The measure unveiled by Ryan and Murray blends $85 billion in spending cuts and revenue from new and extended fees — but no taxes or cuts to Medicare beneficiaries — to replace a significant amount of the mandated 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.
House Majority Leader Eric Cantor, R-Va., said the measure will serve as a vehicle to delay a 24 percent cut in Medicare reimbursements to physicians that would otherwise take effect Jan. 1 The idea is to buy negotiators more time to try to permanently fix the problem, which dates to miscalculations enacted in a 1997 budget law.
The plan doesn’t attempt to resuscitate earlier attempts at an accommodation that would have traded 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.
The measure won an immediate endorsement from President Barack Obama, who called it a step in the right direction.
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,” Boehner said.
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.