First Federal Budget in Four Years Receives Tepid Response from Many

First Federal Budget in Four Years Receives Tepid Response from Many
December 19, 2013

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)

Members of the U.S. House and Senate have approved and the president has signed the first federal budget since 2009, but it's a deal that has received a lukewarm response even from many supporters and outright opposition from many groups on the political left and right.

Senators voted 64-36 for the measure in December, one week after the House of Representatives voted overwhelmingly in favor of it. Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA) negotiated the deal. Final approval came in January after members of the Tea Party caucus in the Senate tried unsuccessfully to block it.

Sen. Ted Cruz (R-TX) led Tea Party opponents who opposed lifting some of the automatic “sequester” spending cuts that have helped hold down spending increases in recent years. With those cuts lifted, more money will go to the military (favored by Republicans) and to social programs (favored by Democrats). Cruz also tried and failed to win support for an amendment to the budget to defund the Obamacare health insurance law.

Congress has been operating since 2009 by approving a series of “continuing resolutions” to spend money in lieu of a budget. Still, many analysts say in the grand scheme of things, this budget amounts to little.

‘Largely Inconsequential Deal’

"In two words: Ho Hum. This largely inconsequential deal provides modest -- $63 billion -- relief from sequester cuts in spending spread over two years. The 'pay for' comes later and is largely illusory. The deal is an answer to the question, 'What can Republicans and Democrats agree on for deficit reduction?' The answer still is: nothing,'" said John Makin, resident scholar at the American Enterprise Institute and author of the monthly Economic Outlook, in a statement.

Many organizations on the “progressive” and “conservative” sides of the political spectrum have come out against the deal.

“[T]his budget agreement does nothing for the millions of people who remain without work and asks nothing from the people who caused our economic crisis and continue to benefit from economic inequality,” said AFL-CIO President Richard Trumka in a statement. The AFL-CIO is a reliably left-leaning and Democratic Party-supporting labor organization.

Lawrence Mishel at the left-leaning Economic Policy Institute also wrote, “I support reaching an agreement that will end the culture of periodic crises that has driven policy in recent years. However, this deal addresses the wrong set of priorities: namely, deficit reduction ten years out rather than a stronger recovery now, and tweaking domestic spending for a few years as we continue to ignore the public investments our country needs."

‘Example of How Out of Touch Leaders Are’

Meanwhile, at Americans for Limited Government, which advocates for smaller government and fiscal restraint, President Nathan Mehrens said in a statement, “It is disappointing that House Republican Budget Chairman Paul Ryan would bust the $65 billion sequestration and raise government fees and other assessments, in return for other supposed cuts in the out years that likely will just be rolled back later.”

Romina Boccia, writing for the conservative Heritage Foundation’s blog, said: “Many had high hopes that the first budget conference in four years would make a substantial down payment toward fixing the U.S. spending and debt crisis. The new ‘Bipartisan Budget Act’ thoroughly disappoints.”

Boccia noted the deal “busts through” spending caps Congress okayed in 2011, and raises spending over the next two years with promises of less spending over 10 years – promises that could be ignored by future Congresses.

‘Bad Policy and Bad Politics’

And at the right-leaning fiscal watchdog organization Americans for Prosperity, President Tim Phillips said in a statement, “This budget compromise is not just bad policy, it is bad politics. The American people remember hard-won bipartisan spending limits set by the sequester, and are not pleased to see their conservative representatives so easily go back on their word to rein in government over-spending.”

Ryan and Murray announced an agreement on December 10 after spending several weeks negotiating in secret. The Ryan-Murray deal sends spending up $63 billion by 2015, thus ending some of the “sequester” cuts that were imposed in 2011 to hold down spending. In exchange, $85 billion of cuts over 10 years would be made, resulting in more than $22 billion of savings. But with the federal government spending approximately $10 billion a day, $22 billion of savings over a decade is a drop in the bucket, say conservative critics.

The deal also adds a $5 "fee" to airline tickets, higher premiums charged to employers to support the federal Pension Benefit Guaranty Corporation, and larger contributions from new federal employees for their pensions. Most federal civilian employees hired beginning in January will contribute 4.4 percent of their pay to their pensions. This compares to 3.1 percent for those who were hired in 2013 and 0.8 percent for those who were hired before 2013.

American Conservative Union Chairman Al Cardenas said in a statement, “Conservatives prefer a wiser approach to cost cutting than the sequester but appreciate the beginning of a more disciplined approach to spending. The solution is not to walk away from progress and add over $60 billion in spending over the next two years."

President Obama signed the budget shortly after lawmakers gave their final approval and just one day before funding would have run out.

“This agreement doesn’t include everything I’d like – and I know many Republicans feel the same way,” Obama said in a statement. “That’s the nature of compromise. But it’s a good sign that Democrats and Republicans in Congress were able to come together and break the cycle of short-sighted, crisis-driven decision-making to get this done.”

Steve Stanek

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute and managing... (read full bio)