President Signs Two-Year Budget Deal

November 4, 2015

pic-whitehouseOn Nov. 2, President Barack Obama signed a two-year budget agreement that raises the debt ceiling until March 2017 and lifts spending limits through September 2017. After weeks of secret negotiations between the White House and Congressional leaders, the 144-page deal was released and passed both chambers last week.

The Bipartisan Budget Act of 2015 (H.R. 1314) cleared the House on Oct. 29 by a vote of 266-167, with only 79 Republicans supporting it, in contrast to the 187 Democrats who favored the measure. The following day, on Oct. 30, the measure passed the Senate by a 64-35 vote. Similarly, the bill was supported by only 18 Republicans and 44 Democrats.

The budget agreement portion of the deal will lift the statutory caps on discretionary spending (known as the “sequester”) by $80 billion over two years –$50 billion for the remainder of fiscal year 2016 (which began on Oct. 1) and by $30 billion in fiscal year 2017. With the increase evenly split, the fiscal 2016 defense cap will rise to $548.1 billion while the nondefense cap will go up to $518.5 billion. The measure also provides an additional $32 billion in funding for Overseas Contingency Operations, evenly split between the two years and also divided equally between defense and nondefense.

The increases would be offset with a mix of unrelated measures, including increasing premiums paid by single-employer defined benefit plans to the Pension Benefit Guaranty Corporation, deferring required deductible pension contributions by certain employers, selling oil from the Strategic Petroleum Reserve, and implementing certain tax compliance measures.

The deal also suspends the $18.1 trillion debt limit until March 15, 2017. The Treasury Department had set Nov. 3 as the deadline for Congress to deal with the debt ceiling or risk a default.

While the agreement lifts spending caps put in place by a 2011 law, it does not fund the government. That is the next most pressing item on Congress’ agenda before the end of the year. Lawmakers will have to craft and pass a fiscal 2016 omnibus appropriations bill before Dec. 12, which will be based on the parameters of this new budget deal and incorporates funds into national security-related and domestic accounts.

 

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