Monday, December 16, 2013

What’s in Congress’ budget deal, and what isn’t?

House Budget Chairman Ryan and Senate Budget Chairman
Patty Murray announce the budget deal
With great aplomb, the media has been in a frenzy to report the new and seemingly unprecedented progress of Congressional budget talks.  Indeed, last week the House overwhelmingly approved (332-94) a two-year budget blueprint that will set the stage for the final weeks of negotiation at the start of the New Year.  The Members of the House who opposed the deal are, for the most part, on the far right or the far left.   The Senate will take up the measure this week, and while it has a steeper slope to climb in that chamber, it will likely pass there before the adjournment of the 1st session of the 113th Congress.

But what is actually in the deal?  And what is not?

First, this is NOT a funding bill.  It is a budget blueprint that essentially takes the place of the annual Budget Resolutions for Fiscal Year (FY) 2014 and 2015.  These Resolutions are usually passed no later than April 15th of the year (April 2014 for the FY15 budget).  Congress must still act on spending bills by January 15th to avoid another government shutdown.

So, what does the budget deal do?
  • It makes it much more likely that Congress will reach spending deals and avoid a government shutdown in January.
  • It is also more likely that FY2015 budget negotiations will proceed in the normal order, starting early next year.
  • It shrinks the sequester (across-the-board spending cuts) by $45 billion in 2014 and $18 billion in 2015. 
    • This year’s $45 billion increase will be split evenly between defense and non-defense discretionary programs (2015 increases will be split evenly also).
    • The mandatory programs affected by sequester (including Medicare), on the other hand, see the length of their cuts extended for two additional years, in 2022 and 2023 (i.e. more cuts in the long-term to pay for these short-term increases).
  • It means that appropriators in January will be able to put some funds back into the programs that serve the most vulnerable, like Head Start and Housing Vouchers.
  • It continues to protect the Defense department from bearing its full share of spending cuts by restoring some of its funding, even after it was funded in FY2013 with an additional $20 billion above the original deal that created the sequester.
  • It raises some new revenue for the federal government by increasing some fees and other premiums, included the following item:
  • It increases retirement contributions for new federal employees, reducing their take-home pay, even after federal workers have already been seriously attacked in recent months through furloughs, sequester, and layoffs.

What does it NOT do?
  • It does not extend Unemployment Insurance (UI) benefits for the long-term unemployed (workers unemployed for 27 weeks or more, not including those who have given up looking for a job and “left” the labor force), which expire on Dec. 28. 
    • Without an act of Congress, 1.3 million workers will lose benefits only days after Christmas, and an additional 3.5 million workers will lose their safety net in the course of 2014. 
    • According to the non-partisan Congressional Budget Office (CBO), allowing benefits to expire will harm the economy by resulting in up to 300,000 fewer jobs by the end of 2014.
    • The modest economic boost achieved by partially offsetting the sequester will essentially be counteracted by the expiration of UI for the long-term unemployed.
  • It does not do anything about the U.S. debt ceiling.
  • It does not make some of the deepest cuts to social and safety net programs, about which we have been concerned all year.
  • It does not close corporate tax loopholes or reform the tax code in order to achieve more economic equality.  

For a more in-depth analysis of the budget deal, see this paper released by the Center on Budget and Policy Priorities.

In all, this deal is a mixed bag.  It could have been so much worse.  But we hoped that it would be so much better.  In the short term, it provides some stability and accomplishes some measure of bipartisanship.  It makes the brinksmanship of recent months all the less likely when Members of Congress return from the holiday recess, as so many Members, especially Leadership in the House, have agreed to these spending levels. It paves the way for final spending bills in early January that will avert the next government shutdown, whose deadline looms on January 15th.

But this bill fails U.S. workers who are and have been struggling to find jobs in a still languishing economy. It reduces take-home pay for federal workers who have already borne the brunt of furloughs and budget cuts. And it locks in the sequester for 2016-2023, so we will continue to have these funding battles every year for the foreseeable future.

In all, it is positive sign that Members of Congress from across the aisle came to the same table and negotiated a compromise -- but this is a low bar. It is a very small step in the right direction, and the Senate should pass it.  But we can do so much better for this nation and for each other.