Behind the scenes of the budget talks

congress_health_reform.top.jpg By Tory Newmyer, writer


FORTUNE -- Budget negotiators pulled an all-nighter in Washington on Wednesday night, racing to forge a spending compromise to avert the government shutdown looming on Friday. No agreement was reached, and the ongoing talks are focused on top-line numbers: how many billions to cut, and where.

But hanging in the balance are a number of provisions that have nothing to do with federal spending -- proposals pushed by House Republicans to protect interests ranging from cement manufacturers to for-profit education companies.

Those provisions, so-called policy riders, likely will be the last details ironed out in any deal, and aides close to the process say negotiators haven't even begun hashing out which will stay and which will go. Lobbyists for the impacted industries nevertheless are swarming Capitol Hill, trying to gain what they acknowledge is a marginal advantage at best in the highly cloistered process.

To the extent the riders have been the subject of conversation at all, at least publicly, attention has centered on those that would defund Planned Parenthood, block the Environmental Protection Agency from regulating greenhouse gas emissions, and hamstring the implementation of President Obama's health care overhaul. But they could draw a filibuster from Senate Democrats, and the possibility of a Presidential veto, if it came to that.

Other, lower-profile proposals pack plenty of punch, and their fate is far less certain. Among the background battles: Republicans are pushing to block tough new restrictions on for-profit colleges; stop the Federal Communications Commission from imposing net neutrality rules on Internet service providers; and defund a public database tracking injury reports in children's products.

And the GOP is pushing to curb environmental protections. Take a rider sponsored by Ohio Rep. Bill Johnson (R) that would block the Interior Department from imposing new restrictions on surface mining near streams. The department itself reportedly estimates the rule will slow coal production and cost 7,000 jobs -- impacts that officials defend as necessary to protect public health and the environment.

The National Mining Association argues the administration is underestimating the economic damage the rule would cause to the tune of "tens of thousands of coal-related jobs across the country from Appalachia to Alaska." The mining lobby is trying to line up Senate support for the proposal, but a spokeswoman for the group said that while "there's a lot of interest among certain Senators, it's unclear what the process is going to be."

Environmental fights looming

Another, sponsored by Texas Rep. John Carter (R), would block funding for an EPA push to limit mercury emitted in cement production. The agency estimates the new standards will yield between $7 and $19 in public health benefits for every dollar that they cost. But manufacturers are howling that the rule carries a $3.5 billion price tag at a time when the recession-battered industry is only generating $6.5 billion in annual revenue.

"We're up on the Hill talking to both sides of the aisle on both sides of the Capitol, trying to get some relief," says Andy O'Hare, vice president of regulatory affairs for the Portland Cement Association.

Environmental groups, meanwhile, are banding together to knock down those proposals and others, focusing on shoring up support among Senate Democrats as a backstop against proposals generated by the Republican-controlled House. Scott Slesinger, legislative director for the Natural Resources Defense Council, says the green groups are cautiously optimistic, "but we want to make sure there's no backsliding."

There's already been some. Senate Majority Leader Harry Reid (D-Nev.) back in February dismissed the riders out of hand as non-starters. By the end of last month, however, he was signaling that Democrats could hold their noses and accept some in the interest of striking a deal. "There aren't many of them that excite me," he said. "But we're willing to look at them."

Though the proposals have gotten little attention so far, the stakes for the impacted industries are particularly high because the spending package may be their last, best chance of squeezing their priorities through a divided Congress. As stand-alone bills, the proposals will face much tougher scrutiny, especially in the Democratic Senate. That dynamic was in evidence on Wednesday evening, when the chamber rejected a GOP-sponsored attempt to limit the EPA's authority to regulate greenhouse gas emissions.

With only a handful of principals from Congressional leadership and the White House making the final decisions -- and the Republican emphasis on maximizing spending cuts -- corporate lobbyists are realistic about their ability to influence consideration of the riders. O'Hare acknowledges GOP leaders may be aiming to use the cement proposal and others as "negotiation bait" to extract deeper spending cuts from Democrats. Adds one Republican lobbyist: "The soup is simmering, and you're either in or you're out." To top of page