Budget deal to ease spending cuts gets Republican backing

Chief architects call plan imperfect but say it will provide economic certainty, help heal wounds

Dec 11, 2013 @ 4:22 pm (Updated 4:30 pm) EST

u.s. budget, congress, spending, economy, house of representatives, obama, boehner, ryan, murray

Congressional negotiators selling a budget accord won Republican endorsements for the plan to ease automatic U.S. spending cuts for two years, remove the risk of a government shutdown and cut the deficit by $23 billion.

“I believe it'll get a majority of the majority” of House Republicans and a large number of Democratic votes, Representative Darrell Issa, a California Republican, said Wednesday after a Capitol Hill briefing. The House may vote as early as tomorrow on the plan.

Chief architects Senator Patty Murray and Representative Paul Ryan in announcing the deal said that while imperfect, the plan would provide economic certainty by establishing a bipartisan budget for the first time in four years.

“It is an important step in helping heal some of the wounds here in Congress,” Ms. Murray, a Washington Democrat, said yesterday at a Capitol Hill news conference.

The limited agreement seeks to end three years of political gridlock in Congress over spending and revenue that culminated in a 16-day government shutdown in October. Lawmakers' approval ratings in opinion polls have tumbled amid the regular partisan standoffs over the budget.

Groups that back limited government and the automatic spending cuts criticized the accord as a retreat from policies enacted in a budget deal two years ago. Club for Growth, which has intervened in Republican primaries to back candidates who support less government spending, said it would rate lawmakers seeking election in 2014 based on their budget vote.

'USING MEMBERS'

House Speaker John Boehner lashed out at the groups for criticizing the budget deal.

“They're using our members, and they're using the American people for their own goals, this is ridiculous,” Mr. Boehner said. “If you're for more deficit reduction, you're for this agreement.”

The tone in the room during the briefing was optimistic, said Representative Buck McKeon, a California Republican and chairman of the House Armed Services Committee.

“Paul Ryan executed what I think is a great deal, not only for our party but for the people back home,” Representative Pete Sessions, a Texas Republican, said as he predicted the proposal will pass the House.

After emerging from the briefing, lawmakers including Republican Representatives Tom Cole of Oklahoma and Matt Salmon of Arizona separately said the budget will pass.

Representative John Fleming, a Louisiana Republican, said he could vote for the proposal, saying, “it actually does reduce the deficit, although in a small way.” The deal “accomplishes a lot of good things,” he said.

The deal was faulted by some Republicans, including those backed by the small-government Tea Party movement, who say it trades concrete spending cuts that are part of sequestration for future promises. In the House, they are poised to resist Boehner's attempt to win passage this week.

The Senate is expected to vote on the budget accord sometime next week, said Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid.

“There is a recurring theme in Washington budget negotiations,” Senator Rand Paul, a Kentucky Republican, said Wednesday in a statement. “It's: I'll gladly pay you Tuesday for a hamburger today. I think it's a huge mistake to trade sequester cuts now, for the promise of cuts later.”

The bipartisan plan would set U.S. spending at about $1.01 trillion for this fiscal year, higher than the $967 billion required in a 2011 budget plan. The agreement sets spending for defense at $520.5 billion and for non-defense at $491.8 billion.

DEFICIT REDUCED

The accord would reduce the budget deficit by $20 billion to $23 billion, the lawmakers said. It would ease the automatic spending cuts known as sequestration by $40 billion in 2014 and about $20 billion in 2015.

The agreement also cushions the military from a $19 billion cut scheduled next month as part of the across-the-board cuts that lawmakers from both sides warned would hollow out the military and cost U.S. jobs.

The agreement, though, falls short of the panel's original goals. It doesn't fully replace the automatic cuts and it will have a marginal effect on the U.S. debt because it doesn't address the growing entitlement programs that are its long-term drivers. It produces a sliver of the $1 trillion to $4 trillion in savings previous budget negotiators sought to identify.

“It's underwhelming at best,” said Robert Bixby, executive director of the Concord Coalition, which backs deficit reduction. “It leaves a lot undone, and isn't close to the grand bargain that was sought.”

