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.