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Budget showdown looms; Pres. Obama draws ‘two clear, red lines’

Remember the government shutdown? Seems like yesterday, right? Well, before you go wandering wistfully down memory lane, longing for the days of Senate Majority Leader Harry Reid and House Speaker John Boehner holding court, another government shutdown could be in the offing unless Congress manages to do something that has come to feel like an impossibility: compromise.

This week will be the first test of just what kind of chance there is for any kind of meaningful compromise along the lines of the Murray-Ryan deal that saved the day last time around. The House of Representatives is expected to take up the budget resolution on Thursday. That resolution appears to have the support of the Republican majorities in both chambers. The President doesn’t have the option to veto the resolution if it does pass, but that doesn’t mean the debate is over. On the contrary, the real battles will begin once legislation is proposed that would actually implement budgets and budget cuts.

President Obama has vowed not to accept any budget that requires automatic cuts like the sequestration cuts that took effect in 2013.

Shaun Donovan, Director of the Office of Management and Budget under President Obama tells Yahoo Finance’s Rick Newman that the President has drawn “two clear, red lines.”

“He’s not going to accept a budget that locks in sequestration,” says Donovan. “Second, he’s not going to accept fixing the defense spending cuts without fixing the non-defense side of the budget as well.”

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If the House and Senate adopt a final budget resolution, it will be the first one since 2009. The Senate during Harry Reid’s tenure as majority leader did not pass a budget between 2009 and 2013. In 2013, the Democratically-controlled Senate and Republican-controlled House did not adopt a final compromise resolution.  

The battles that begin this week could rage on until October 1st when the next fiscal year begins. But Donovan is cautiously optimistic. “There is an opportunity right now for Republicans in Congress to make the decision that they want to avoid these cuts coming back, that they want to avoid another manufactured crisis,” he says. “The good news here is we’ve heard not just Democrats but Republicans also saying they’d like to see a deal like this.”

But while Donovan says he sees an opportunity for compromise, he makes clear that President Obama’s veto pen will be waiting if he doesn’t like what arrives on his desk.

“The rubber’s hitting the road right now and the President’s been very clear: He’s not going to accept these bills if they’re written to these lower levels.”

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