The budget deal reached between congressional leaders and the White House late Monday seeks to settle all budgetary business until after the 2016 elections when a new president and Congress can begin the fiscal fighting anew.
Negotiators are selling the package as a trade-off between the domestic spending increases that Democrats wanted and the defense funding boosts and entitlement savings that Republicans desired. In addition, it would suspend the debt ceiling until March 2017, avoiding a possible disastrous default next week when the Treasury Department says the government’s borrowing authority will run out.
The $80 billion in additional discretionary spending for military and domestic programs included in the deal would be offset by a smorgasbord of spending cuts and revenue raisers that total $75.7 billion, according to the Congressional Budget Office.
The House is expected to vote on the bill Wednesday with the Senate taking it up the next day.
It appears to have the votes to get through both chambers, but House conservatives, in particular, have raised objections by casting doubt on the veracity of some of the offsets and objecting to how the deal was crafted in leadership offices and not by committees with the input of the rank-and-file.
Speaker John A. Boehner (R-Ohio), who will step down at the end of week, shrugged off these complaints on Tuesday with the insouciance of a man who knows this is the last budget battle he’ll have to wage.
“A bipartisan agreement in a town that isn’t known for a lot of bipartisanship, you’re going to see bricks flying from those that don’t like the fact that there’s a bipartisan agreement. But there is,” he told reporters. “It’s a solid agreement. And I told my colleagues there isn’t any reason why any member should vote against this.”
The bill isn’t all budget numbers. It would rename an area of the first floor on the House side of the Capitol as the Freedom Foyer.
What follows is a breakdown of what is in the deal.
New discretionary spending
The bill would boost discretionary spending by $80 billion over two years with an equal amount being set aside for domestic and military programs. Of this amount, $50 billion would be available in fiscal 2016 and $30 billion would be available in fiscal 2017. The House and Senate Appropriations committees would decide exactly how this money will be parceled out among the various agencies and federal programs.
Democrats highlighted that the agreement would lead to increased spending on health research, education, veterans and job training programs while Republican leaders focused their praise on the increased funding for the Pentagon, arguing it would allow the military more certainty as it makes budget decisions over the next two years.
Leaders also heralded the agreement to channel more spending through a war funding account, known as the Overseas Contingency Operations (OCO), which is not subject to the budget caps. This funding could be used for both military and non-defense programs. The deal would allow $74 billion to be spent through this fund in both fiscal 2016 and fiscal 2017. This is the same amount that was provided last year and is about $16 billion more than President Obama requested for fiscal 2016.
How the bill’s cost is offset and other policy changes in the deal
Republicans insisted that the bill’s cost be offset, while Democrats wanted some sweeteners added to the package, such as preventing a Medicare premium increase.
To achieve these goals, a variety of policy changes made their way into the legislation.
Sequester: To allow for the increased discretionary spending, the proposal would lift for two years the so-called sequester budget caps put in place by the 2011 Budget Control Act. To help offset this cost, the sequester savings targeting Medicare and other mandatory spending programs would be extended for two years and would run through 2025.
This section of the law would produce $14 billion in savings over 10 years and most of that would occur during the last three years, a point that will likely bother conservatives suspicious of budget cuts occurring that far into the future.
Health care: At the urging of Democrats, the bill would prevent an historic increase in premiums for some Medicare Part B beneficiaries for services such as outpatient hospital care and doctor visits. Monthly premiums would still go up for the 30 percent of Part B beneficiaries who are affected by the scheduled increase, which is roughly 15 million people, but by only $18 rather than the $54 increase that would occur if Congress doesn’t act. The cost of this provision would be offset by a $3 monthly surcharge on some beneficiaries that would begin next year.
The legislation would repeal a section of the Affordable Care Act, or Obamacare, that requires large employers to automatically enroll employees in a health care plan.
All of the policy changes included in the health-care title of the bill would produce $18.4 billion in deficit savings over 10 years, with $6.2 billion of that amount coming from budget cuts and $12.2 billion from increased revenue.
Strategic Petroleum Reserve: The bill would require the Energy Department to sell 58 million barrels of crude oil from the Strategic Petroleum Reserve from fiscal years 2018 through 2025. This would raise $5.1 billion over 10 years.
Spectrum auction: The Commerce Department would be required to auction off electromagnetic spectrum controlled by the federal government to the private sector. The government would have until 2024 to complete the sales, which are estimated to raise $4.4 billion over 10 years.
Social Security: To prevent a 20 percent across-the-board cut to Social Security Disability Insurance benefits set to take place next year, the bill would transfer some funding from the main Social Security fund while also reforming the disability program. Those cost-saving measures include allowing some recipients who can still work to receive partial payments while earning outside income and expanding a program requiring a second medical expert to weigh in on whether an applicant is truly disabled.
The deal also includes several other changes intended to root out waste and fraud in Social Security. All of the changes to the program included in the bill would produce $4.5 billion in savings over 10 years.
Tax compliance: The deal also uses new, tougher tax compliance requirements, including for business partnerships, that would raise $11 billion over 10 years.
Justice programs: The agreement would tap for savings the Justice Department’s Crime Victims Fund and Asset Forfeiture Fund by rescinding and “canceling” money in the accounts. This tactic has been used in the past to find budget savings and has been derided by some experts as a gimmick because it is more of a bookkeeping change than a decrease in actual spending. The bill also would increase the amount agencies can charge in civil penalty cases.
This section of the agreement would produce $3.6 billion in deficit savings over 10 years.
Pensions: The bill would increase the premiums companies running single-employer pension plans pay to the Pension Benefit Guaranty Corporation, which insures pensions when a private-sector plan goes bankrupt. All of the pension changes contained in the deal would produce $11.6 billion in deficit savings over 10 years.
Agriculture: A change to the federal crop insurance program would produce $3 billion in savings over 10 years.
The bill would suspend the debt limit through March 15, 2017, allowing the government to issue debt securities during that time to cover the cost of spending that goes beyond the amount of revenue collected. At the end of this period, the debt limit would be increased by however much was borrowed over this time frame.
Sources: Bill text, Congressional Budget Office, House Rules Committee, congressional aides and Congressional Quarterly.