Congressional negotiators Tuesday reached a deal to keep the government running for nearly two more years, a rare bipartisan agreement that should ease the threat of automatic spending cuts.
After weeks of closed-door meetings, House Budget Committee Chairman Paul Ryan, R-Wis., and Senate Budget Committee Chairwoman Patty Murray, D-Wash, emerged with a deal far short of a political grand bargain but good enough to probably pass both chambers of Congress before lawmakers end their 2013 session next week.
If approved by Congress – and while that’s expected, it’s no certainty – the deal would allow the government to keep running past Jan. 15, when funding is due to expire. It would also skirt the next round of automatic cuts, or sequester, due to take effect the same day.
“This agreement breaks through the recent dysfunction to prevent another government shutdown,” Murray said, appearing before reporters with Ryan at her side. “It’s a good step in the right direction that can hopefully rebuild some trust and serve as a foundation for continued bipartisan work.”
“In divided government, you don’t always get what you want,” Ryan said. “I think this agreement is a clear improvement on the status quo. This agreement makes sure that we don’t have a government shutdown scenario in January.”
President Barack Obama and House Speaker John Boehner, R-Ohio, were quick to praise the deal while acknowledging its modest reach.
Obama called the agreement “a good first step,” noting, “The American people should not have to endure the pain of another government shutdown for the next two years.”
Boehner had similar thoughts, calling the deal “a positive step forward.” The House of Representatives is expected to consider the deal this week.
However, House Democratic leader Nancy Pelosi of California offered lukewarm praise. “Tonight’s agreement represents a step toward enacting a budget for the American people and preventing further manufactured crises that only harm our economy, destroy jobs, and weaken our middle class,” she said, adding she looked forward to discussing details with fellow Democrats.
Budget watchdog groups also called it a good step but noted that serious problems remain.
“This bipartisan deal looks like a good step, but it doesn’t address the real drivers of our long-term debt,” said Michael A. Peterson, president of the Peter G. Peterson Foundation. “Make no mistake – we still have a lot more to do to put our nation on a sustainable fiscal path. I’m hopeful that this agreement will lay the foundation for future bipartisan collaboration to stabilize our national debt for the long term.”
The deal would permit spending of $1.012 trillion in fiscal 2014 for the third of the government spending subject to annual approval by Congress, and slightly more the following year.
The overall spending level would be more than the fiscal 2013 figure of $986 billion and the projected fiscal 2014 level of $967 billion, which after the scheduled sequester cuts would have totaled $498 billion for defense and $469 billion for domestic programs. Pentagon officials have warned that looming defense cuts could create a “readiness crisis.”
Instead, defense spending will rise to $520.5 billion, while non-defense discretionary spending will increase to $491.8 billion.
In all, spending should increase about $63 billion over two years over sequester levels, offset by about $85 billion in “mandatory savings and non-tax revenue.” No specifics were given. It would reduce the projected deficit by between $20 billion to $23 billion.
Democrats had wanted far more spending. Earlier this year, the Democratic-controlled Senate, on a largely party-line vote, backed a $1.058 trillion plan.
Discretionary spending subject to annual approval includes a host of popular items such as education, transportation and environmental programs. Most of the rest of the budget, such as Social Security payments, Medicare and interest on the debt, is set automatically.
The pact also would save $12 billion from federal retirement programs by requiring workers to contribute more from their paychecks. Both Ryan and Obama had earlier proposed increasing federal employee contributions, and the talks had focused on a total of $17 billion in increased contributions.
“We think it’s only right and fair that they pay something more toward their pensions just like the hardworking taxpayer that pays for those pensions in the first place,” Ryan said.
“It is down to $6 billion for federal employees and $6 billion for military, and we will have the details of those proposals out to you very shortly,” Murray said.
The new agreement would be a political boon for most lawmakers in two ways. By easing the impact of the automatic spending cuts, or sequester, members of Congress can go home this month and boast how they were able to deliver more money – but not too much more money – to their states or congressional districts.
It also would avoid another partial government shutdown. If no budget agreement were approved by Jan. 15, that scenario could unfold again – and probably cause dire political consequences for both political parties.
The deal is not expected to fall apart, but it has stumbled through a series of hurdles. Many Democrats want to extend emergency jobless benefits, now scheduled to expire Dec. 28. That provision is likely to be considered in separate legislation.
Some powerful Democrats have questioned any change in federal retirement contributions. Some of the most influential Democrats in Congress – House Minority Whip Steny Hoyer, top Budget Committee Democrat Chris Van Hollen and Senate Appropriations Committee Chairman Barbara Mikulski – represent Maryland, where the federal government is a major employer.
And conservatives challenged the higher spending.
Sen. Marco Rubio of Florida, a potential 2016 Republican presidential candidate, blanched at the deal, calling it a retreat from budget-cutting efforts.
“I voted against sequestration because of its effect on key programs, including the defense budget, but higher spending and more revenue are not the appropriate ways to address that problem,” Rubio said.
FreedomWorks, a tea party group, and Heritage Action, the political arm of the conservative Heritage Foundation, both blasted the deal because of its easing of sequestration.
“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,” Heritage Action said in a statement.
Bills funding the federal governmentThe federal budget is made up of a series of smaller bills approving spending for related areas of the government. Committees are responsible for writing spending laws for relevant agencies, which then must be approved by all of Congress.In recent years, fewer of these bills are being written and passed before the old budget expires and more committees are failing to write budget proposals all together.
Passed before the fiscalBefore September
Passed after fiscal year began Oct. 1In October
Spending bills never passed
Continuing resolutionsIf Congress does not approve spending for all parts of the government by Oct. 1, the current budget expires and the government has to shutdown.In order to avoid closing the government, Congress frequently passes "continuing resolutions," temporarily approving spending based on the previous year's budget.
Some years, such as in 2013, Congress is unable to pass a complete budget and ultimately issues a continuing resolution for the rest of the fiscal year.