Conference committee reports budget deal

Agreement will pay down but not eliminate sequester.

The House-Senate budget conference committee headed by Rep. Paul Ryan, R-Ohio, and Sen. Patty Murray, D-Wash., announced an agreement the evening of Dec. 10 that will allow for an increase in federal spending and for modest deficit reduction. As you may recall, the agreement that ended the 16-day federal government shutdown authorized this conference committee to set a top-line number — in other words, to determine whether the House budget, Senate budget or some figure in between, would govern how much the 13 appropriations committees have available to spend for fiscal year (FY) 2014. A primary reason that none of the spending bills have passed both chambers of Congress this year is lack of agreement on a budget. The conference committee opted to split the difference between the House- and Senate-passed top line numbers.

The $85 billion agreement, known as the Bipartisan Budget Agreement, or BBA, would partially repeal the sequester. It includes $63 billion that will reduce the size of the automatic cuts, and will prevent the $19 billion cut due to hit the Pentagon in January. The BBA will increase discretionary funding (that is, subject to annual appropriations) to around $1.012 trillion in FY 2014 and $1.015 trillion in 2015 up from FY 2013 post-sequestration funding of $987.5 billion. To offset the spending, the $63 billion would come from modest changes to several laws, including cuts to government contributions to federal worker pensions, higher security fees for the nation's airline passengers and cuts in future spending. Details can be found in a summary published by the conference committee.

The BBA would reduce the budget deficit by between $20 and $23 billion. It would ease the automatic spending cuts known as sequestration by $45 billion in 2014 and about $18 billion in 2015. The agreement replaces some but not all of the spending cuts due to take place: $64.6 billion in cuts would still take place in 2014 and $90.9 billion in 2015. The appropriations subcommittees would determine how the cuts, and new revenue, would be applied in each spending bill.

The BBA is scheduled for a vote in the House on Thursday, one day before that chamber recesses for the year. The Senate will vote next week. The agreement has been attacked by some conservative organizations, including the Club for Growth, for not including enough deficit reduction, and some Democrats are criticizing the deal because it does not stop the expiration of benefits for the long-term unemployed (those benefits will expire on Dec. 28). So issues remain on the table that could complicate the finalization of any agreement, but most observers expect both houses to approve the agreement.

In the coming days if the agreement is adopted, several of the FY 2014 appropriations bills will come up for a vote. Those bills will provide additional information about how research and education accounts will be impacted by the new top-line numbers. We at the Federal Budget Blog will continue to provide information about how research funding agencies will be affected. Bottom line — most agencies will have more money than last year, and all will have more certainty about their budgets for the next year and a half.