Budget Deal Heads for Passage by Limiting Scope to Easing Cuts – Businessweek

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Budget Deal Heads for Passage by Limiting Scope to Easing Cuts – Businessweekby wpjljron.Budget Deal Heads for Passage by Limiting Scope to Easing Cuts – BusinessweekA U.S. budget accord is on track to win passage in Congress largely because its most important accomplishment is pushing off automatic spending cuts that neither party likes. The two-year budget deal sidesteps lawmaker protests by not touching entitlement programs that Democrats want to protect or the corporate tax breaks Republicans favor. It also doesn’t […]

A U.S. budget accord is on track to
win passage in Congress largely because its most important
accomplishment is pushing off automatic spending cuts that
neither party likes.

The two-year budget deal sidesteps lawmaker protests by not
touching entitlement programs that Democrats want to protect or
the corporate tax breaks Republicans favor. It also doesn’t
raise the U.S. debt ceiling, setting up a potential fiscal
showdown after February.

The accord, which is set for a House vote today, may help
lawmakers repair their image after a 16-day government shutdown
and the least productive legislative record ever.

“This is better for Congress than it is for the country,”
said Stan Collender, managing director of Qorvis Communications
LLC in Washington and a former congressional appropriations
aide. “It doesn’t do anything about the budget.”

The deal by chief architects Senator Patty Murray and
Representative Paul Ryan to ease $63 billion in automatic
spending cuts — $40 billion in 2014 and about $20 billion in
2015 — is far from the grand bargain on taxes and spending that
previous budget negotiators sought.

The plan would set U.S. spending at about $1.01 trillion
for this fiscal year, higher than the $967 billion required in a
2011 budget plan. It cushions the military from a $19 billion
cut set for next month.

Bipartisan Support

The deal has the backing of House and Senate Democratic
leaders and top House Republicans. President Barack Obama’s
administration urged Congress to pass the plan, which he would
sign into law, White House spokesman Josh Earnest said yesterday
at a briefing.

While the agreement temporarily replaces some of the
automatic spending cuts to Pentagon and domestic programs, it’s
main objective is political — diffusing the hostility in
Congress after three years of spending disputes.

Ryan, a Wisconsin Republican, and Murray, a Washington
Democrat, said the deal would provide economic certainty by
establishing a bipartisan budget for the first time in four
years. It includes $23 billion in debt reduction on the nation’s
$17 trillion national debt.

“Paul Ryan executed what I think is a great deal, not only
for our party but for the people back home,” said
Representative Pete Sessions, a Texas Republican.

Negotiators considered items that each party wanted and
left them out in the end. The plan doesn’t include an extension
of expiring unemployment benefits for 1.3 million Americans that
Democrats pushed to include, and that Obama urged lawmakers to
pass.

Jobless Aid

Representative Chris Van Hollen, the top Democrat on the
House Budget Committee, said yesterday he wants to extend the
jobless aid as part of the budget agreement in exchange for
cutting direct U.S. payments to farmers. Republicans who control
the House have opposed continuing the expanded benefits.

The limited agreement seeks to end a cycle of spending
standoffs that culminated in the 16-day partial government
shutdown in October. It also may give Congress a chance to
advance other initiatives that have remained on the back burner
as Congress lurched from one stopgap spending bill to the next.

Lawmakers’ approval ratings have tumbled to their lowest
levels ever recorded by the Gallup Organization amid the regular
budget feuds.

Republicans who oppose the deal say it trades scheduled
spending cuts for future promises of austerity that may never
materialize and includes tax increases that masquerade as user
fees.

‘Recurring Theme’

“There is a recurring theme in Washington budget
negotiations,” Senator Rand Paul, a Kentucky Republican, said
yesterday. “It’s: ‘I’ll gladly pay you Tuesday for a hamburger
today.’ I think it’s a huge mistake to trade sequester cuts now,
for the promise of cuts later.”

Congressional leaders are predicting the legislation will
pass the House.

“I believe it’ll get a majority of the majority” of House
Republicans and a large number of Democratic votes,
Representative Darrell Issa, a California Republican, said
yesterday after a Capitol Hill briefing.

If the House passes the plan, the Senate will take it up
and is expected to clear it for Obama’s signature.

The alternative to passing the budget deal is for Congress
to allow the full $109 billion in across-the-board spending cuts
set for next year to pinch programs including scientific and
medical research. The Pentagon has warned that that an
additional $19 billion in defense cuts slated for January could
compromise national security.

Equal Pain

A 2011 budget plan that raised the debt ceiling established
the cuts as a hammer — with the threat of equal pain to
domestic and defense programs — to force a congressional panel
to reach a deal on taxes and entitlement spending. After it
failed, Congress allowed the first wave of cuts to primarily
affect domestic programs starting last March.

Groups that back limited government and the automatic
spending cuts such as Americans for Prosperity and Heritage
Action for America criticized the accord as a retreat from
policies enacted in a budget deal two years ago.

Club for Growth, which has intervened in Republican
primaries to support candidates who support less government
spending, said it would rate lawmakers seeking election in 2014
based on their budget votes.

Boehner’s Rebuke

House Speaker John Boehner lashed out at the groups for
criticizing the budget deal, in his most pointed public rebuke
of a wing of his party that has steered his agenda on fiscal
policy since the 2010 election.

“They’re using our members, and they’re using the American
people for their own goals, this is ridiculous,” said Boehner,
an Ohio Republican. “If you’re for more deficit reduction,
you’re for this agreement.”

Former Republican Senator Alan Simpson, who co-chaired a
national deficit commission in 2010, said the deal is
disappointing because it doesn’t address the nation’s fiscal
challenges on entitlement spending and rising health care costs.
At the same time, he said, it is heartening that budget leaders
from both parties could reach a fiscal agreement.

“It’s baby-step progress,” said Simpson, whose National
Commission on Fiscal Responsibility and Reform recommended $4
trillion in deficit reduction by 2020. “But at least for the
first time in recent memory the two parties are working
together.”

Federal Employees

The main components of the deal include raising
contributions that federal employees make to their retirement
plans and increasing premiums for pensions backed by the Pension
Benefit Guaranty Corp.

The final product mollified Democrats who said they were
concerned about effects on federal employees. It includes
pension payment increases for military workers to mitigate the
effects on other federal employees and requires that only newly
hired federal workers contribute more to their pension plans.

The agreement has a grab bag of obscure savings provisions,
with an emphasis on tightening eligibility criteria and
eliminating fraud and overpayments in programs including
unemployment insurance, Medicaid and benefits for federal
prisoners.

It also eliminates some programs including a 2005 natural
gas and petroleum resources research program and caps income
paid to federal contractors.

Republican leaders are selling the deal to their members by
emphasizing that it will reduce the deficit by an additional $20
billion largely from increased user charges. Those include
raising the security fees paid by airline passengers.

To contact the reporter on this story:
Heidi Przybyla in Washington at
[email protected]

To contact the editor responsible for this story:
Jodi Schneider at
[email protected]

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