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Post-shutdown, how will Congress deal with long-term budget?

As soon as lawmakers in Washington brokered a deal to reopen the government and raise the debt limit, President Obama urged Congress to "put the last three weeks behind us" and move forward with the fiscal plan it agreed to."

Obama: Stop "governing by crisis"

"We now have an opportunity to focus on a sensible budget that is responsible, that is fair, and that helps hardworking people all across this country," Mr. Obama said from the White House Wednesday evening.

The legislation that Congress passed and that Mr. Obama quickly signed Wednesday night will keep the government open until Jan. 15 and will extend the nation's borrowing authority through the first week of February -- meaning Congress could find itself on the verge of another economic crisis early next year. The bill, however, set one more deadline aimed at avoiding that: By Dec. 13, a committee of Democrats and Republicans from both chambers of Congress (called a conference committee) is supposed to reconcile the vastly different House and Senate budgets.

If the conference committee - led by Senate Budget Committee Chairwoman Patty Murray, D-Wash., and House Budget Committee Chairman Paul Ryan, R-Wis. -- accomplishes that, it can direct Congress to write various spending bills for 2014, and Congress would be on its way to passing a budget for the first time since 2009.

"This shouldn't be as difficult as it's been in past years," Mr. Obama said Thursday, "because we already spend less than we did a few years ago. Our deficits are half of what they were a few years ago. The debt problems we have now are long term and we can address them without shortchanging our kids or shortchanging our grandkids."

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Indeed, because of the sequestration cuts that went into effect this year, the federal government is spending less and has reduced deficits. The recovering economy and increased tax rates on the highest-earning Americans have also brought down the deficit.

That, however, doesn't change the fact that it took this month's fiscal crisis to force Congress to convene a conference committee.

Back in March, the Republican-led House passed a budget cutting $4.6 trillion from the budget (on top of the sequester cuts), while the Democratic-led Senate passed a budget that raised $975 billion in new taxes. Until this week, Republicans have refused to form a conference committee, calling it a waste of time with such wide differences between the bills.

Now Congress has eight weeks to resolve those differences and pass its first budget in four years. Mr. Obama Wednesday night insisted this time should be different.

"My hope and expectation is everybody has learned that there is no reason why we can't work on the issues at hand, why we can't disagree... while still being agreeable, and make sure that we're not inflicting harm on the American people when we do have disagreements," he said. "So hopefully that's a lesson that will be internalized, not just by me but also by Democrats and Republicans, not only the leaders but also the rank and file."

Alice Rivlin, who served as President Clinton's budget director during the 1995 government shutdown, told that she's moderately optmistic Congress can start working together.

"The main thing is that there is a moderate coalition that wants to get on with the business of governing, moderate Democrats and moderate Republicans," she said. "Republicans were reluctant to offend their right wing, but now the've seen the strategy of the tea party didn't work, and they need to do something constructive."

John Makin, a conservative scholar at the American Enterprise Institute, is less optimistic.

"We'll wake up New Year's morning, and we'll be two weeks from a government shutdown," he said. "I'd like to think otherwise, but I can't think why the passage of six weeks is going to change anything."

Ryan and Murray are well aware of the differences in their budgets, he said, and there's no clear reason why those differences would be resolved now, particularly since there's no penalty if the conference committee fails to meet its Dec. 13 deadline.

Even when Congress faces a penalty for inaction -- as the so-called "supercommittee" did in 2011 -- it can't be counted on to reach a compromise. The steep sequester cuts went into effect this year, in spite of the fact that both Democrats and Republicans opposed them, only because the supercommittee failed to find a better way to bring down the deficit.

Now, Democrats want to repeal the sequester before the next round of cuts kick in next year and replace the lost revenue with more taxes. Republicans, meanwhile, want to keep the cuts but give agencies for flexibility in applying the cuts.

"The Republicans got out-maneuvered" during the government shutdown, Makin said. "Rightly or wrongly, they feel they've been snookered, and they are going to be very tough on giving any ground on the sequester."

The gulf between the parties can be attributed to a number of factors.

"Our primary system has given us candidates that represent the extremes rather than the center," Rivlin said.

"Other things like gerrymandering have given us more extreme candidates, and the whole spirit of making legislation has changed," she said. "We need to have compromises across party lines, between the executive and Congress, or our system can't function."

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