Budget fights in Washington are rarely simple or without rancor. Some conservative groups have already begun attacking the compromise deal announced Tuesday, lobbing complaints Republican House Speaker John Boehner dismissed as “ridiculous.”
Despite this infighting, prospects appear favorable for its passage in both chambers as of now.
As with all compromises, this one doesn’t completely satisfy either side, but most leaders in Congress are touting elements that appeal to their respective parties.
So, what’s in this deal? Would it avert another shutdown? Would taxes go up?
Here’s a primer on the compromise that must make its way through the House and Senate before heading to President Barack Obama’s desk.
This isn’t a ‘grand bargain’ on taxes and spending, is it?
Not at all. It’s a modest agreement which makes no significant changes in taxes or in the entitlement programs which account for the vast majority (over 60 percent) of federal spending. But House Budget Committee Chairman Paul Ryan (who brokered the deal with Washington Democratic Sen. Patty Murray) has been saying for months that any deal would be relatively small, so there’s no surprise here.
In the most basic terms, what would the deal do?
The deal would modestly increase discretionary federal spending on items such as medical research, the Head Start program, and military training.
It would apply to spending for Fiscal Year 2014 (which began on Oct. 1) and Fiscal Year 2015.
In the current fiscal year, it would increase defense discretionary spending by about 4.5 percent over what it otherwise would have been. And it would increase non-defense discretionary spending in FY 2014 by about 4.7 percent.
Would the deal raise taxes?
No, but it would increase fees for people who travel on airlines. Specifically it would increase aviation security fees by about $13 billion over ten years.
For a person traveling on a commercial flight, it would mean a minimum 60 cent-per-ticket increase in aviation fees, according to Erik Hansen, director of domestic policy at the U.S. Travel Association.
This aviation security fee is separate from the 7.5 percent federal excise tax on airline tickets which remains unchanged under the terms of the Ryan-Murray agreement.
Would this deal avoid government shutdowns in the near future?
If passed by Congress and signed into law, the agreement would remove the chance of another lapse of discretionary funding and a resulting partial shutdown of federal government for the next two years.
Ryan told reporters Wednesday that the deal “helps produce more certainty … We think that’s good for the country.”
Could House Republican conservatives derail this deal?
A handful of conservatives have said they oppose the budget deal as outside advocacy groups mount a lobbying effort against the legislation.
“I don't know how a deal is good for conservatives or for Americans if spending is going to go up," said Kansas Rep. Tim Huelskamp, one of the outspoken Republicans who voted against the December 2012 spending deal and the New Year’s Day tax bill.
But as with those and the deal to reopen the government this October, Huelskamp and like-minded Republicans ultimately lost those battles as Democrats joined the GOP to help approve those measures.
This time around, most of the 200 Democrats in the House appear inclined to support the budget compromise, making it all the more difficult for conservatives to stymie the bill. Republican leaders are probably calculating that with some of their own members and most of the Democratic members, there are enough votes to pass the legislation.
What did some Democrats want included in the deal that was omitted?
Democrats wanted Congress to extend the emergency unemployment compensation program that was created in 2008 and that expires in two weeks.
The emergency program covers jobless people who’ve exhausted their benefits under their state’s regular unemployment benefits program. Benefits are available for 26 weeks in most states.
How does this deal relate to the 2011 Budget Control Act which made ‘sequester cuts’ in discretionary spending?
The deal undoes (in a relatively small way) some of the spending cuts required by Budget Control Act. It allows for $63 billion in higher discretionary spending over the next two fiscal years. That $63 billion would be a tiny fraction of total federal spending – which will total about $7.4 trillion over the next two years.
By what amount would this deal reduce future budget deficits? The estimate Wednesday from the Congressional Budget Office showed the Ryan-Murray bill would increase discretionary spending by $62 billion but achieve a net deficit reduction of $23 billion over ten years.
Is $23 billion a large amount of deficit reduction?
According to CBO, cumulative federal deficits over the next ten years will be $6.3 trillion. So $23 billion is a reduction of 0.36 percent in cumulative deficits.
Are there other fees included in the deal?
There is an $8 billion increase in the premiums that corporations which have defined benefit pension plans must pay to the federal government to back up those plans.
What types of mandatory spending would the deal affect?
It keeps in place and extends for a few more years relatively small cuts in Medicare spending that were part of the Budget Control Act.
And it increases the amount that newly hired federal workers will need to chip in to their pension plan.
Workers enrolled in Federal Employees’ Retirement System now contribute 0.8 percent of their pay to the retirement plan. The agreement would increase the required contribution by 1.3 percentage points for workers hired after Dec 31 of this year.
“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 argued.
And Murray noted if she and Ryan had failed to reach an accord, “many of these same people would be facing furloughs, layoffs and uncertainty. “
The deal would also reduce cost-of-living increases in retirement benefits for military retirees who are under age 62.
First published December 11 2013, 2:44 PM