Budget passed by House eases cuts disliked by both parties

Debt Ceiling

It doesn’t raise the U.S. debt ceiling, setting up a potential fiscal showdown after borrowing authority lapses as soon as February.

“It doesn’t go as far as I’d like, but it’s a firm step in the right direction,” Ryan, a Wisconsin Republican, said in a statement after the vote.

The accord also spared doctors for three months from cuts in the Medicare payment rates set to start in January. The measure doesn’t extend emergency benefits for 1.3 million unemployed workers, an omission that frustrated Democrats, who say they plan to continue the fight when Congress returns in January from a holiday break.

Hoyer was among 32 Democrats, including Representatives John Conyers and Carl Levin of Michigan, Louise Slaughter of New York and Peter DeFazio of Oregon, who voted against the budget measure.

The budget was opposed by 62 House Republicans, a quarter of the caucus, including Representatives Michele Bachmann of Minnesota, Michael Burgess of Texas, Mick Mulvaney of South Carolina, Steve King of Iowa and Tim Huelskamp of Kansas.

Economy Certainty

Lawmakers and some economists said adopting a formal budget will provide some certainty to the U.S. economy after three years of spending feuds that led to a government shutdown, rattled investors and prompted a downgrade in the nation’s credit rating.

Beth Ann Bovino, chief U.S. economist for Standard & Poor’s Corp., said in a recent newsletter that adoption of a bipartisan budget will be a boon to the U.S. economy.

“The budget would reduce a key risk, political uncertainty,” she wrote. “The private sector will probably be more confident when planning investment and spending for next year, which would directly boost growth.”

The deal is far from the $1 trillion to $4 trillion grand bargain on taxes and spending that previous budget negotiators sought. The plan would set U.S. spending at about $1.01 trillion for this fiscal year, higher than the $967 billion required in a 2011 budget plan.

$20 Billion

Much of the deficit reduction will come in later years, according to an analysis by the nonpartisan Congressional Budget Office. The plan would lower the deficit by $3.1 billion in 2014 and $3.4 billion in 2015 and exceed $20 billion a year in 2022 and 2023, the CBO said.

A big portion of the savings is tied to extending the cuts in Medicare provider payments into 2022 and 2023, rather than letting them expire in 2021 as under current law.

The accord may help lawmakers repair their image after a 16-day government shutdown in October that caused congressional approval ratings to fall to the lowest level recorded by the Gallup Organization polling group.

It also may give lawmakers breathing room to debate other initiatives that have been sidelined as Congress moved from one stopgap spending bill and fiscal crisis to the next.

Some Republicans opposed to the deal say it trades scheduled spending cuts for future promises of austerity that may never materialize and includes tax increases that masquerade as user fees.

<< Page 2 of 3 >>

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

comments powered by Disqus
Check out Futures Magazine - Polls on LockerDome on LockerDome