Working Over the Holidays

Following the October government shutdown, lawmakers from the House and Senate met in conference to hammer out a budget agreement in the hopes that future budget gridlock could be avoided.  After weeks of negotiations, it became clear that most of the power at the table rested with the House and Senate Budget Committee Chairs: Representative Paul Ryan (R-WI) and Senator Patty Murray (D-WA).  Finally, on December 10, Representative Ryan and Senator Murray announced that they had reached an agreement on a budget deal for fiscal years 2014 and 2015.  The agreement, the product of what each lawmaker glowingly referred to as "tough negotiating" by his or her counterpart, would avoid another government shutdown until at least 2015 (after the mid-term elections ) and would partially repeal some of the sequestration cuts set to take effect next year and the year after.  On December 12, the House passed the bill 332-94 and on December 18, the Senate passed the bill 64-36.  President Obama signed the measure into law n Hawaii, while on vacation, on December 26.

President Obama praised the legislation for unwinding some of the "damaging sequester cuts that have harmed students and seniors and acted as headwinds our businesses had to fight."

Under the Budget Control Act, which resolved the last "fiscal cliff" episode, discretionary spending would have been capped at $967 billion next year.  Under the next agreement, that level is instead set at $1.012 trillion (splitting the difference between the top line spending figures proposed in the House and Senate's respective budget resolutions).  The deal includes $63 billion in relief from sequestration, split evenly between defense and non-defense programs, setting non-defense spending fro FY 2014 at $491.8 billion (a roughly $22 billion increase over this year's cap of $469.3 billion).  The deal also extends a 2% sequestration cut to Medicare, which should alleviate cuts to other non-defense programs.

Part of what will make this deal palatable to conservatives in Congress is that it achieves deficit reduction without raising taxes.  It does so by imposing fees on airlines passengers, increasing the retirement contributions of newly hired federal workers beginning on January 1, 2014, reducing the cost of living adjustments for military retirees between the ages of 40 and 62, and extending Medicare provider sequestration for two years beyond that currently scheduled by the Budget Control Act.

In the President's official statement, he called the agreement a "good first step away from the crisis-driven decision-making that has only served to act as a drag on our economy," but cautioned that there is much more work to do.  Now that Congress has agreed on the top line spending figures for the next two years, the next challenge is actually funding the government.  What looks most likely for the remainder of Fiscal Year 2014 is an Omnibus Appropriations bill that addresses all spending programs that would otherwise be covered by the 12 stand-alone Appropriations subcommittees.  Given the highly contentious nature of some of the issues that fall under the purview of the Labor, Health and Human Services Appropriations Subcommittee (including the Affordable Care Act - "Obamacare"), it appears unlikely that there will be a traditional comprehensive Labor-HHS-Education appropriations bill.  Instead, there could be some Labor-HHS anomalies and a "freeze" for most accounts.  This arrangement could well result in increased funding for some programs, but will be unlike the appropriations process for other categories.

Although the Bipartisan Budget Agreement has been hailed as a compromise that will allow lawmakers to finally stop governing by crisis for at least two years, there remain two hurdles to clear before this praise becomes entirely warranted:

• The Continuing Resolution that reopened the government back in October is set to expire on January 15.  This means that the appropriations legislation, in whatever form it takes, must be passed by then in order to avoid another government shutdown;
• The temporary suspension of the statutory debt limit expires on February 7.  This means, depending on which economic projection you look at, Congress will have to vote to raise the debt ceiling again some time between between March and June or risk the United States defaulting on its debt.

There have been reports that Appropriations Committee staffers have been working through the holiday recess in order to have legislation ready for consideration when lawmakers return to Washington.

Hopefully, with the appropriations hurdle cleared by mid-January, Congress will be able to turns its attention to the debt ceiling and finally, truly, be able to stop governing by crisis.

Gearing Up for a Sit Down

Two-and-a-half weeks after a two-and-a-half week government shutdown - the first government shutdown since the 1990s - everything is just about back to normal on Capitol Hill.  Normalcy these days, of course, means that not a great deal is getting done legislatively.  But at least federal workers around the country are receiving their paychecks on time as party leaders in both chambers work in conference to negotiate an actual budget for Fiscal Year 2014.

The Eleventh Hour Agreement that ended the October shutdown created a number of important dates on legislators' calendars:  temporary debt limit cushion will expire on February 7; appropriations for fiscal 2014, funded at current sequester levels, is set to expire January 15; the conferees - 22 Senators and 8 House Members - who are tasked with agreeing to a budget resolution by December 15, are scheduled to convene next on November 13.

The impetus for the last shutdown, to the extent that it can be determined and easily summarized, was the fundamental disagreement between Democrats and Republicans as to whether Obamacare was such a destructive government intrusion on the American people that they would be better off with the government simply not functioning at all.  After an Obamacare rollout that could charitably be described as "bumpy," the jury is still out with respect to the law and its current warts.

With Obamacare already wreaking havoc on unwitting patriots across America or helping to insure the tired, poor, huddled masses yearning to breathe free (depending on whom you ask), the next showdown will not be waged over efforts to delay the law.  Instead, the issues likely to keep lawmakers at work on nights and weekends this winter will be more traditional partisan budget battles: cutting spending versus increasing revenues, entitlement reform versus eliminating corporate tax loopholes, Fox versus MSNBC.

