Congress Approves Two-Year Budget Plan
Appropriators Begin Negotiating Year-End Spending Package
This week, Congress approved a bipartisan budget deal that will
help avert a government shutdown and prevent the nation from
defaulting on its debt obligations. The agreement, which
was brokered by congressional leaders from both parties and
President Obama, would provide a two-year reprieve from the
sequester-level spending caps set by the 2011 Budget Control Act.
Specifically, the legislation (HR 1314) would authorize an
additional $80 billion in spending ($50 billion in fiscal year
2016 and $30 billion in fiscal year 2017) split evenly between
defense and nondefense programs.
Although the new fiscal framework will yield two years of
relative budgetary stability, it does not entirely remove the
threat of a government shutdown. With the current short-term
continuing resolution (PL 114-53) slated to expire on December
11, lawmakers must still negotiate the final spending and policy
details for the remainder of fiscal year 2016. In doing so, the
12 appropriations subcommittees will be charged with deciding
which individual programs will be the beneficiary of the
increased spending authorized under the new budget deal.
Additionally, appropriators – with input from congressional
leaders – will decide what, if any, policy riders might be
attached to a final spending package.
It should be noted that the increased discretionary funding
authorized under HR 1314 would be offset through a combination of
cuts to various entitlement programs, fee increases, and other
revenue raisers. Among other things, the deal would extend the
sequester on Medicare and certain other mandatory spending
programs by an additional year (through fiscal year 2025).
In addition, the budget plan proposes to sell crude oil from the
Strategic Petroleum Reserve, auction off federal spectrum, and
repeal a requirement in the Affordable Care Act for large
employers to automatically enroll their employees in health care
plans.
While a previous estimate from the Congressional Budget Office
(CBO) suggested that the budget agreement would add to the
federal deficit, the legislation was amended prior to floor
consideration to ensure that it was fully paid for. According to
the latest CBO projections, the revised plan would cost $79.4
billion over the next decade and would be offset by $79.9 billion
in new revenue and other cost savings.
With regard to the debt ceiling – and with officials from the
Department of the Treasury warning Congress that it must take
action before November 3 to avoid a potential default on the
country’s financial obligations – HR 1314 would suspend the debt
limit until March 15, 2017. The duration of the legislation’s
provisions on the budget and the debt ceiling effectively takes
these issues off the table for the remainder of President Obama’s
term in office. For his part, the president is expected to sign
the legislation into law in the coming days.