The Budget Deal: A Needed Time Out From Washington’s Fiscal Tantrums

By :: December 11th, 2013

House and Senate budget negotiators have reached what can only be called a temporary fiscal truce—if they can convince their congressional colleagues to accept it.

House Budget Committee Chair Paul Ryan (R-WI) and Senate Budget Committee Chair Patty Murray (D-WA) hammered out a lowest-common-denominator deal that gives both parties two years of breathing room—and talking points.

The agreement reached last night doesn’t end the budget wars. Far from it. Democrats are furious that the measure does not extended long-term unemployment benefits that will expire after Dec. 31. Tea party Republicans are angry that the plan would boost spending and diminish the automatic spending cuts known as sequester.

And sometime next spring lawmakers will have the chance to lock horns again when the federal government reaches its borrowing limit. In what these days passes for an era of good feeling, however, congressional aides are optimistic lawmakers would finesse the debt limit as well.

Far from the Grand Bargain some lawmakers have been seeking, this bill is built on the narrowest strip of common ground on which the conservative Ryan and the liberal Murray could stand together.

It effectively would do nothing to reduce the deficit—the stated goal of many Republicans—or stimulate economic growth—the wish of many Democrats including President Obama.  It does not even mention taxes, much less take steps toward tax reform. Nor does it address Social Security or Medicare, except for a small future cut in Medicare payments to providers.

However, it would break—temporarily at least-- the cycle of fiscal brinksmanship that has largely paralyzed Washington. The constant threat of government shutdowns—and the reality of one last fall—created uncertainty in the business community, made it impossible for the Federal Reserve to begin slowing its bond buying program, and completely disrupted other policymaking. If this deal is accepted, there will be no more shutdowns until at least October, 2015.

The plan would also partially replace the sequester and return Congress to “regular order.” Appropriations committees could once again consider agency spending on the merits (or at least what passes for merit in Congress) rather stand aside and blindly watch good programs cut along with bad.

Skeptics might say the deal does nothing to address the nation’s long-term problems. And they’d be right. But this sort of truce is a necessary first step. It is what diplomats call a confidence-building measure. Or what parents call a time-out.

The best description of the agreement comes from my Tax Policy Center colleague Gene Steuerle. The other day, Gene described the pending deal this way to the Washington Post’s Lori Montgomery: “With this little package, we’re not going to climb out of the hole we’ve dug. All we’re doing is agreeing to stop throwing shovels at each other.”

And given what we’ve seen in Washington over the past few years, a stop to the shovel tossing is, in its way, a big step, if not a grand bargain.




  1. Michael Bindner  ::  4:38 pm on December 11th, 2013:

    Ending the sequester is a big deal, even if only temprorarily (and long enough for me to get back into the federal workforce). Sadly, this was a manufactured crisis. The Budget Control Act already contains spending caps that function as a Section 302 allocation for appropriations purposes. The only reason there was an obsession to pass a “budget” when one was already passed was because no one on the left was willing to call out Republicans who claimed the Senate had not passed a budget in years as either ignorant or demagogues. This deal stops such nonsense. While it is regretable that the debt limit and unemployment insurance are not dealt with here, it is a positive that the GOP formula on SNAP was also left out. UI and the debt can be dealt with later. Draconian food stamp cuts are hopefully off the table and will remain that way. The long term fix is, of course, both political and demographic. Obama fininishing his term will do away with those organized to oppose everything he does – and they will mostly die off anyway and may lose office on the House side next November due to how they are now perceived,. It is no surprise the Ryan mostly geeked. Had he shut everything down again voters would likely have noticed and not been happy.

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