Come January, the stakes of failing to reach an agreement will be the same as they were in September, but for this round of possible brinksmanship, the Holy Grail of defunding or defending Obamacare is no longer on the table.  Furthermore, Standard and Poor's estimated that the October shutdown cost roughly $24 billion in the midst of an argument over how best to stabilize and grow an already fragile economy.  These facts, along with the pound of political flesh that each side was forced to pay to end the last shutdown, are reason for tempered optimism that this budget debate will at least be about the budget.

Then again, as Congress continues to boldly explore new frontiers of partisan rancor and gridlock, the only guarantee in this likely confrontation, no matter which side you fall on, is that any failure to reach an accord will be the other side's fault.

Getting Along to Get Along

After months of discord over a Fiscal Year 2014 budget, the merits of the Patient Protection and Affordable Care Act (a.k.a. Obamacare), and whether the U.S.'s self-imposed statutory borrowing limit should be raised in the face of the possibility of the first debt default in the nation's history, Congress was able to come to yet another Eleventh Hour Agreement that will keep the country running. . . 

As the end of Fiscal Year 2013 approached and Congress scrambled to reach a short-term spending bill to buy more time to negotiate a budget that could, for some reason, not be negotiated during the preceding six months, a group of House Members moved the goalposts.  No longer was the focus of the debate on the vastly disparate top level spending figures crafted by the respective Budget Committees of the House and Senate, but intend it was on whether it was worth funding the government at all if Obamacare remained the law of the land.  With Congress at an impasse and neither side showing any signs of backing down, Democrats and Republicans engaged in a 16-day staring contest, during which hundreds of thousand of federal workers were furloughed and a staggering number of vital public services were put on hold.

Finally, on the eve of what the Treasury Department predicted would be the last day that the Federal Government would be able to pay its bills, the contestants blinked.  After immeasurable handwringing and near-agreements, leaders of both parties in the Senate were able to broker a deal that the Speaker was willing to bring to the House floor for a vote.  After passing in the Senate overwhelmingly, the multifaceted resolution was sent to the House.  Although the risk of staining the full faith and credit of the United States was not enough to inspire unanimous approval, the bill eventually passed the House with broad bipartisan support and the President promptly signed it into law.

Included in the not-so-grand bargain: the government will be funded through January 15 at the House-proposed spending figure, the debt limit will be raised until February 7, members of the House and Senate will meet in conference to attempt to finally agree on a budget (with a December 13 deadline for agreement), and Kentucky will get a new dam.

Crises averted.  For now.  See you again in January.  And February.

Can't We All Just Get Along?

Congress enters the first weekend of the government shutdown with no clear end in sight and the statutory limit on the federal debt nearing breach.  Rumors of a grand bargain and internal talks between the Speaker and House Republicans have yet to yield any tangible plan.  In the House, Members have been asked to vote on piecemeal openings of "favored" programs--in fact, necessary programs that meet the needs of low-income families and children.  Every one of the, a party line vote.

There are good, rational ideas on both sides of the aisle and on both sides of the Dome.  But the conversation so far has been anything but substantive.  The weekend should not be considered a respite.  Federal employees who would be on the job this weekend will likely not be.  The Capitol police who sprang to Congress and the Public's defense in Thursday's tragic events were not getting paid for their work.  American taxpayers are not only starting to feel the pinch, but are legitimately starting to worry about the safety of our water, our food, our highways, our airways, and our children.  And what of those Americans who have, for so many reasons, counted on the government to help between starvation and hunger, and even between life and death?  We're talking about babies, seniors, and everyone in between.

Vice President Humphrey put it, "It was once said that the moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life, the sick, the needy and the handicapped."

It is time that our lawmakers see the light.

The day dawned, October 1, 2013, the first day of fiscal year 2014, and the Federal Government is shut down. An (under-)estimated 800,000 Federal employees have been told to stay home.  No job.  No pay.  And the expectation that if and when the dispute is resolved, lost pay will not be restored.  But, presumably, the work will get done.

 

And where will this end?  On Capitol Hill, most staff have been deemed "essential" for fear of press reports that our elected representatives may have employed "nonessential" staff at taxpayer expense. The House and Senate are no closer to agreement to defund, delay, or suspend Obamacare as the cost of enacting a sequester-level Continuing Resolution to keep the Federal Government running temporarily until November 15, December 15, sooner, later?  

 

The last chess play was the House attempt to "request a conference" on the CR -- to which Senate Majority Leader Reid responded "not with a gun to our head," while reminding lawmakers that for 6 months the House has refused to sit down at a conference on the competing House and Senate Budget Resolutions passed 6 months ago.

 

And prior to that: House Republicans proposed denying Members, their staff, and executive branch political employees an employer contribution for their employer-sponsored health insurance (a benefit in place since the 1960's).  The Senate rejected that proposal. too.  

 

A precursor to a mid-October expiration of the Federal Debt Limit?  At what cost?  Yesterday, in anticipation of the potential government shutdown, the stock market was down modestly (100-150 points).  "So, what will motivate folks to resolve this?" one Member asked us yesterday.  "A market drop of 2,000+ over a day or two?" we predicted.

 

Time will tell.  Long past the time we no longer have.

 

Let us hope that this shutdown does not cost lives or real harm.  Certainly, more than inconvenient now, particularly for Federal employees and their families.  But what of the people they serve? Where will the pain be felt first for this unfortunate game of budget chicken.

 

Maybe, at least, traffic will be a bit lighter.

 

Happy New Year (FY 2014)