A Glimmer of Hope on the Budget Horizon

Earlier this week Senator Patty Murray (D-WA) and Representative Paul Ryan (R-WI) announced a budget deal that would, remarkably, provide a short-term era of budget stability in the nation’s capital for the first time in three years. While the deal is small and has some unattractive qualities, such as lower take-home pay for federal workers and a failure to extend long-term unemployment insurance, overall it is a small step in the right direction.

The Murray-Ryan deal includes:

  • $63.4 billion in sequester relief over 2 years:
    • 2014: $22.4B in Non-defense Discretionary (NDD) spending that is matched in Defense discretionary spending for a grand total of $44.8 billion
    • 2015: $9.3B in NDD, again matched in the Defense budget, for a total of $18.6 billion
    • This increase in spending caps for 2014 and 2015 are offset by savings elsewhere in the budget (fraud reduction, increased pension contributions from federal workers, TSA fees, etc.)
  • $28 billion in additional deficit reduction will take place by extending cuts from 2021 into 2022 and 2023

While there are still a lot of issues that Republicans and Democrats disagree on, this mini-budget deal has a few bright spots. One, it allows agencies to ease off on some of sequestration’s cuts, and it allows appropriators to set funding priorities for 2014 and 2015, within the annual budget caps laid out in sequestration. Second, and very importantly, it does not impose new cuts that would be harmful for our most vulnerable people – children, seniors, people with disabilities, and others. And while the deal includes some revenue increases, such as higher TSA fees and reductions in payments to education loan servicers, it does not close the tax loopholes as many Democrats had wanted.

But many Republicans complain that because the deal front loads spending to offset the sequester and spreads out deficit reduction over 10 years, that there is no guarantee the cuts will take place under the governing congress. Many analysts believe these complaints are really political theater, though, not actual disapproval of the Murray-Ryan deal.

However, the biggest problem with the Murray-Ryan deal is that it prioritizes reducing the deficit over the well-being of millions of still unemployed American workers.

Unemployment Insurance for the long-term unemployed is set to expire the week after Christmas, and Congress has yet to act to extend those desperately needed benefits.

Unemployment dropped again this month, but long-term unemployment–the percent of the unemployed who have been out of work for more than 6 months–is up in November to 37.3% from 36.9% in September, suggesting that those who need jobs can’t find them. This is double the rate in 2007, before the Great Recession began, and the long-term unemployed now make up a stunning 2.6% of the labor force. Congress has never cut UI when long-term unemployment has been above 1.3% and groups like the Coalition on Human Needs are calling on them to avoid setting such a negative precedent now. Click here to act with them.

Overall, the deal is moderately positive. It is certainly better than sequestration and prevents another government shutdown/standoff. Better still, it lays the groundwork for a permanent budget deal in 2014. The House passed the deal last night and the Senate is expected to do so today. Here’s to a small glimmer of hope in the new year!

Want more? Here are a couple of good articles on the deal:


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