Congressional Negotiators Reach Two-Year Budget Deal

07:56PM Dec 10, 2013
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via a special arrangement with Informa Economics, Inc.

Sequestration tempered; deal would reduce deficit by $22.5 billion without raising taxes

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Democratic and Republican budget negotiators have struck a deal, Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) announced Tuesday.

The deal would raise discretionary spending $63 billion over the next two years and increase the sequester-set level of $967 billion, to $1.012 billion this year, about halfway between the Senate budget level of $1.058 trillion and the House budget level of $967 billion. The bipartisan agreement would allow more spending for domestic and defense programs in the near term, while adopting deficit-reduction measures over a decade to offset the costs. While the agreement calls for a $63 billion increase in spending in 2014 and 2015, it is coupled with $85 billion in deficit reductions over the next 10 years, for a net deficit reduction of $22.5 billion – without raising taxes.

The plan does not deal with the debt ceiling, which is anticipated to be reached sometime after Feb. 7.

The deal replaces $63 billion of the automatic spending cuts from the sequester in 2014 and 2015. The $63 billion in sequester relief is split evenly between defense and nondefense programs. In Fiscal 2014, defense discretionary spending would be set at $520.5 billion, and nondefense discretionary spending would be set at $491.8 billion. In FY 2014, defense discretionary spending would be set at $520.5 billion, and nondefense discretionary spending would be set at $491.8 billion.

The agreement includes dozens of specific deficit-reduction provisions, with mandatory savings and non-tax revenue totaling roughly $85 billion. Those cuts would be offset by a combination of increased federal worker retirement contributions, an increase in aviation fees, cuts to hospital payments, postal reforms, and adjusting military retirement benefits, The deal would requiring federal workers to pay more into their pensions is a contentious development for some Democrats.

The final deal called for $6 billion in lower spending on federal employees' pensions. In addition, the deal called for another $6 billion in savings in military retirees' benefits.

"It would concern me if the only way we think we can balance budgets is on the backs of workers," House Democratic Caucus Chairman Xavier Becerra of California said. "I would ask yacht owners to give a little bit more. I would ask corporate executives who fly on jets to give a little bit more. I would ask oil companies who make millions in profits to give a little bit more before I ask workers."

Democratic Rep. James Moran, who represents a Northern Virginia district with a significant number of federal workers, said he hopes the negotiators would use savings from a deal over agriculture legislation to defray the cost of a budget deal. But House Speaker John Boehner (R-Ohio) has nixed that approach and instead the House later this week will likely take up a one-month extension of farm policy.

If approved by lawmakers in the House and Senate, the deal would, among other things, fund the government past Jan. 15 and replace the sequester – the automatic spending cuts -- with longer-term savings for two years.

The House is set to vote this week, with the Senate voting before it recesses on Dec. 20.

The big question is whether the package will be accepted in the House. The Murray-Ryan deal will likely need considerable Democratic support to pass the GOP-controlled House. House Republicans have repeatedly challenged their leaders on budget deals, and some are likely to argue for bigger spending cuts. Ryan, who will discuss the deal with his conference on Wednesday morning, lobbied his colleagues to support it. "As a conservative, what am I getting out of this? More deficit reduction," he said.

The package does not include a Democratic-pushed extension of unemployment benefits, due to expire at the end of December. The White House has said that 1.3 million Americans will lose their emergency unemployment benefits if Congress doesn't renew the program. Officials said that Democratic leaders were still looking for ways to extend the program—possibly for three months. Many Republicans are opposed to renewal, saying the program was meant as a temporary response to the recession.

"We have broken through the partisanship and gridlock," Murray said. Ryan said the budget plan uses "smart, targeted reforms" to add $23 billion in deficit reduction beyond what had been set under the 2011 plan. "This agreement makes sure we don't have a government shutdown scenario in January, it makes sure we don't have a government shutdown scenario in October," Ryan said. 

Ryan predicted a "strong" GOP vote in the House and said the deal was possible because both he and Murray decided they would not go after the other party's sacred cows in the talks. "Nobody had to sacrifice their core principles," Ryan said.

President Obama praised the budget deal, calling it "a good first step" toward deficit reduction. Obama hailed the "balanced" deal for replacing $63 billion in automatic spending cuts known as the sequester, but also called on Congress to extend federal unemployment benefits, something excluded from the deal. "This agreement replaces a portion of the across-the-board spending cuts known as "the sequester" that have harmed students, seniors, and middle-class families and served as a mindless drag on our economy over the last year," he said in a statement. "It’s balanced, and includes targeted fee increases and spending cuts designed in a way that doesn’t hurt our economy or break the ironclad promises we’ve made to our seniors,’ he added. "This agreement doesn’t include everything I’d like – and I know many Republicans feel the same way. That’s the nature of compromise. But it’s a good sign that Democrats and Republicans in Congress were able to come together and break the cycle of short-sighted, crisis-driven decision-making to get this done," Obama said.


  • The bipartisan agreement is a $1.012 trillion budget for Fiscal Year 2014.

  • $85 billion in total savings over ten years.

  • $63 billion in sequester relief over two years, split evenly between defense and non-defense budgets.

  • $23 billion in net deficit reduction over ten years.

  • Does not include unemployment insurance extension. Includes federal employee pension pay-ins.


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.