Budget Deal Reached

On Tuesday evening, the leaders of the Budget Conference Committee – Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA) – announced a two-year budget agreement. The budget leaders found previously unreachable middle ground by first taking both tax increases and major entitlement program cuts out of the negotiations and by ultimately agreeing on a discretionary cap of $1.012 trillion for FY 2014 that essentially splits the difference between the $1.058 trillion proposed in the Senate Budget Resolution (S. Con. Res. 8) and the $967 billion proposed in the House Budget Resolution (H. Con. Res. 25).

The aptly titled Bipartisan Budget Act of 2013 also establishes a $1.014 trillion discretionary spending cap for FY 2015; mitigates sequestration by $63 billion over two years – $45 billion in FY 2014 and $18 billion in FY 2015 – split evenly between defense and non-defense activities; and includes $85 billion in deficit reduction through a package of savings and non-tax revenue. The proposal does not include an extension of unemployment benefits for which Democrats have been advocating.

The Numbers

The $1.012 trillion discretionary cap for FY 2014 will provide $520.5 billion for defense, compared to current funding of $518 billion provided through the FY 2014 Continuing Resolution (CR/P.L. 113-46) and the $498 billion sequester-level for FY 2014 mandated by the Budget Control Act of 2011 (P.L. 112-25). Likewise, the cap will increase discretionary non-defense funding to $491.8 billion, compared to current funding of $468 billion and 2014 sequester-level funding of $469 billion.

The Offsets

The measure includes a mixture of spending cuts and non-tax revenue provisions to account for $85 billion in savings. In part, the bill:

  • Increases Transportation Security Administration security fees;
  • Increases federal employee contributions to their pension accounts by 1.3 percent;
  • Modifies cost-of-living increases for military and civilian retirement benefits;
  • Raises the premiums for the Pension Benefit Guaranty Corporation;
  • Eliminates mandatory spending for payments to non-profit student loan servicers, requiring them to be paid in the same manner as other student loan servicers;
  • Limits how much a contractor can charge the federal government for an employee’s compensation to $487,000;                                        
  • Approves the U.S.-Mexico Transboundary Agreement;
  • Repeals of the Ultra-Deepwater and Unconventional Natural Gas and Other Petroleum Resources Research Program;
  • Makes permanent the requirement that states receiving mineral revenue payments help pay the costs of managing the leases; and
  • Rescinds the balance of the Strategic Petroleum Reserve (SPR) Petroleum Account and permanently repeals the SPR’s authority to accept oil from Interior’s royalty-in-kind program.


The House is expected to vote on the bill on Friday before adjourning for the year. Despite recent feedback from Democrats and Republicans ranging from skepticism to opposition – Democrats primarily concerned with federal retirement contribution changes and conservative Republicans pushing for sequester-level funding – Rep. Ryan expressed confidence that the House will approve the measure. If the House does pass the bill, the Senate will take it up next week before also adjourning for the year.