Jan 27, 2014

Congressional Negotiators Reach Budget Deal

WASHINGTON - House and Senate budget negotiators reached agreement Tuesday on a budget deal that would raise military and domestic spending over the next two years, shifting the pain of across-the-board cuts to other programs over the coming decade and raising fees on airline tickets to pay for airport security.

The deal, while modest in scope, amounts to a ceasefire in the budget wars that have debilitated Washington since 2011 and gives lawmakers breathing room to try to address the real drivers of the national debt - burgeoning health care and entitlement programs like Medicare and Social Security - and to reshape the tax code. But it quickly drew fire from conservatives who saw it as a retreat from earlier spending cuts and a betrayal by senior Republicans.

"We have broken through the partisanship and gridlock and reached a bipartisan budget compromise that will avert a government shutdown in January," said Senator Patty Murray of Washington, the chairwoman of the Budget Committee and the chief Democratic negotiator. The agreement eliminates about $65 billion in across-the-board domestic and defense cuts while adding an additional $25 billion in deficit reduction by extending a 2 percent cut to Medicare through 2022 and 2023, two years beyond the cuts set by the Budget Control Act of 2011.

For Democrats and their negotiator, Ms. Murray, the deal marks a turning point in the spending wars that have dominated the Capitol since Republicans swept to control of the House in 2011. For Republicans and their negotiator, Representative Paul D. Ryan of Wisconsin, the House Budget Committee chairman, the deal should mean the political focus can remain on President Obama's health care law and not another round of budget brinkmanship next month, as the government moves to another shutdown.

Rep. James Lankford of Oklahoma, a member of House Republican leadership, said the deal goes back to the original idea of the Budget Control Act, which was to force deficit reduction on entitlement and "mandatory" programs, with automatic cuts to defense and domestic discretionary programs only as a last resort. "Two years ago, we wanted to get mandatory spending reductions," he said. "If we didn't get that, then we wanted to get some supercommittee to form a plan to do it. That didn't happen.

Third best was sequester. If we can get back to first best to resolve this, that's a better option." But the accord is taking fire from conservative on and off Capitol Hill, who are excoriating Mr. Ryan for rolling back immediate spending cuts in exchange for promised savings that may never materialize. "If it cancels earlier spending reductions without replacing them with the beginning of substantial changes to the true drivers of our debt, which are these unsustainable programs, then I think we're in the same place we were at the beginning of this debate," Senator Marco Rubio, Republican of Florida and a top prospect for a presidential run, told conservative talk show host Sean Hannity Tuesday. "We've got to deal with this issue at some point."

Heritage Action, the political arm of the Heritage Foundation, which is influential with House Republicans, came out against the deal even before it was announced, as did Americans for Prosperity, the advocacy group backed by the conservative Koch brothers, and Koch Industries, the brothers' energy and paper conglomerate. "We will hold members accountable, Republican and Democrat, if they go forward and vote to raise spending above sequester levels," said Tim Phillips, president of Americans for Prosperity. Senator Mitch McConnell of Kentucky, the Republican leader, also expressed reluctance to reverse automatic, across-the-board spending cuts mandated by the 2011 Budget Control Act if a broader, multi-trillion-dollar deficit reduction deal could not be reached. "I remain convinced the Budget Control Act has done what it was supposed to do.

We've reduced government spending for two years in a row for the first time since right after the Korean War," he said. "It has been a success, and I hope we don't revisit it." Under the agreement, military and domestic spending for the current fiscal year that is under the annual discretion of Congress would rise to just over $1 trillion, from the $967 billion level it would hit if spending cuts known as sequestration were imposed next month. Spending would be capped at $1 trillion in fiscal year 2015 as well. The $65 billion increase over the next two years would be spread evenly between Pentagon and domestic spending, nearly erasing the impact of sequestration on the military. Domestic programs would fare particularly well because the 2 percent cut to Medicare health providers would not be touched, alleviating cuts to programs like health research, education and Head Start. That increase would be paid for in part with higher airline fees that underwrite airport security and higher contributions from federal workers to their pensions.

Military pensions would get slower cost of living increases. Democrats have given up their demand that the deal extend unemployment benefits that expire at the end of the month but hope to press for an extension in a separate measure. For Republican leaders, the deal would erase the threat of a second government shutdown Jan. 15, when the stop-gap spending measure that reopened the government in October runs out. The government's statutory borrowing authority will lapse in May or June, another potential crisis, but a budget deal would allow Republicans to remain singularly focused on President Obama's health care law.

But it will be up to Mr. Ryan, his party's vice presidential nominee in 2012 and a credible conservative voice, to sell the accord to leery congressional Republicans. Republican House leaders "have a lot of confidence in Paul Ryan, and hopefully they're going to see today that confidence is also shared by the conference itself when they present the deal," said Senator Roy Blunt, Republican of Missouri. It's going to take a serious sales job. "Heritage Action cannot support a budget deal that would increase spending in the near-term for promises of woefully inadequate long-term reductions," the group declared Monday. "While imperfect, the sequester has proven to be an effective tool in forcing Congress to reduce discretionary spending, and a gimmicky, spend-now-cut-later deal will take our nation in the wrong direction."


Back Federal News
We have broken through the partisanship and gridlock and reached a bipartisan budget compromise that will avert a government shutdown in January
We can either have democracy in this country or we can have great wealth concentrated in the hands of a few; but we can't have both. - Supreme Court Justice Louis Brandeis
NAGE HEADQUARTERS 159 Burgin Parkway
Quincy, MA 02169
Main Phone: (617)376-0220
Main Fax: (617)984-5695
Union Local Tax Issues Federal law now requires that every local union file an annual information return—Form 990, 990-EZ, or 990-N—with the IRS. If your local fails to file under this new requirement.. Read more