Obama Locks Down the Budget Deal: Cue the Debt Ceiling Debate
“It’s probably too early to declare an outbreak of bipartisanship,” said President Barack Obama at a December 20 news conference, “but it’s also fair to say that we’re not condemned to endless gridlock.”
Obama was speaking about a bipartisan budget compromise that was proposed by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.) earlier in the month, a deal that made a fairly speedy trek through both houses of Congress. The president signed the measure into law on Thursday, effectively ending, for the time being, the destructive cycle of stopgap spending measures that have characterized fiscal policy over the past few years.
By most measures, the new deal is modest. The provisions are so bland that they don’t offend most lawmakers, but they also don’t excite anyone, either. The deal provides for $63 billion worth of relief from the sequester over two years ($45 billion in fiscal 2014 and $18 billion in fiscal 2015), split evenly between military and domestic programs. This is something that appeals to Democrats and that many Republicans can tolerate.
The deal is seasoned with between $20 billion and $23 billion in additional deficit reduction spread over 10 years and extends a 2 percent cut to Medicare providers. The federal fiscal 2014 discretionary spending level would be set at $1.012 trillion and at $1.014 trillion for fiscal 2015.
The sequester has often been criticized as a blunt tool, and the proposal on the table now is much more refined. Changes to federal retirement programs, for example, will only impact new hires as opposed to existing personnel, and changes to military benefits won’t affect the elderly or disabled. The deal also seeks to increase revenue by increasing the fees the Transportation Security Administration charges airports and the rate charged to companies to insure their pension benefits.
What the deal does not do, though, is address the issue of the debt ceiling. Treasury Secretary Jack Lew has once again warned Congress that the government is approaching the statutory debt limit, which was suspended through February 7 as part of the stopgap deal that ended the partial government shutdown in October. Lew told Congress that if legislation is not passed before this deadline, the Treasury could undertake extraordinary financing measures that would last just a few weeks, until late February or early March.
These deadlines will likely find their way onto doomsday countdown clocks once again as Republican lawmakers such as Rep. Ryan, budget czar of the GOP, and Senate Minority Leader Mitch McConnell (R-Ky.) signal that they will seek concessions from the Democratic Party in exchange for raising the debt limit. Obama, meanwhile, has reiterated that he will not negotiate on the nation’s borrowing authority.