The Best Worst Budget Deal

28 Oct 2015 | Author: | No comments yet »

Budget deal’s big winner: U.S. economy.

Performing one more thankless task before he is chased out of his post, U.S. Washington — The bipartisan deal announced by House Speaker John Boehner appears to be a win-win-win – for the White House, Republicans, and Democrats.

House Republican leaders on Tuesday pushed toward a vote on a two-year budget deal despite conservative opposition, relying on the backing of Democrats for the far-reaching pact struck with President Barack Obama. House of Representatives, lobbied lawmakers Tuesday to approve a new government spending plan and increase the country’s borrowing authority, even as conservative Republicans attacked the deal. It would also clear out one big worry facing the Federal Reserve as it attempts to finally end an era of emergency interest-rate policy that has left the central bank with few weapons in its arsenal if the economy does turn south again. “This would take away a very big potential negative and remove a serious threat at a time that the economy feels a little fragile,” said Mark Zandi, chief economist at Moody’s Analytics. “The budget battles of the last five years did a great deal of damage in terms of raising borrowing costs, constraining business investment and depressing consumer spending. The outgoing House speaker, Republican John Boehner of Ohio, prepared to push the deal through his unruly chamber on Wednesday as his last act before departing Congress at the end of the week. The deal also would take budget showdowns off the table until after the 2016 presidential and congressional elections, a potential boon to the eventual GOP nominee and incumbents facing tough re-election fights.

A White House official said the deal would “break the cycle of shortsighted, crisis-driven decision-making.” The toxic fiscal cycle — which began with a near default and the first-ever U.S. credit rating downgrade in the summer of 2011 — clearly slowed the recovery following the brutal financial crisis and recession. Martha McSally when the 247 House Republicans gather privately Wednesday to choose a leader and when the formal vote is taken in the House chamber Thursday. They said it broke a 2011 pact limiting spending and bypassed rank-and-file lawmakers in deciding to boost spending by $50 billion in 2016 and another $30 billion in 2017. “I think this process stinks,” said Ryan. “This is not the way to do the people’s business.

They seethed but acknowledged they were powerless to stop an agreement all but certain to pass with votes from Democrats and a sizable number of Republicans. The government shutdown of 2013 shaved an estimated 1.5 percentage points from economic growth; the economy has struggled to stay above 2 percent annual growth throughout the recovery. “These events clearly produced big hits to confidence and equity markets and hurt both Main Street and Wall Street,” said Jim O’Sullivan of High Frequency Economics. “The presumption this time was that the debt limit stuff was just a bluff, but if that had been wrong it would have been very bad.” A budget agreement reached in 2013 helped usher in a period of relative calm in Washington that boosted confidence and helped lead to over 4 percent growth in the second and third quarters of 2014, the strongest period of the recovery.

Boehner brushed off their complaints, declaring that he intended to make good on his promise to leave a “clean barn” for his successor, Paul Ryan of Wisconsin, who is set to get the GOP nomination for speaker on Wednesday and win election on the House floor the day after that. “I didn’t want him to walk into a dirty barn full of you-know-what. This one was slammed together in the frantic desire to avoid the catastrophe of jeopardizing the full faith and credit of the U.S., an event that the nation has managed to avoid for more than 200 years. Much of it has to do with the way the deal was put together – highly dependent on one man who is leaving the scene and highly reliant on a secretive negotiating process involving only a few key people and their staffs. So I’ve done my best to try to clean it up,” a good-humored Boehner told reporters after a closed-door gathering of House Republicans, his last such weekly meeting after nearly five years as speaker and a quarter-century on Capitol Hill. Boehner negotiated the deal with the Senate Republican leader Mitch McConnell, as well as House Democratic leader Nancy Pelosi and Senate Democratic chief Harry Reid.

But the hard-line House Freedom Caucus has been demanding a different way – a bottom-up approach, which could actually complicate dealmaking for a future Speaker Ryan. The plan would fully fund the federal government and extend the government’s debt ceiling, or borrowing authority, through March 2017, two months after Obama leaves office. The new budget deal would also ease some of the fiscal tightening that began with the “sequestration” agreement that ended the 2011 debt limit crisis. Struck over recent days in closely held talks with White House officials and top House and Senate leader of both parties, the agreement would raise the government debt ceiling until March 2017, removing the threat of an unprecedented and market-rupturing national default just days from now. At the same time it would set the budget of the government through the 2016 and 2017 fiscal years and ease punishing spending caps by providing $80 billion more for military and domestic programs, paid for with a hodge-podge of spending cuts and revenue increases touching areas from tax compliance to spectrum auctions.

That coming departure has freed him up to negotiate directly with Democrats in Congress and with President Obama, unconcerned about another eruption on his right flank from the Freedom Caucus. “This is not a good sign for the budget process. Salmon said he expects most of the nearly 40-member caucus to vote for Ryan because they realize they don’t have enough votes to elect one of their own to the position. “He’s going to spread the decision-making ability among the 247 conference members. The extra spending would be offset by long-term savings to the Social Security Disability Insurance program and a cap on payments to health care providers by Medicare, the federal government’s health insurance program for senior citizens.

