Two-Year Budget Deal Proposed

October 28, 2015

pic-capital-capitolLate on Oct. 26, the White House and Congressional leaders reached a two-year bipartisan budget deal that would raise the Budget Control Act caps by $80 billion, increase the government’s borrowing authority needed to prevent a shutdown, and offset higher discretionary spending through the Strategic Petroleum Reserve, make changes to agricultural programs and other spending cuts and revenue increases.

Released by the House Rules Committee, the measure, known as the Bipartisan Budget Act of 2015, would raise the discretionary spending by $50 billion in fiscal year 2016 and $30 billion in 2017. The language also includes a suspension of the debt limit until March 15, 2017. According to Treasury Secretary Jacob Lew, Congress needs to act before Nov. 3 to extend the government’s borrowing authority and avoid a potential default on the country’s financial obligations.

The discretionary spending increases are evenly split between defense and non-defense programs and would raise the fiscal 2016 defense cap to $548.1 billion from $523 billion and the non-defense cap to $518.5 billion from $493.5 billion. While it would raise the discretionary caps, the deal would partially pay for that by extending the sequester on Medicare and certain other mandatory spending programs by one year, through fiscal 2025.

The agreement also provides $73.5 billion for Overseas Contingency Operations in fiscal 2016 and the same amount in 2017, with most of the funds expected to be used by the Pentagon. That matches the $74 billion in war funds that were available in fiscal 2015, and is about $16 billion a year more than the $58 billion President Barack Obama had requested for 2016.

Other provisions included in the deal would repeal a requirement in the Patient Protection Affordable Care Act (PPACA) for larger employers to automatically enroll their employees in health care plans. According to the Congressional Budget Office (CBO), the health care title would reduce direct spending over a decade by $6.2 billion and reduce revenues by $12.2 billion. The package also includes a series of changes aimed at preventing the exhaustion of the Social Security disability insurance trust fund late next year, including a reallocation of payroll tax revenue between the disability fund and main Social Security fund.

The increased spending would be offset by a variety of spending cuts and revenue increases, including selling crude oil from the Strategic Petroleum Reserve at the rate of 5 million barrels a year starting in fiscal 2018, rising to 10 million barrels from 2023 through 2025.

Procedurally, lawmakers smoothed the path for the legislation by attaching it to a House tax bill (H.R. 1314) that became the Senate’s vehicle for a trade package. That means the bill might pass faster because it would not be subject to a motion to proceed in the Senate, since it already passed in that chamber.

Please click here to read the discussion draft.

Please click here to read a section-by-section summary.

Please click here to read the House amendment to H.R. 1314.