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New Jockeying in Congress for Next Phase in Budget Fight

Republicans and Democrats maneuvered for advantage on Wednesday in the next battle over federal spending, trying to influence the choice of members and frame the agenda for a powerful “supercommittee” that is supposed to recommend at least $1.5 trillion of additional

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Alexandra Grablewski | Riser | Getty Images

deficit reduction measures.

A huge fight has already erupted over how to count the costs of extending tax cuts for high-income people, which are due to expire at the end of 2012.

Republicans want to extend the tax cuts, but Democrats want the cuts for more affluent people to expire.

Congressional leaders have two weeks to name panel members. Names of candidates were circulating Wednesday on Capitol Hill, and some lawmakers have been quietly promoting themselves or their friends for spots on the 12-member panel, which will consist of equal numbers of Republicans and Democrats from the House and the Senate.

Lobbyists scrambled Wednesday to figure out how to influence the new panel to protect the programs and tax breaks from which they benefit. Military contractors and health care lobbyists were particularly active, as they have the most to fear.

The panel, known as the Joint Select Committee on Deficit Reduction, will have three months, until Nov. 23, to forge an agreement on divisive issues that have defied solution for decades.

The options on the table have been studied by numerous expert panels, including several in the past year.

The problem is not so much determining how to align the government’s revenues and spending; it is in reaching a compromise on the specific elements of a plan and then finding the political will to enact the necessary spending cuts, tax increases or both.

Congressional leaders say this panel has a better chance than many of its predecessors because the debt deal creates a strong incentive for bipartisan agreement: If the committee fails to agree or to win approval for a plan from the House and the Senate, the government will automatically cut $1.2 trillion over 10 years from hundreds of military and nonmilitary programs, biting deeply into the priorities of both parties.

Medicaid, which finances health care for more than 50 million people, “is more at risk of significant cuts than any other entitlement,” said Ellen Nissenbaum, a lobbyist for the liberal-leaning Center on Budget and Policy Priorities.

The composition of the committee will be an early indication of its prospects. Republicans, in particular, are under intense pressure to choose members who will not compromise in their opposition to any deal that involves increased revenues. And members of both parties are interested in overhauling the tax code to eliminate tax breaks and simplify the laws.

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Photo: James Manners

Among the Democrats mentioned as possible appointees to the panel are Senators Max Baucus of Montana and Kent Conrad of North Dakota and Representative Chris Van Hollen of Maryland.

Republican candidates include Senator Rob Portman of Ohio, Representative Dave Camp of Michigan and Representative Paul D. Ryan of Wisconsin, whose earlier budget plan — since rejected in the Senate — called for sizable cuts in Medicare’s growth.

The panel is expected to consider a wide range of proposals to slow the growth of entitlement programs like Medicare, Medicaid and Social Security, along with cuts to military spending and ways to raise more revenue.

The Senate majority leader, Harry Reid, Democrat of Nevada, said members of the panel must have “open minds.” The House Democratic leader, Nancy Pelosi of California, said her appointees would “fight to protect” Social Security, Medicare and Medicaid. Republican leaders indicated they would not appoint anyone willing to raise taxes.

An immediate question on Wednesday was how to measure the impact of changes in tax law.

In estimating the effects of legislative proposals, the Congressional Budget Office says, it usually assumes that current laws remain unchanged. That means that tax cuts from 2001 and 2003 will expire at the end of 2012, with revenues rising rapidly in the next three years.

President Obama’s economic policy coordinator, Gene Sperling, said he hoped the joint committee would not use this starting point.

“The budget legislation specifically calls for deficit reduction — not simply spending cuts — and does not anywhere require the committee to work off a current law baseline,” Mr. Sperling said.

Democrats would prefer to start with what they describe as more realistic assumptions: that the tax cuts will continue for middle-income people but end for those with high incomes.

Mr. Ryan, the chairman of the House Budget Committee, fired back. He said Mr. Sperling was trying to pave the way for tax increases by advancing “a misguided interpretation of the mandate given to this newly created committee.”

In fact, Mr. Ryan said, the new law “explicitly instructs the committee” to follow the standard practice of comparing legislative proposals with current law, which he said “already assumes tax increases after 2012.” Mr. Sperling said Mr. Ryan’s claim was “simply false.”

Huge sums are at stake. Continuing the tax cuts for middle-income people could cost $2.8 trillion over 10 years. Continuing the cuts for more affluent people — individuals with annual incomes over $200,000 and couples over $250,000 — could cost $800 billion.

Mark J. Tavlarides, a vice president of Van Scoyoc Associates, who lobbies on foreign and military policy, said that in dozens of e-mails this week, lobbyists were asking one another, in effect: “What kind of cuts can we expect? And what do we do about them?”

Geoffrey C. Peterson, a health care lobbyist, said he was trying to figure out whether his clients would fare better in the joint committee or under the automatic cuts. For hospitals, he said, the automatic cuts would probably be “more benign,” because Medicaid is exempt and Medicare cannot be cut more than 2 percent.

Another lobbyist, Michael H. Herson, president of American Defense International, said, “The defense industry is just coming to grips with the new law — and the prospect of cuts that could have a devastating impact on jobs, manufacturers and national security preparedness.”