Senate Reaches Bipartisan Deal with Sharp Spending Increases

The US Senate reached a 2-year budget deal that sharply increases defense spending and for a range of health care programs. The deal, which will boost the federal deficit and doesn’t deal protection of Dreamers, still must pass muster in the House and with President Trump, even though it doesn’t appear to provide funding for his border wall

The US Senate reached a 2-year budget deal that sharply increases defense spending and for a range of health care programs. The deal, which will boost the federal deficit and doesn’t deal protection of Dreamers, still must pass muster in the House and with President Trump, even though it doesn’t appear to provide funding for his border wall

[UPDATE: Early on Friday, February 9, the Senate passed a continuing resolution in effect until March 23 that authorizes spending levels contained in the bipartisan Senate budget deal. Later in the morning, the House passed the continuing resolution and President Trump signed it. The temporary government shutdown lasted only a few hours. Federal government employees reported to work as normal.]

 

The Senate reached a bipartisan budget deal that will boost federal spending by $300 million over the next two years and suspend the debt ceiling for one year, but without resolving immigration issues. The House and President Trump still must agree, which is not automatic.

House conservatives voiced concern about increased spending that will push up the federal deficit even further after GOP-backed tax-cut legislation late last year. House Democrats were furious the Senate deal didn’t include protection for Dreamers who may face deportation after Trump’s March 5 deadline. Speaker Paul Ryan said he believes the votes exist in the House to approve the Senate compromise.

There also may be some procedural issues slowing the vote in the Senate that could result in a temporary government shutdown scheduled for midnight tonight. And President Trump has yet to officially sign off on the deal, which doesn’t appear to include money for his border wall.

The biggest spending increase goes for defense – $80 billion in Fiscal Year 2018 and $85 billion in Fiscal Year 2019. Caps on non-defense discretionary spending would increase by $63 billion this year and $68 billion next year. Almost $90 billion is provided for disaster relief. There appears to be a $20 billion down payment on the Trump infrastructure package.

The increases give both political parties plenty to crow about and resolve a nagging budget issue that is a hangover of sequestration that went into effect in 2011.

If the Senate budget deal survives, congressional appropriators are expected to write an omnibus FY 2018 appropriations bill that moves up total spending from $1.065 billion allowed under current law to $1.208 trillion as provided in the Senate budget agreement.

The deal also includes some other significant provisions:

  • A one-year extension of expired tax breaks that were not included in the December 2017 tax reform bill, including the Alternative Fuels Tax Credit.
  • Four additional years of extension of the CHIP program after the six-year extension enacted last month runs out.
  • Two years of renewed funding at around $7 billion for community health centers, $6 billion for mental health treatment and opioid addiction and $2 billion in additional funding for the National Institutes of Health. Notably absent, however, was funding to shore up the Affordable Care Act, which was the concession promised to Maine Senator Susan Collins in return for her vote for the GOP tax cut. The deal does continue to delay any cuts to hospitals that serve a disproportionately high share of low-income patients.
  • Accelerated elimination of the “doughnut” in Medicare in pre-catastrophic care drug coverage and elimination of the controversial Medicare Payment Advisory Board. The limit on Medicare coverage for physical therapy would be permanently repealed.
  • $500 million to the National Health Service Corps and $363 million for the Teaching Health Center Graduate Medical Education program to encourage doctors to practice in underserved areas.
  • Creation of a new Joint Select Committee on Solvency of Multiemployer Pension Plans, to produce legislation fixing the Pension Benefit Guaranty Corporation by December 2018 with a guarantee that the bill will get a vote in the Senate under “fast track” procedures.
  • Creation of a new Joint Select Committee on Budget and Appropriations Process Reform, to produce legislation fixing the broken congressional budget process by December 2018 with a guarantee that the bill will get a vote in the Senate under “fast track” procedures.

An estimated $100 billion in “pay-fors” were included in the package to mitigate the effect of non-defense spending on the federal deficit. They include:

  • An extension of the portion of Transportation Security Administration aviation security fees that go towards deficit reduction into fiscal 2026 and 2027, estimated to total $1.64 billion in 2026 and $1.68 billion in 2027.
  • Selling oil from the Strategic Petroleum Reserve.
  • Taking money from the Federal Reserve’s surplus fund.
  • Extending sequestration of non-exempt mandatory programs (mostly Medicare) into fiscal 2026 and 2027.

    Joel Rubin is a partner and leader of CFM’s federal affairs team based in Washington, DC. He has worked on Capitol Hill and now represents Pacific Northwest interests in Congress and with federal agencies.