Wednesday, December 11, 2013

Budget: Deal or No Deal — Not Pretty, Workable, or Not

Ryan-Murray Budget Deal

Update (December 12, 2013): The House of Representatives passes the “2-year budget deal” with huge bi-partisan vote: 

Yea Votes — Total: 332
GOP: 169
Dem: 163 

Nay Votes — Total: 94
GOP:  63DEM: 31 

Highlights from Washington Post: “The Senate is poised to pass the budget and defense bills next week. House and Senate leaders say that votes on a new Farm Bill will be held after Congress returns to Washington in early January 2014. The budget deal appeared to mark a significant shift by House Republicans away from the uncompromising confrontation of recent years fueled by tea party-aligned politicians and outside conservative advocacy groups. After multiple standoffs and threatened defaults and one actual shutdown, polls show that the Republican brand has been badly damaged among voters, and even some of the most conservative Republicans said they were ready for a breather.” 

Ho, ho, ho...

Original post follows from here. 

Big news, big deal, or not??? We are about to find out. The finer points of the "deal" just agreed to between Sen. Patty Murray (D-WA) and Rep. Paul Ryan (R-WI). Notes from this article (my editing for this posting follows). Other articles related to the “deal” are here; here; and here (mostly right wing opposition) – FYI. 

The so-called Ryan-Murray Budget Deal (deal hammered out by Sen. Patty Murray (D-WA) and Rep. Paul Ryan (R-WI) and just announced) for implementation in October is now the hot seat as it were.

The, however, still has to be passed by the House and Senate and then implemented by appropriations committees by January 15, 2014 and then signed by the President. There are many things we need to know about that “deal” and what it means. Key points follow:

1.  It increases spending levels to partially undo sequestration implemented before and kinda stops or slows down those cuts that are set to take place at the beginning of the year. Many say those cuts, if allowed would bring more damage than they did this full year of those mandated and automatic cuts. This deal partially repeals those cuts for fiscal years 2014 and 2015.

2.  Under sequestration, discretionary spending would have been capped at $967 billion next year. But, with this “deal” it would instead be set at $1.012 trillion next year, and then $1.014 trillion in 2015. That capped amount includes $63 billion in relief from sequestration split evenly between defense and non-defense programs, setting defense discretionary spending for 2014 at $520.5 billion, or a $2 billion increase over last year, and non-defense spending at $491.8 billion, a $22 billion increase.  Such a funding level would mean “nearly erasing” sequestration cuts for the Pentagon, according to the New York Times.

3.  The deal also extends a 2 percent cut to Medicare from sequestration, which should alleviate the cuts to other non-defense programs.

4.  The deal, however, does not appear to address the cuts that ravaged many programs this year. Examples:

a.  The First Five Years Fund program director says, “While the deal addresses some future impacts of sequestration on Head Start, it can’t do anything to undo the damage to the 57,000 young children who were deprived of the opportunity to attend a Head Start program due to sequestration.”

b.  Other people were kicked out of programs, including Meals on Wheels, Section 8 housing voucher assistance, and homelessness assistance. Some schools had to close and some scientists had to halt their research projects or fire staff.

5.  The “deal” does raise raise some revenues as an offset, but none through the tax code: But, it does raise $65 billion in additional revenue to offset the higher spending levels that ease sequestration, but none of it comes through higher taxes. Instead, the new revenues come from $12.6 billion in higher security fees for air travelers, $8 billion from having federal workers pay higher premiums for private pensions, $6 billion in lower payments to student loan collectors, and $3 billion in savings from not completely refilling the strategic petroleum reserves. 

6.  Higher pension payments would be split evenly between military retirees, who would see lower cost of living increases for those between age 40 and 62, and civilian workers who start after the end of the year – who would have to contribute 1.3 percent more to their retirement funds. The Washington Post reports that current federal workers wouldn’t be affected.

7.  The extension of the 2 percent cut to Medicare providers, which will last through 2023, would also bring in revenue. In all, the agreement would reduce the deficit by between $20 and $23 billion.

8.  The “deal” avoids one crisis but not another. It avoids another government shutdown early next year by funding the government through 2015. But it doesn’t address the debt limit, which will have to be raised sometime in late February or March. The agreement to end the government shutdown suspended the debt limit until February 7. Republicans have repeatedly pushed the government to the brink of crisis to made a variety of demands.

Thus that leaves some issues unresolved:

a.  Extension of the unemployment benefits: Democrats had suggested they might push to include that but it does not show up in the Ryan-Murray plan.

a.  Without Congressional action, 1.3 million people who have been out of work for about six months or longer will abruptly lose unemployment insurance by the end of the year. The states cut off benefits around 26 weeks, so the federal government has reauthorized a program to extend them past that point 11 times.

b.  A failure to extend the benefits won’t just hurt those who rely on them, but will also cost the economy as many as 240,000 jobs and 0.4 percent of GDP.

c.  Anyone hoping for a grand bargain will have to look to the future for hope of cutting or reforming entitlement programs like Social Security and or Medicare and for a comprehensive overhaul of the tax code.

d.  Congress still has to resolve a fight over the farm bill and how much they want to cut the Supplemental Nutrition Assistance Program, or food stamps, by the end of year deadline.

This deal’s future is not certain since it has to pass both the House and Senate, with the House expected to take it up first. But it’s not clear how it will fare.  Some House Republicans had written a letter to their leadership ahead of the deal urging them to keep sequestration in place, and in the Senate Marco Rubio (R-FL) has already come out against the deal.  A handful of other Republicans have previously voiced their support for sequestration.

Additionally, the deal was also condemned by conservative groups such as the Heritage Foundation and Americans for Prosperity.

Gosh, who would have expected that those two groups would be against the "deal" (huge smile included here). 

Stay tuned. The worst is yet to come, believe it (read the original article for the full text and not my editing for refinement).

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