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Budget Deal: Higher Fees , Some Spending Cut, No Govt. Shutdown



The chairs of the House and Senate Budget Committees, Rep. Paul Ryan, R-Wis., and Sen. Patty Murray, D-Wash., have announced a budget deal that will set spending levels for the next two years, preempting another government shutdown in January.
 

“We knew that if we forced each other to compromise a core principle, we would get nowhere. That’s why we decided to focus where the common ground is,”
- Rep. Paul Ryan (R- Wisconsin)

  “We have broken through the partisanship and the gridlock and reached a bipartisan budget compromise that will prevent a government shutdown in January,” 
-- Sen. Patty Murray (D-Wash)

The deal will replace mandatory, across-the-board cuts from sequestration with a different set of spending cuts and non-tax revenue. The agreement sets spending for the 2014 fiscal year at $1.012 trillion, including $63 billion of sequester relief and $85 billion of total savings. The result is about $23 billion in net deficit reduction.

Speaking to reporters Tuesday evening, Ryan and Murray both hailed the deal as a victory for bipartisanship and a critical step in setting Congress on a path back to normalcy rather than lurching from crisis to crisis.

 

A congressional budget agreement avoids a government shutdown in January and sets spending for defense and domestic programs. A look at the deal:

-Establishes overall discretionary spending for the current fiscal year at $1.012 trillion. The House budget level had been $967 billion and the Senate $1.058 trillion.

-Eases the automatic, across-the-board spending cuts by $63 billion over two years, split between defense and domestic programs. In the current fiscal year, defense would be set at a base budget of $520.5 billion and domestic programs at $491.8 billion.

-Working-age military retirees would see a change in their retirement benefits. The cost-of-living adjustment would be modified equal to inflation minus 1 percent. The changes would be phased in, with no change in the current year, a 0.25 percent reduction in December 2014 and a 0.5 percent decrease in December 2015. The change would not apply to retirees who left the service because of disability or injury. It would apply to retirees under the age of 62.

-Increases by 1.3 percentage points pension contributions paid by federal civilian workers hired after Jan. 1, 2014.

-Increases airline security fees from $5 to $10 for a typical round-trip ticket.

-Raises premiums paid by corporations to the Pension Benefit Guarantee Corp. to guarantee pension benefits.

-Eliminates a requirement that the Maritime Administration reimburse other federal agencies for additional costs associated with shipping food aid on U.S. ships.

-Cancels unobligated balances in Justice and Treasury Department funds that seize assets from criminals.

 

(AP) Top Republicans and President Barack Obama are lining up behind a modest but hard-won bipartisan budget agreement that seeks to replace a portion of tough spending cuts facing the Pentagon and domestic agencies.

The deal to ease those cuts for two years is aimed less at chipping away at the nation's $17 trillion national debt than it is at trying to help a dysfunctional Capitol stop lurching from crisis to crisis. It would set the stage for action in January on a $1 trillion-plus spending bill for the budget year that began in October.

The measure unveiled by House Budget Committee Chairman Paul Ryan, R-Wis., and his Senate counterpart, Patty Murray, D-Wash., blends $85 billion in spending cuts and revenue from new and extended fees - but no taxes or cuts to Medicare beneficiaries - to replace $63 billion in cuts to agency budgets over the coming two years.

The package would raise the Transportation Security Administration fee on a typical nonstop, round-trip airline ticket from $5 to $10; require newly hired federal workers to contribute 1.3 percentage points more of their salaries toward their pensions; and trim cost-of-living adjustments to the pensions of military retirees under the age of 62. Hospitals and other health care providers would have to absorb two additional years of a 2-percentage-point cut in their Medicare reimbursements.

The plan pales compared with earlier, failed attempts at a "grand bargain" that would trade tax hikes for structural curbs to ever-growing benefit programs like Medicare and Social Security. But it would at least bring some stability on the budget to an institution - Congress - whose approval ratings are in the gutter.

"Our deal puts jobs and economic growth first by rolling back ... harmful cuts to education, medical research, infrastructure investments and defense jobs for the next two years," Murray said.

Ryan is set to pitch the measure to skeptical conservatives at a closed-door GOP meeting on Wednesday. Democrats are set to discuss it as well, but the measure won an immediate endorsement from President Barack Obama if only tepid approval from top Capitol Hill Democrats like House Minority Leader Nancy Pelosi and Rep. Chris Van Hollen, ranking Democrat on the Budget Committee.

"Tonight's agreement represents a step toward enacting a budget for the American people and preventing further manufactured crises that only harm our economy, destroy jobs and weaken our middle class," Pelosi said in a statement.

"This agreement makes sure that we don't have a government shutdown scenario in January. It makes sure that we don't have another government shutdown scenario in October," Ryan said. "It makes sure that we don't lurch from crisis to crisis."

The budget deal was one of a few major measures left on Congress' to-do list near the end of a bruising year that has produced a partial government shutdown, a flirtation with a first-ever federal default and gridlock on Obama's agenda.

In a blow to Democrats, the agreement omits an extension of benefits for workers unemployed longer than 26 weeks. The program expires Dec. 28, when payments will be cut off for an estimated 1.3 million individuals. Senate Majority Leader Harry Reid, D-Nev., has agreed to stage a test vote on the measure this year, but it's not clear whether he'll get enough GOP support to advance it.

Aides predicted bipartisan approval in both houses in the next several days, despite grumbling from liberals over the omission of the unemployment extension and pressure from tea party-aligned groups that are pushing Republican conservatives to oppose the deal.

The agreement would increase the cap on so-called discretionary spending from the $967 billion mandated by Washington's failure to follow up a 2011 budget agreement with additional deficit cuts. The cap would rise to $1.012 trillion for the ongoing 2014 budget year and up to $1.014 trillion for 2015.

The relief to the Pentagon is relatively modest since the agency started out facing a cut of $20 billion below the harsh cuts it faced in 2013; the agreement replaces those cuts but doesn't bring the military's budget much above 2013 levels.

"While modest in scale, 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," said Speaker John Boehner, R-Ohio.

Even before the deal was announced, conservative organizations were attacking the proposal as a betrayal of a 2011 agreement that reduced government spending and is counted as among the main accomplishments of tea party-aligned Republicans who came to power earlier the same year in the House.

Sen. Marco Rubio, R-Fla., issued a statement opposing the measure and Senate Minority Leader Mitch McConnell, R-Ky., was seen as likely to oppose it as well. But key Democrats lined up behind Obama, especially after Ryan eased demands on making federal workers contribute more to their pensions.

"This agreement isn't perfect, but it is certainly better than no agreement at all," said Van Hollen, the top House Budget Committee Democrat.


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