Understanding What the Bipartisan Budget Deal Does and Does Not Achieve
On Wednesday, the House of Representatives approved a bipartisan, two-year budget deal that was hammered out over the last few weeks between White House officials and congressional leaders. The Senate is expected to take up the same bill later this week before the November 3rd debt ceiling deadline. While the deal provides limited sequestration relief and paves the way for Congress to avoid a government shutdown in the coming months, it does not fully address the twin issues of Congressional gridlock and a continuing austere budget environment.
What the deal does:
- Adds $80 billion to discretionary spending over the next two years. The new money will be allocated evenly each year between defense and non-defense funding, with a total of $50 million in sequestration relief earmarked for 2016 and the remaining $30 million for 2017. The deal effectively suspends 90 percent of sequestration cuts for 2016 and eliminates 60 percent of cuts for 2017. Though details remain to be worked out, this could mean additional money going to agencies within the Department of Health and Human Services.
- Raises the debt limit until March 2017. In recent years, the periodic need to raise the debt limit in order to continue paying the country’s bills has served as a flashpoint for fiscal conservatives who have threatened to block the increase if it is not accompanied by major new spending cuts. With another debt ceiling deadline approaching on November 3, this agreement averts any potentially catastrophic debt defaults through the end of the Obama Administration in 2017. This should aid the smooth functioning of government for the next 18 months.
- Makes structural changes to Social Security and Medicare. In January, the House approved a small provision that would prohibit routine transfers between the Social Security retirement trust fund and the Social Security Disability Insurance (SSDI) trust fund, setting the stage for an estimated 19% cut in SSDI benefits at the end of 2016. Today’s budget deal would eliminate this provision and allow for the transfer of funds to keep SSDI solvent through 2022. In Medicare, the deal staves off an estimated 50 percent increase in Part B premiums for millions of beneficiaries. Instead, premiums will rise by approximately 20 percent. For the remaining 70 percent of Part B beneficiaries, premiums will remain frozen in 2016.
While this deal is a step in the right direction, Congress is not out of the fiscal woods yet. Legislators still face major appropriations hurdles in the weeks ahead, with important ramifications for federally funded health and social services programs.
What the deal does NOT do:
- It does not avoid a government shutdown. House and Senate appropriators must still approve all appropriations bills prior to the December 11 deadline when the continuing resolution that is currently funding the government will run out. It is expected that legislators will work to pass an omnibus appropriations package as opposed to individual spending bills. However, this process could be stalled or complicated by individual policy amendments that were included in either draft or committee-approved versions of the appropriations bills. In order for the President to approve funding legislation, the Senate and House appropriations packages must be identical.
- It does not reinstate pre-sequestration funding levels. The Budget Control Act of 2011 established caps on discretionary spending, forcing cuts of over $1 trillion dollars from the federal budget over ten years beginning in 2013. Even with the additional $80 billion in discretionary funding over the next two years, government spending is still nearing an all-time low for discretionary programs. In 2016, discretionary programming will account for just 6.2 percent of GDP – the lowest level in decades.
- It does not ease Washington gridlock. This is still a tight fiscal climate. Approving additional programming and authorizing new money will be difficult to achieve. As the Obama Administration enters its final year, it is important for advocates to remain steadfast in efforts to increase the discretionary budget caps and fully end sequestration.
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