Budget Deal Emerges

Late Tuesday evening, House Budget Committee Chairman Paul Ryan (R-Wis.) and Senate Finance Committee Chairman Patty Murray (D-Wash.) announced a budget deal that would soften the sequester by adding back $63 billion in existing cuts over two years. The deal trims an additional $23 billion in long-term deficits. The two budget leaders reached the deal after compromising on federal pension cuts, which were settled on $6 billion for federal employees and $6 billion for military retirees for employees hired in 2014 or later. The offset package also includes increased aviation fees and higher premiums for companies whose pensions are backed by the Pension Benefit Guaranty Corporation. The lawmakers achieved an additional $28 billion in savings by extending sequester cuts to Medicare by two years, to 2023.

While the deal has detractors on both sides of the aisle, reports from closed-door meetings of both parties indicate that there will be enough bipartisan votes to pass the budget in the House, which is scheduled to vote on it Thursday before the House adjourns for the year.

The Senate plans to be in session one more week in December. With the strong support from Majority Leader Harry Reid (D-Nev.), the deal should have an easier time winning support from Democrats. While the budget crises of the past few years may be averted for the next 24 months, a smaller fight looms in February when Congress will have to vote on raising the debt ceiling. The ceiling is tentatively scheduled to expire February 7, 2014. Contact: Guido Zucconi