Two-year budget deal emerges between GOP Congress, White House; Update: WH to Congress: Let's pass this thing, mm-kay?

The timing on this seems a bit … curious, no? With Paul Ryan apparently ready to accept the mantle of House Speaker, John Boehner has decided to take care of budgetary business before he leaves. And not just for FY2016, but also for FY2017 as well:


After five years of bitter clashes, Republican congressional leaders and President Obama on Monday night appeared to settle their last budget fight by reaching a tentative deal that would modestly increase spending over the next two years, cut some social programs, and raise the federal borrowing limit.

The accord, which must be approved by the House and the Senate, would avert a potentially cataclysmic default on the government’s debt and dispenses with perhaps the most divisive issue in the capital just before Speaker John A. Boehner is expected to turn over his gavel to Representative Paul D. Ryan of Wisconsin. …

The $80 billion increase amounts to little more than 1 percent per year of the nearly $4 trillion annual federal budget, but carries the politically charged significance of breaking through agreed-upon spending caps that Republicans had praised as a rare display of responsible cost-control and Democrats criticized as a wrongheaded drag on economic growth.

Republicans had wanted to end the sequester on defense spending, while Democrats demanded increases in social-program spending. Each side got what they wanted — more spending:

The bill would set spending levels through September of 2017 in an effort to return to the regular government funding process, a deal aides say would raise the spending caps set in place in 2011 that would result in deep cuts to both defense and non-defense spending, called sequestration.

This deal would provide $80 billion in sequester relief — $50 billion the first year and $30 billion in the second equally divided between defense and non-defense spending.


There also appears to be an even-up swap on entitlement reforms. The GOP got Social Security reform to extend the viability of the program, while Democrats got to stop a big spike in Medicare insurance premiums that would have reflected poorly on their health-care reform over the past five years:

The deal is likely going to need Democratic votes to pass the House, but some moderate Republicans, defense hawks and appropriators will likely find many parts of the deal to their liking. The bipartisan agreement would include long-term entitlement reforms to the Social Security Disability Insurance (SSDI) program — the first major reform to Social Security since 1983.

It also prevents a spike in Medicare B premiums for millions of seniors, a source familiar with the negotiations said. House Democratic Leader Nancy Pelosi, D-CA, has been advocating for a change to this program.

The decision to link both remaining fiscal years of the Obama administration in a deal with an outgoing Speaker already has conservatives crying foul. Heritage Action, the political action fund of the Heritage Foundation, issued a statement early this morning that derided an agreement “brokered by a lame duck speaker and a lame duck president.  It represents the very worst of Washington – a last minute deal that increases spending and debt under the auspices of fiscal responsibility.”


In the Senate, John McCain hailed the deal for its increased defense spending, but conservative Jeff Sessions had a much different reaction:

Under normal circumstances, in a situation where leadership would be expected to remain static, this would be exactly the kind of Solomonic baby-splitting that takes place in normal budgeting cycles where power is split between Capitol Hill and the White House. What makes this different — and suspicious — are the unusual circumstances of leadership and the scope of this deal.

Why two years rather than one? Biennial budgeting may have its benefits, but Congress doesn’t operate on that basis and no one had been demanding one in this particular instance prior to this announcement. It’s not that it looks like an attempt to play keep-away from House conservatives on budget issues until FY2018. It’s that it obviously is an attempt to play keep-away from House conservatives on budget issues until FY2018. That, by the way, includes incoming House Speaker Paul Ryan, who will not be able to preside over any budget resolutions on spending for the rest of this session. The Freedom Caucus, after having been mollified into accepting Ryan as a consensus choice for Speaker, might start having some second thoughts.


That’s not to say that Ryan will not have an impact on budgeting. Resolutions provide spending frameworks, into which appropriation bills have to later fit. There will still be fights over specific appropriations, and perhaps even a showdown or two with the White House. However, the fight to keep spending capped has been conceded for the next two years, which will make fiscal conservatives even less likely to trust GOP leadership in the future. Don’t be surprised if this extends the populist demand for outsiders in the presidential race — at least in the Republican primary.

Update: The White House didn’t waste much time in pressing for passage:

A White House official said the deal accomplishes its central goal of lifting spending caps, known as sequestration, while shielding Social Security and Medicare beneficiaries from “harmful cuts.”

“We urge members of Congress from both parties to take the next step and pass a budget based on this agreement,” the official said.

“It provides substantial relief from harmful spending cuts, and it does so equally on the defense and non-defense sides of the budget,” the official added. “It’s a responsible agreement that is paid for in a balanced way by ensuring that hedge funds and private equity firms pay the taxes they owe and by cutting billions in wasteful spending.”

They budget pact would extend the debt ceiling to March 2017 and raise budget caps by $112 billion over the next two years.


Uh … wasn’t that supposed to be $80 billion? No matter; we know what this is, and now all we’re doing is haggling over the price.

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