The latest budget agreement is not exactly a massive stimulus spending plan — the Congressional Budget Office says it would reduce the deficit by $76 billion over 10 years — but does represent another move away from immediate austerity. Congressional leaders would then enter into negotiations to determine how to fund individual government agencies before December 11, when a temporary spending plan expires. He’s in league with the Democrats.” But Massie also said that “it’s a long game” and that conservatives are winning the war after forcing Boehner to resign and cowing his heir apparent, Majority Leader Kevin McCarthy, into dropping his candidacy. Freedom Caucus member Mo Brooks of Alabama called the accord “financially irresponsible” because it would increase spending by about $80-billion (U.S.) over two years.

Patty Murray (D-Wash.) said it “restores critical investments in health care, education, defense jobs and other priorities.” Wall Street reacted tepidly to the news out of D.C. on Tuesday, with most traders expecting that Washington would find a way out of its latest fiscal mess. That caused a power vacuum that threw the House into pandemonium for much of this month, until GOP leaders prevailed upon a reluctant Ryan, the party’s 2012 vice presidential nominee, to seek the speakership. Two conservative groups, Club for Growth and Heritage Action, announced their opposition in a joint statement that called the agreement a “zombie budget deal.” Mr.

It also, regrettably, “kicks the can down the road” once again, by pushing the national borrowing limit deadline to March 2017 — safely past the next presidential election. Congressional Democrats have pushed for months for such a deal, bottling up routine spending bills in an effort to produce negotiations that would result in increased domestic spending.

Having been forced out by hardline conservatives angry over his willingness to negotiate with Democrats, Boehner wanted to complete the spending and debt ceiling deal before leaving office, so that Ryan would not immediately face a contentious political debate in his first days as the House speaker. He said he hopes Ryan will change the process for determining committee assignments and chairmanships so it is not controlled entirely by the speaker’s office. Ryan told reporters. “As a conference, we should have been meeting months ago to discuss these things, to have a unified strategy going forward.” Later, Mr.

Congress managed for many years to settle its budget differences without threatening both the credit standing of this nation and the millions who depend on regular payments. He suggested the committees elect their own leaders. “Most of the critical decisions that are made on the way government runs are made in those committees,” Salmon said. “It is really kind of a travesty that we’ve allowed one person and his staff to call all the shots and make all the decisions.” “Paul Ryan is a forceful enough leader where Boehner was not. Their preferred approach would empower committees, and themselves, to a much greater extent. “Putting together a very complex deal and giving members less than 48 hours to read it, study it, and vote on it with virtually no input – it’s about as bad as the process gets around here,” said Rep. In the past such pressures have thrown Congress into disarray, producing a partial government shutdown two years ago as conservatives clamored to end Obama’s health care law and causing a near-shutdown of the Homeland Security Department earlier this year over Obama’s immigration policies.

But that can’t happen unless members acknowledge that this is a political process geared toward compromise, not a ceaseless war that brooks no dealings with those on the opposing side. It’s like any battle, or any negotiation or any endeavor, if you yield before the fight ever even begins then you’re never going to win,” Salmon said. The additional spending is paid for by measures to ensure hedge funds and private equity companies pay full taxes and it cuts wasteful programs, he said.

The budget deal means that central bankers can now stop trying to game out political scenarios that could force them to hold off on rate hikes — or take other extraordinary actions — in the face of D.C. dysfunction. In addition to moving toward passage of the bipartisan budget deal, the House was expected to vote late Tuesday to revive the federal Export-Import Bank, supposedly killed off earlier in the year by conservatives who attacked it as corporate welfare. It’s not clear whether the marginalization of the most conservative forces in Congress will last — or if it simply took a lame-duck speaker with nothing to lose to bring temporary order to Capitol Hill. “It may have taken Boehner to actually be told he’s not going to stay as speaker to have the ability and the power to do this now,” said Democratic Rep. He’s been trying to figure out if he’s going to be speaker this week, not if he’s cutting a debt ceiling deal,” said Freedom Caucus founder Rep.

Louis Gohmert, R-Texas, may have put it best: “I didn’t know when Boehner cleaned the barn that I’d get so much manure on me.” In Minnesota’s congressional delegation, Rep. We hope Emmer, along with the rest of the Minnesota delegation, will seize the moment to put the nation’s continued financial stability above political concerns. They don’t like that it busts budget caps of the 2011 Budget Control Act by $80 billion, even as it raises the current $1.8 trillion debt ceiling. “That’s two strikes, and there are plenty of other third strikes in there,” said Rep. The budget increases are being offset by cuts elsewhere, including small-scale reforms to Social Security and Medicare – long sought by Republicans. Peter King (R) of New York, a moderate, in an interview. “He’ll be able to actually start working toward governing as opposed to going from crisis to crisis.”

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