Warner, Kaine urge budget compromise

To make a budget, Virginia's two senators told fellow members of the budget conference committee Wednesday, you've got to give a bit to get a lot.

Uncertainty over federal finances is "an ankle weight dragging down the economy," Sen. Tim Kaine told the second meeting of the high-powered panel that is attempting to break years of budget impasse.

Sen. Mark Warner said talking about revenue — talk nobody likes to hear because it means talking about taxes — has to be on the table. Reforming Medicare and Social Security to rein in soaring costs won't be enough to bring the budget under control, he said.

With its two senators, Virginia has one of the largest delegations on the conference committee, set up as part of the compromise that ended last month's federal shutdown.

"I talk to businesses, I talk to DoD (the Department of Defense) as they try to make plans. Again and again I hear, the uncertainty is what's killing them," Kaine said after the meeting.

"Just this morning, a friend of mine in the investment business said businesses are just holding back," he added. "We keep going from one new fiscal cliff to the next, and they are holding back."

Kaine asked one of the shortest questions at yesterday's hearings, when he wanted Congressional Budget Office director Douglas Elmendorf to discuss the effect of budget uncertainty on the economy.

Elmendorf said it was hard to measure — but was very large.

"I wanted the group of people around that table to feel how high the stakes are," Kaine said later, adding that he had put aside a list of questions he'd planned to ask in order to get Elmendorf to make that point about the cost of uncertainty.

In response to a question from Warner, Elmendorf said interest rates tend to spike as deadlines for budget or debt ceiling actions approach, though he added that cost was hard to measure in dollars and cents.

Warner also asked if certain categories of federal spending might be more effective than others in terms of boosting the economy — he mentioned infrastructure, such as highways, and research and development.

Elmendorf said that would be the case for both.

Warner also commented that historically the government runs a deficit when federal revenue dips to less than 19 percent of the total value of all goods and services produced in the country. He said he doubted that Medicare or Social Security spending growth could be slowed enough to get past that ratio.

Kaine said he's encouraged that in the first two meetings of the committee "there's been a positive lack of non-negotiable language or drawing lines in the sand."

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