Tuesday, December 31, 2013

Bipartisan Budget Act for FY14-15 Approved in Congress

On December 18, 2013, the US House and Senate passed the Bipartisan Budget Act, a two-year budget agreement that will undo at least some of the impending sequestration cuts, and will prevent the government from shutting down again on January 15.  As part of the agreement, Republicans were able to say that they did not raise taxes, and that the end result would be to reduce the deficit some more.  Democrats pointed to the fact that they prevented further cuts to programs like Social Security, Medicaid, or SNAP/food stamps. 

However, Congress refused to include the renewal of the Emergency Unemployment Compensation (EUC) program despite the fact that the number of people out of work for more than six months rose in November – it was higher than in September or October. This federally funded unemployment insurance for the long-term jobless who exhaust their state benefits expired on December 28th.  Between Christmas and New Year’s, 1.3 million people will lose benefits, which average $260 per week.  If Congress does not act to re-start the program, another 3.6 million people will lose access to benefits by the end of 2014.

The budget agreement also sets appropriations totals for FY 2014 (the current fiscal year) and FY 2015.  It changes the deficit reduction law by increasing the amounts that can be spent in those two years by $63 billion.  In FY 2014, the budget the House voted for will enable domestic appropriations to be $22.4 billion more than was spent in the previous year.  That will make it possible to restore some of the lost services caused by sequestration in FY 2013 in programs such as Head Start, rental vouchers, meals for seniors, and many other areas.
The sequestration cuts are not eliminated, but instead of $109 billion a year cuts to the Pentagon and domestic/international appropriations they will be $64.6 billion in FY 2014 and $90.9 billion in FY 2015.  The budget agreement does not do anything to reduce the sequester cuts in FYs 2016 – 2021, which will revert to $109 billion a year unless Congress takes further action.  In fact, in order to pay for the modest reduction in cuts to appropriations, the budget plan extends cuts to mandatory programs (prominently Medicare) for two additional years.
By setting appropriations totals at $1,012.2 billion in FY 2014 and $1,013.6 billion in FY 2015, the budget allows the House and Senate Appropriations Committees to determine program-by-program spending levels. The appropriators will have to assemble an Omnibus spending bill (one that combines all areas of discretionary (appropriated) spending, instead of passing separate appropriations bills) so that it can be voted on by Congress before January 15, when the current temporary funding measure runs out.
The budget provides nearly $45 billion more in FY 2014 for appropriations, divided equally between defense and domestic programs.  In FY 2015, a little more than $18 billion is added, for a total of $63 billion.  The plan saves about $85 billion through FY 2023, thereby providing another $22 billion in deficit reduction.
In addition, the House added a three-month suspension of a long-avoided reduction in payment rates to physicians under Medicare, and also extended the Transitional Medicaid program (for low-income families that leave Temporary Assistance for Needy Families for employment), and the Qualifying Individual (QI) program, which assists near-poor people who qualify for Medicare by using Medicaid funds to pay for their Medicare Part B premiums.