What’s in the budget deal?

28 Oct 2015 | Author: | No comments yet »

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

If the budget deal hammered out by outgoing House Speaker John Boehner and the White House passes both houses of Congress it would at least temporarily end a bruising era of shutdowns and default freak outs that rattled Wall Street, raised government borrowing costs and crushed business and consumer confidence. 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 the 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 members of the suddenly renowned House Freedom Caucus have spent months railing against just this type of deal—a bipartisan accord negotiated entirely in secret by party leaders and then presented, as if by fiat, to rank-and-file lawmakers for their immediate approval. This is not the way to do the people’s business,” House GOP savior Paul Ryan told reporters on the eve of his Speaker nomination, complaining of the closed door process. Boehner has left a parting gift: a two-year, $80 billion budget deal negotiated by the lame-duck speaker with fellow congressional leaders and the Obama administration that also raises the nation’s borrowing limit.

Before agreeing to support Ryan last week, the hard-line caucus met with him to make sure he was open to the rules changes they were seeking that would make these types of top-down, last-minute agreements less likely. The likely next House Speaker said he wanted to “see what it looks like on paper” before coming to a conclusion but defended the proposal as a “good deal” all things considered. Several conservative lawmakers, who have long chided Boehner for making deals on spending and key policy issues with Democratic President Barack Obama, complained about the deal. A White House official said the deal would “break the cycle of short-sighted, 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. CNN reports that rural Republicans on the agriculture committee are upset with cuts to the crop insurance program, threatening to vote against the deal if the cuts are not removed.

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. House Republicans have been in upheaval since Boehner, under pressure from elements of his party’s hard right flank, decided to pack his golf clubs and return to Ohio, and Huelskamp has been at the center of the chaos. After all, Congress doesn’t need to pass a spending bill until December, and the debt ceiling won’t be breached for another week, which means Capitol Hill has a few more days before panic erupts. Leadership’s determination to ram through this legislation days before we reach the debt limit, with zero input from rank and file Members of Congress, demonstrates precisely what is wrong with Washington, D.C.

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. 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. It isn’t clear whether Huelskamp can really take much credit for the dramatic shakeup in the House GOP leadership, which would assume Huelskamp was working behind the scenes to force Boehner out. 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. But there’s no question that he relished his role in Boehner’s exit and is leveraging it to increased his stature among conservatives. “Huelskamp has made a national name for himself. Republicans won’t officially nominate Ryan until Wednesday, and after seeing the swift backlash that forced Kevin McCarthy to abandon his bid earlier this month, he can’t afford to risk angering conservatives before he has the gavel in hand. Therefore I call on all candidates running for Speaker of the House to oppose this legislation and go on record showing they do not support this approach to governing. 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.

Thomas Massie sounded resigned to the prospects of another loss for House conservatives. “I mean I don’t think there’s anything you can do at this point … We can’t stop it. 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. Conservatives widely hailed this reduction but many economists believe the United States entered a period of fiscal austerity at exactly the wrong time.

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. The structure of the agreement is remarkably similar to the two-year budget that Ryan himself negotiated with Democratic Senator Patty Murray two years ago. 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 ten years — but does represent another move away from immediate austerity.

Huelskamp is expressing a concern that is generally shared by the Obama administration.” But will Huelskamp – and Kansas – benefit from his increased profile? Boehner said this deal is intended to “clean out the barn.” He hopes to go out as a martyr for the establishment, clearing the decks for likely incoming speaker Rep. Congressional leaders would then enter into negotiations to determine how to fund individual government agencies before December 11, when a temporary spending plan expires. 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. 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.

Huelskamp was kicked off both that committee and the House Budget Committee in 2012 by Boehner allies as payback for Huelskamp’s outspokenness and for bucking the party on key votes. Senator Ted Cruz deemed it “complete and utter surrender,” while a few House members called on Ryan to state his position on it before Republicans vote on his candidacy Wednesday.

In reality, this is a betrayal of everything Republicans ran on in 2010 — fittingly negotiated behind closed doors and rammed down members’ throats. 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. 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. He backed down, at least for the moment, on his demand that Republicans modify a procedural tool allowing dissidents to oust a speaker in a floor vote.

Marshall’s campaign outraised Huelskamp’s for two consecutive quarters, but the incumbent already has $700,000 in his war chest and the potential to get more money and assistance from tea party and conservative groups. And on Tuesday, he spoke out against a move by a coalition of Democrats and moderate Republicans to reauthorize the Export-Import Bank by going around the leadership. They labeled the new deal “Ryan-Murray 2.0,” and outside conservative groups such as Tea Party Patriots and Heritage Action for America promptly issued press releases lambasting it and calling on lawmakers to reject it. “Here we go again: John Boehner wants to make his last capitulation to President Obama his worst,” Tea Party Patriots co-founder Jenny Beth Martin fumed. 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.

While the Freedom Caucus has given its blessing to Ryan, Huelskamp and others have expressed reservations about former Republican presidential candidate Mitt Romney’s running mate. They question his support for bailing out Wall Street financial institutions, overhauling the nation’s immigration laws, and forging a budget pact with Sen.

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