Gregg: Budget talks leaning toward reconciliation

The budget negotiations that have kept appropriators and Wall Street on pins and needles edged closer to a deal yesterday, as one Senate Republican signaled that House Democrats may win the battle over budget reconciliation.

House and Senate Democrats are split over whether to use the reconciliation process to cut student-loan subsidy rates, shielding the cuts from a likely GOP filibuster and requiring only 51 Senate votes to pass them.

{mosads}Senate Budget Committee Chairman Kent Conrad (D-N.D.) favors using reconciliation only to reduce the deficit, while House budget-writers and education committee members in both chambers believe meaningful deficit reduction is achievable as part of a larger student-loan package.

Sen. Judd Gregg (N.H.), the budget panel’s ranking Republican, said yesterday that he believed the House’s push is paying off and reconciliation for student loans would occur.

“That appears to be the direction the conference is going,” Gregg said. “It’s certainly the direction the House wants to go.” He attributed the forecast to Democrats’ desire to tackle student-loan rates this year: “There’s always an incentive to spend around here, especially on the other side of the aisle.”

Reconciliation would also throw legions of Wall Street brokers for a loop, thanks to a clause in the buyout offer for student-loan giant Sallie Mae that would void the deal if Congress exceeds the White House-backed level of subsidy cuts this year. Reconciliation would make higher subsidy cuts far more likely to pass the Senate.

Conrad declined to address sticking points in the conference, keeping his eye on the goal of approving the budget by week’s end. “The important thing is that we get it done in a way that’s timely for the appropriators,” he said.