Senate Passes Budget Deal; President Will Sign

The Senate voted this afternoon to approve the two-year budget agreement negotiated by Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA) that sets discretionary spending levels for fiscal 2014 and fiscal 2015 and partially replaces sequestration for those two years. The measure passed by a vote of 64-36, with only a simple majority of 51 votes needed for passage. The House voted overwhelmingly (332-94) to approve the bill (H J Res 59) last week before adjourning for the rest of 2013. While the deal is not a “grand bargain” and fails to address long-term federal budget issues, it provides increased certainty for states, localities and the private sector about federal spending over the next couple of years. The agreement raises discretionary spending by roughly $63 billion over the next two years, compared to the caps under the Budget Control Act (BCA) of 2011, increasing the fiscal 2014 spending limit from $967 billion to $1.012 trillion and the fiscal 2015 spending cap from $995 billion to $1.014 trillion. The overall spending limit increase evenly applies to defense and nondefense spending, and would prevent the need for another sequestration in mid-January for defense programs. The $1.012 trillion spending level for this fiscal year represents a compromise about halfway between the levels set earlier this year in the House and Senate budget resolutions, $967 billion and $1.058 trillion, respectively. Compared to final fiscal 2013 spending levels after sequestration, fiscal 2014 nondefense discretionary spending would see an increase of roughly $27 billion to a level of $492 billion under the agreement. The bill makes no adjustments to post-sequester discretionary spending limits for fiscal 2016-2021; the fiscal 2016 spending cap would remain $1.016 trillion under current law. The agreement leaves in place sequestration of non-exempt mandatory programs, and actually extends the sequester on mandatory spending for two additional years (fiscal 2022 and fiscal 2023) to achieve some savings. For more details on the contents of the budget agreement, see this previous Washington Report article, as well as this Federal Funds Information for States (FFIS) budget brief, available for subscribers.

President Obama is expected to quickly sign the bill into law. Congressional appropriators will then need to complete spending legislation, according to the budget deal framework, that can pass both the House and Senate and be enacted before the current fiscal 2014 continuing resolution (CR) expires on January 15, 2014. Top appropriators in the House and Senate hope to complete all 12 bills in time to meet this deadline and combine them into a full-year fiscal 2014 omnibus package. However, appropriators may need to use continuing resolutions to fund some of the most contentious spending bills, including Labor-Health and Human Services (HHS)-Education and Interior-Environment, if they are unable to reconcile the sharp differences between Democrats and Republicans in these policy areas. According to reports, top appropriators are already working to finalize their 302(b) allocations, which will determine the individual spending levels for each of the 12 appropriations bills.