House Budget Committee Chairman Paul Ryan (R-WI) and Senate Budget Committee Chairwoman Patty Murray (D-WA) announced a two-year budget deal Tuesday evening that will cancel automatic across the board spending cuts for the next two years and avert the possibility of another government shutdown in early January.
The much-anticipated bipartisan package includes $63 billion of new spending or “sequester relief,” $85 billion of total savings, and $23 billion in net deficit reduction, according to staffers. The additional spending would be offset by increases in fees and pension costs for federal and military employees, but no increases in tax rates.
The agreement stands an excellent chance of winning passage in the House and Senate before Congress adjourns for the year. The House is expected to vote before adjourning on Friday for the rest of the year, and the Senate may vote next week.
Still, there is widespread displeasure among conservatives and Democrats alike about key provisions of the deal. Democrats are especially unhappy that the agreement would raise federal employees’ pension costs and allow supplemental unemployment insurance to expire this month. Many Republicans don’t think the deal will do enough to control long term spending and some insist it would be a mistake to lift the caps mandated by the 2011 Budget Control Act that have forced the government to cut back spending and furlough many workers this year.
Democrats have vowed to continue to press the GOP for a compromise to prevent more than one million people from losing their unemployment benefits at the end of the month. Even though the job market is improving along with the economy, many people continue to struggle. House Speaker John Boehner (R-OH) said recently he would consider a proposal from the White House to continue to provide supplemental benefits to those who have exhausted their state unemployment benefits, but insisted it be considered outside the framework of a budget deal.
While the agreement bears no relationship to a “Grand Bargain” of entitlement and tax reforms once sought by President Obama and Boehner to reduce the $17.3 trillion debt, it represents a rare bipartisan consensus on spending policy after years of political trench warfare. The accord would end the automatic sequester mandated by the 2011 Budget Control Act and raise agency and program spending to slightly more than $1 trillion a year in fiscal 2014 and 2015.
Ryan and Murray essentially split the difference between the Senate budget level of $1.058 trillion and the House budget level of $967 billion. The agreement would provide $63 billion in sequester relief over two years, split evenly between defense and non-defense programs. In fiscal year 2014, defense discretionary spending would be set at $520.5 billion, and non-defense discretionary spending would be set at $491.8 billion.
The additional spending is fully offset by savings elsewhere in the budget. The agreement includes dozens of specific deficit-reduction provisions, with mandatory savings and non-tax revenue totaling approximately $85 billion. The agreement would reduce the deficit by between $20 and $23 billion.
Ryan, the Republicans’ 2012 vice presidential nominee, and Murray, a hardworking member of the Senate Democratic leadership, who is closely allied to Majority Leader Harry Reid, spent weeks haggling behind closed doors in search of a bipartisan spending agreement that could pass muster with congressional leaders, committee chairmen and rank and file members.
ALL THE MEN AND WOMEN MERELY PLAYERS….
The tall, lean Ryan and the short, bespectacled Murray were something of a political odd couple in their quest for a deal. This was Murray’s first year as Senate Budget Committee Chairwoman, and she persuaded the Senate to adopt a budget resolution for the first time in years. But once the Senate had acted last April, Ryan and Boehner ignored her repeated calls to meet in conference to iron out the many differences between the House and Senate-passed versions of the 2014 budget.
Murray grew frustrated and irate that Ryan was ignoring her, and made numerous floor speeches calling attention to the House Republicans’ unwillingness to play ball. That all changed after Congress and the White House agreed to a short-term deal ending the government shutdown and ordering a special 29-member House-Senate conference committee headed by Ryan and Murray to iron out a long-term budget blue print for avoiding another government shutdown in mid-January.
By all accounts, the two chairpersons worked closely and relentlessly in the final weeks to carve out a plan that was saleable to the two parties. Murray’s biggest concern was eliminating the sequester and freeing up spending for to spur the economy and help the middle class, while Ryan was in search of a plan that would spare the Pentagon from additional cuts, put a small dent in the deficit and avoid more tax increases.
With his eye on a possible 2016 presidential bid, Ryan probably faced the bigger challenge in forging an agreement with the Democrats without alienating the Republican conservative base that will have a big say in the choice of the next GOP presidential nominee. In describing the overall agreement during a meeting with reporters, Ryan repeatedly insisted that the agreement reflected the best of conservative values:
“As a conservative, I think this is a step in the right direction,” he said. “What am I getting out of this? I’m getting more deficit reduction. So the deficit will go down more by passing this than if we did nothing. Point number two, there’s no tax increases here. Point number three, we are finally starting to deal with autopilot spending – that mandatory spending that has not been addressed by Congress for years.”
In addition to canceling the sequester for two years, the deal calls for another $25 billion in deficit reduction by extending a small part of the sequester into 2022 and 2023. That shift would primarily affect Medicare providers.
“Look, this isn’t easy,” Ryan added. “This is the first divided government budget since 1986. . . .So we know we’re not going to get everything we want and [Murray] is not going to get everything she wants. . The key here is nobody had to sacrifice their core principles.”
“This agreement breaks through the recent dysfunction to prevent another government shutdown and roll back sequestration’s cuts to defense and domestic investments in a balanced way,” Murray said. “It’s a good step in the right direction that can hopefully rebuild some trust and serve as a foundation for continued bipartisan work.”
A TALE TOLD BY AN IDIOT, FULL OF SOUND AND FURY
Americans for Limited Government President Nathan Mehrens blasted the budget deal that would cancel $65 billion of sequestration over the next two years.
“It’s disappointing that House Republican Budget Chairman Paul Ryan would bust the $65 billion sequestration and raise government fees and other assessments, in return for other supposed cuts in the out years that likely will just be rolled back later,” he said in a statement. “The sequester needed restructuring as it disproportionately hurt our national defense capabilities, but Ryan's plan to raise taxes is unacceptable, and the supposed out year cuts are simply a cynical insult to taxpayers who now know that when push comes to shove, the cuts will not be kept.
Rep. Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, bridled at the emerging agreement, particularly the plan to offset about $12 billion of new spending by raising pension contributions by $12 billion split between federal employees and members of the military.
Van Hollen, House Minority Whip Steny Hoyer (D-MD) and Senate Appropriations Committee Chairwoman Barbara Mikulski (D-MD) all strenuously objected to the pension provision because they represent large numbers of federal workers in their state.
“This agreement isn’t perfect, but it is certainly better than no agreement at all,” Van Hollen said after Ryan and Murray made their announcement. “This difficult negotiation has gone through many phases. The final product replaces part of the job-killing sequester without disproportionally hitting working families, including hundreds of thousands of public servants. It’s a small, but good step forward for our country.”
The White House played an active role behind the scenes in keeping Hill Democrats apprised of the President Barack Obama’s priorities in a budget deal, according to Politico. But in contrast with past spending fights, most recently the government shutdown in October, the White House avoided making major pronouncements and instead encouraged lawmakers to go through the “regular order” process of House and Senate leaders sitting down to work out a solution. In this case, the lower-key approach appears to have been helpful in reaching a deal.
Obama issued a statement saying that while "This agreement doesn't include everything I'd like," it's a good sign the two parties could come together and break the cycle of crisis-driven decision making.
Boehner said that "while modest in scale," the agreement represents "a positive step forward."
If the bill is passed in the House and Senate and signed into law, the appropriations committees will then be able to work on spending bills at an agreed-upon level in advance of the January 15th deadline.
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