Congress hits deal to restore spending

$63 billion plan awaiting votes

Republican Sen. Paul Ryan of Wisconsin and Democratic Sen. Patty Murray of Washington announce a tentative budget agreement Tuesday that Murray said broke through “the partisanship and gridlock.” Ryan said the plan “cuts spending in a smarter way.”
Republican Sen. Paul Ryan of Wisconsin and Democratic Sen. Patty Murray of Washington announce a tentative budget agreement Tuesday that Murray said broke through “the partisanship and gridlock.” Ryan said the plan “cuts spending in a smarter way.”

Correction: Paul Ryan of Wisconsin is a U.S. representative. Ryan's title was incorrect in a photo caption published with this article.

WASHINGTON - Congressional negotiators reached a modest budget agreement Tuesday to restore about $63 billion in automatic spending cuts from programs ranging from parks to the Pentagon, with votes expected in both houses by week’s end.


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Meanwhile, government dairy subsidies that affect the cost of milk are set to expire at the end of the year as lawmakers from farm states said Tuesday that they do not expect to have a new farm bill - or an extension of current law - before Jan 1.

Officials said the budget increases would be offset by a variety of spending reductions and increased fees elsewhere in the budget totaling about $85 billion over a decade, enough for a cut of roughly $20 billion in the nation’s $17 trillion of debt.

The deal “reduces the deficit by $23 billion and it does not raise taxes. It cuts spending in a smarter way” than the ones in effect, said Rep. Paul Ryan, the Wisconsin Republican who leads the House Budget Committee and was his party’s negotiator in several weeks of secretive talks.

His Democratic counterpart, Sen. Patty Murray of Washington, said, “We have broken through the partisanship and gridlock” that could have produced a government shutdown in January.

The offsetting deficit cuts include a requirement for newly hired federal workers to make larger contributions to their pensions, as well as an increase in a federal airport security fee that would add $5 to the cost of a typical round-trip flight. The annual increase in military retirement benefits for those under age 62 would be slowed.

More savings would come from extending an existing 2 percent cut in payments to providers who treat Medicare patients. Full details were unavailable pending their posting on budget committee websites.

Officials said Democrats had failed in their bid to include an extension of benefits for workers unemployed longer than 26 weeks. The program expires on Dec. 28, when payments will be cut off for an estimated 1.3 million individuals.

It’s “a deal that not everybody’s going to like,” said Maine Sen. Angus King, an independent who sits on a 29-member panel led by Ryan and Murray. But congressional aides predicted bipartisan approval in both houses.

Officials said that under the agreement, an estimated $63 billion in automatic spending cuts would be restored through the end of the next budget year, which runs to Sept. 30, 2015.

Conservative organizations immediately attacked the proposal as a betrayal of a hard-won 2011 agreement that reduced government spending and is counted as among the main accomplishments of Tea Party-aligned Republicans who rose to power earlier the same year in the House.

Americans for Prosperity issued a midmorning statement saying GOP lawmakers should uphold current spending levels. Otherwise, the group said, “congressional Republicans are joining liberal Democrats in breaking their word to the American people to finally begin reining in government overspending that has left us over $17 trillion in debt.”

The group played a behind-the-scenes role earlier this fall in events that led to a partial government shutdown, supporting an unsuccessful strategy of refusing to provide funds for federal programs until President Barack Obama’s health-care law was defunded.

Given the internal GOP divisions in the House, Speaker John Boehner of Ohio is likely to need Democratic votes to approve any deal by Ryan and Murray. It was not immediately clear how many Democratic lawmakers would support a plan that didn’t extend unemployment benefits.

The party’s House leader, Rep. Nancy Pelosi of California, said at one point last week that her rank and file would insist on an extension for the unemployment program as a condition for supporting a budget deal. The White House refused to support that position.

Some Democratic officials suggested a possible two-step solution. It included swiftly passing any budget agreement that emerges, and then adding an extension of unemployment benefits to must pass legislation early next year, perhaps a measure to reverse a looming cut in payments to doctors who treat Medicare patients.

The bipartisan push for a budget agreement stems from automatic spending cuts that were the consequence of the government’s inability to complete a deficit reduction package in 2011.

If left in place, the reductions would carve $91 billion from the day-to-day budgets of the Pentagon and other domestic agencies when compared with spending limits set by the hard-fought 2011 budget agreement.

Officials said the framework under discussion would raise overall spending on general government programs to $1.012 trillion in the current budget year, compared with $967 billion under existing law.

Even though that represents a two-year increase of about $65 billion, it is below the limits envisioned before the across-the-board cuts began taking effect.

NO DAIRY DEAL

Meanwhile, Senate Democrats said they won’t pass any plan on dairy subsidies sent to them by the House before members leave Washington for the Christmas break this week. The subsidies will expire at the end of the year, triggering an outdated law that could eventually cause the price of milk to rise.

“We’re not going to do an extension,” said Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich. “If the House leadership would just stay through next week, like the Senate is staying, we would actually be able to get” new five-year farm-policy legislation, she said.

House Agriculture Committee Chairman Frank Lucas, R-Okla., proposed a bill that will extend to Jan. 31 the farm law that expired two months ago. He said he will seek a House vote if lawmakers negotiating a five-year plan don’t have an agreement by Friday.

If Congress doesn’t act before the year ends and current law expires, U.S. dairy support programs will revert to a 1949 statute that, when fully implemented, will double the wholesale price of milk.

But Stabenow said she had assurances from the Agriculture Department that the price increases would not happen before the end of January, when she and Lucas hope to have a final farm bill deal.

The House and Senate have passed separate versions of the five-year, roughly $500 billion bill, but with widespread differences over crop subsidies and how much to cut food stamps.

Boehner said last week that he favors an extension of the farm bill, and House leaders have reserved space on their agenda this week for extending the current law.

But Senate Majority Leader Harry Reid of Nevada balked at that plan. “Let them vote on it. We’re not going to do it,” he said Tuesday.

Stabenow said a short-term extension could allow subsidies called direct payments to continue. Those subsidies are paid to farmers whether they plant or not and have come under political fire from conservatives and others who have lobbied for less spending on farm programs. Both the House and Senate farm bills would eliminate the subsidies and create new ones.

Finding a compromise on cuts to the nation’s $80 billion a-year food stamp program has been the toughest obstacle in the talks between the House and the Senate. The House passed a bill this summer that would cut $4 billion from food stamps annually and allow states to create new work requirements for some recipients. The Democratic Senate, backed by Obama, passed a farm bill with a $400 million annual cut, or one-tenth of the House cut.

Negotiators have focused on cracking down further on a practice in some states of giving low-income people as little as $1 a year in home heating assistance, even when they don’t have heating bills, in order to make them eligible for increased food stamp benefits. The Senate found its $400 million in annual cuts by proposing that states have a $10 heating assistance threshold for such eligibility, while the House doubled that cut by requiring that recipients receive $20 annually - bringing the savings to around $800 million a year.

North Dakota Sen. John Hoeven, a Republican who sits on the House-Senate conference committee, confirmed that negotiators have floated as a compromise $800 million in annual cuts plus pilot programs that would create new work requirements in a handful of states. But he stressed that there is not a final deal on the farm bill.

Information for this article was contributed by Andrew Taylor, David Espo and Mary Clare Jalonick of The Associated Press; by Derek Wallbank, Alan Bjerga, Heidi Przybyla, Caitlin Webber and James Rowley of Bloomberg News.

Front Section, Pages 1 on 12/11/2013

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