The deal also doesn't touch the corporate tax breaks Democrats sought to eliminate or raise the U.S. debt limit, setting up another potential fiscal showdown after February. Still, congressional leaders of both parties lauded the compromise as a breakthrough in the divided Congress.

The agreement “will roll back the painful and arbitrary cuts of the sequester and prevent another costly government shutdown,” Mr. Reid, a Nevada Democrat, said Tuesday after the deal was announced. “We didn't get what we wanted. They didn't get what they wanted. But that's what legislation is all about.”

President Barack Obama called the accord a “good first step” toward a compromise that will meet some of his goals for spending priorities. “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.”

Republicans charged with pushing the measure through the House, including Majority Leader Eric Cantor who said he's “pleased” with the deal, voiced support for it.

“This agreement represents a positive step forward by replacing one-time spending cuts with permanent reforms to mandatory spending programs that will produce real, lasting savings,” Mr. Cantor of Virginia said in a statement.

Senate Minority Leader Mitch McConnell, a Kentucky Republican who, like a number of Mr. Boehner's rank-and-file, has a primary challenger next year, was silent on the agreement after expressing skepticism earlier in the day.

Some Republicans oppose the deal because it pushes savings into future years and includes a variety of user fees that small-government groups are labeling tax increases.

Senator Marco Rubio, a Florida Republican, said he'll oppose the agreement. It “cancels earlier spending reductions, instead of making some tough decisions about how to tackle our long-term fiscal challenges caused by runaway Washington spending,” he said in an e-mailed statement.

Representative Tim Huelskamp of Kansas, a Republican, said it “blows up the only real significant spending restraint passed since the Republicans assumed the majority in the 2010 election.”

While Democratic leaders spoke favorably of the deal last night, it doesn't include an extension of expiring unemployment benefits for 1.3 million Americans that Democrats favor, and that Obama urged lawmakers to pass. That could cost some Democratic votes.

The main components of the deal include raising contributions that federal employees make to their retirement plans and increasing premiums for pensions backed by the Pension Benefit Guaranty Corp.

The agreement includes a grab bag of obscure savings provisions, with an emphasis on tightening eligibility criteria and eliminating fraud and overpayments in programs including unemployment insurance, Medicaid, and benefits for federal prisoners.

It also eliminates some programs including a 2005 natural gas and petroleum resources research program and caps income paid to federal contractors.

Republican leaders want to sell the deal to wary rank-and-file by emphasizing that it will reduce the deficit by an additional $20 billion largely from increased user fees. Those include raising the fees paid by airline passengers, or boosting the so-called Sept. 11 security fee on airline tickets.

The panel's Dec. 13 deadline was set as part of an agreement ending the government shutdown in October.

GROUPS CRITICAL

Among critics of the deal, Tim Phillips, president of Americans for Prosperity, an Arlington, Va.-based group that says it backs individual freedom and smaller government, said Republicans are abandoning their limited-spending principles.

“The American people remember hard-won bipartisan spending limits set by the sequester, and are not pleased to see their conservative representatives so easily go back on their word to rein in government overspending,” he said.

Heritage Action for America, a group that tracks lawmaker votes and is affiliated with the Heritage Foundation that backs limited government, said it opposes short-term spending at higher levels in return for future savings.

The final product mollified some Democrats who had earlier said they were concerned about the possible effects on federal employees. Negotiators included pension payment increases for military personnel to mitigate the effects on federal workers.

They also agreed to require that only newly hired federal workers contribute more to their pension plans.

(Bloomberg News)

  @IN Wire

Apr 23 09:00PM
Behavioral Economics Blogs? http://t.co/9Dj2s0jqTo
Apr 23 06:54PM
Size of Fidelity & BlackRock foreign subsdiaries triggered systemic risk review http://t.co/0ZYakcfRNm

Career Center

Explore your opportunities and be informed for your next move.

Company Type
Firm Type
Clearing Firm
Presented by

Most Watched Video

7:12The 2 biggest factors driving growth in active ETFs

Ugo W. Egbunike Dir. Of Business Development, ETF.com Greg Crawford Deputy Editor, InvestmentNews

Video Spotlight
1:47People are Living Longer. Good News or Bad News?

Sponsored by Oppenheimer Funds Inc.