Yesterday, the Senate passed a procedural vote on the Ryan-Murray budget compromise by a vote of 67-33. All 33 votes in opposition came from Republican Senators, with 12 breaking away from their peers and voting in favor. The Senate Republican opposition was a stark contrast to the House of Representatives vote on the bill, which had approximately equal support from Republicans and Democrats.
Senator Rob Portman (R-OH), former director of the Office of Management and Budget, was one of the twelve Senate Republicans to vote in favor. Although he acknowledged the agreement was less than ideal, he said, “I support the bipartisan budget agreement because it takes modest steps to reduce the deficit without raising taxes, relieves the sequester’s impact on our national security, and prevents another government shutdown.” Senate Majority Leader Harry Reid (D-NV) concurred, stating, “Although neither side got everything it wanted from this agreement, this legislation should help break a terrible cycle of governing by crisis.”
The Senate is expected to give final approval to the bill as early as tomorrow, and President Obama has indicated that he will sign the bill into law.
Politically, the Ryan-Murray budget deal is as much as can be expected from a divided government. Although entitlement reform is needed, and soon, to reduce the public debt, elected officials’ positions are too far apart to achieve any meaningful changes in the current Congress. Despite the lack of serious entitlement reform, the Ryan-Murray budget compromise is notable for the following reasons:
It keeps the government open, but does not completely end budget uncertainty. Prior to the agreement, government funding had been scheduled to run out on January 15th. The budget deal authorizes government spending for an additional two years, ending a two-and-a-half year run of federal budget uncertainty. However, the deal does not alter the debt ceiling, which is currently suspended until February 7th, 2014. The debt ceiling will certainly be a critical issue in 2014, but it is unclear how willing House Republicans will be to put up a big fight after the October government shutdown.
It gets rid of sequestration cuts, but is still a long-term spending cut. Unfortunately, the deal increases government spending in 2014 by $45 billion and by $20 billion in 2015. An outsized portion of the spending increases goes to national defense, which receives half of the spending increases each year. On the other hand, the deal creates new sequestration budget cuts in 2022 and 2023 that will limit spending by $22 billion. The spending caps in 2016-2021 remain unchanged. Overall, the deficit will be reduced by just $23 billion, only a small portion of what is needed to balance the federal budget.
The ten-year scoring makes the cuts all smoke and mirrors. Spending increases now, funded by revenue increases in the future, which can be altered. Just as the sequestration was moderated for 2014 and 2015, so it can be changed for 2022 and 2023. With Congress, all that is certain is spending for the current fiscal year.
It increases revenue for the federal government. Besides some alterations to government employee pension plans, the additional revenue in the plan comes by doubling a fee on airline tickets. The fee is only $5.60 per one-way trip, but it funds the unpopular and inefficient Transportation Security Administration, which would be better off operated by the private sector. While the budget steers clear of altering any taxes, on Sunday Rep. Paul Ryan (R-WI) said the House Ways and Means Committee plans to bring up tax reform in the first quarter of 2014.
Overall, the deal largely maintains the status quo. The spending increases in the next two years are unfortunate, but only increase the size of government by roughly one percent. Alternatively, the $23 billion deficit reduction over ten years, if achieved, is less than three percent of the total budget deficit. The addition of future sequestration cuts showcases a long-term commitment to limiting the growth of government, but the move is largely symbolic since future Congresses will easily be able to alter those cuts. Future Congresses will exist in political and economic environments different than today’s and will be expected to change future budget plans.
The biggest disappointment of the deal is that it fails to reduce entitlement spending, which comprises 60 percent of federal spending and will only grow with time.
America keeps electing legislators who cry foul at even the slightest spending cuts, like the ones shown above. For meaningful change, the public needs to accept that the current fiscal path is unsustainable and can only end in economic misery. Let us hope the next Congress is better able to make the reasonable reforms that will right America’s fiscal ship.
Jason Russell is a research associate at the Manhattan Institute for Policy Research. You can follow him on Twitter here.
