a vote in September. The House was moving Tuesday to take up a bill on disaster relief in the hopes of passing one this week.

In an ideal world, Reid would like to vote on the continuing resolution before the August recess that begins at the end of this week. But he acknowledged that such a feat would prove impossible. Aides say the Congressional Budget Office will need time to score the proposal. In addition, the White House’s Office of Management and Budget will need to provide Appropriations Committee staffers with lists of changes from the current spending levels — called “anomalies” — for inclusion in the measure.

Boehner said in a statement that the timing of the agreement would meddle with the summer vacation plans of some Appropriations staffers.

“During the August district work period, committee members and their staff will write legislation that can be passed by the House and Senate in September and sent to President Obama to be signed into law,” Boehner said.

“This agreement reached between the Senate, the House and the White House provides stability for the coming months, when we will have to resolve critical issues that directly affect middle-class families,” Reid said in a statement.

Without the deal on a spending bill that runs through the first quarter of next year, a shorter-term continuing resolution could leave underlying government spending tied up in the broader debate about extending the Bush-era tax rates and averting the mandatory $1.2 trillion in cuts required by last year’s debt limit deal. Those spending cuts, known as the sequester, are set to take effect beginning in January.

Republicans have advocated extending all current tax rates, while Democrats have said they will only agree to extend those for families making less than $250,000 a year. Obama has also threatened to veto any bill that extends rates for the wealthy as well.

Democrats have also said they are willing to allow steep cuts to defense and domestic programs to take effect if Republicans don’t agree to raise taxes on some sectors and eliminate some tax loopholes. But the GOP has focused on finding alternate cuts to the ones affecting the Pentagon.

While Reid focused on the effect of the government funding deal on the lame-duck session, the agreement also allows a more steady diet of election-year public relations exercises by both parties in September.

“Taking this issue off the table will keep the larger focus on jobs, the economy, and President Obama’s failed economic policies,” one Republican leadership aide said. “That’s where Republicans win and Democrats lose.”

In cutting the deal, Boehner appears willing to stand behind the $1.047 trillion maximum spending level established by the debt limit deal. That spending cap exceeds the $1.028 trillion level contained in the budget resolution adopted by the House and authored by Budget Chairman Paul Ryan (R-Wis.).

House conservatives, who have previously balked at the higher spending cap, appear poised to accept the compromise, realizing the losing politics of being on the wrong end of a government shutdown fight. “They want to take a government shutdown out of the lame duck — remove one big pressure point in an already high charged duck,” said one aide to a conservative Member.

The agreement will shift the attention of budget observers to finding a replacement for the sequester — or at least the first year of that.

Reid and Senate Minority Leader Mitch McConnell (R-Ky.) noted Tuesday that Republican Sens. Kelly Ayotte (N.H.), Lindsey Graham (S.C.) and John McCain (Ariz.) are touring the country to discuss the effect of cutting about $500 billion from the Defense Department’s budget on both readiness and jobs.

Assuming the CR deal holds through the August recess and can be passed quickly in early September, the agreement makes it more unlikely that Congress will address the sequester before the elections because the CR was considered a potential vehicle for any rollback of the mandatory cuts.

For his part, Reid wants Republicans concerned about the sequester to find support for making a deal on the revenue side of the ledger. McConnell said the first priority is getting a report from the White House on the consequences of potential sequester-related budget cuts.

Daniel Newhauser contributed to this report.