U.S. has a Budget at last! So, what’s in it? How does it affect you?

President Obama paying a visit to U.S. troops stationed in Hawaii. Image from Getty Images.

President Obama paying a visit to U.S. troops stationed in Hawaii. Image from Getty Images.

For the first time since 2009, the United States federal government actually has a budget. On Thursday, President Obama signed a budget deal establishing federal spending levels for two years. The deal had earlier this month passed the House by a 332-94 vote and then passed the Senate by a 64-36 vote. Until now, the federal government had funded itself through a series of so-called “continuing resolutions”, essentially just agreements to keep spending at current levels, and the failure to pass one this October is what caused this year’s government shutdown. The shutdown crisis gave Congress record-low approval ratings; only 9% of Americans approve of how Congress has done its job, according to Gallup. Members of Congress hope that this deal and the removal of the threat of another shutdown will see their approval start to rebound.

You can read the full text of the new budget here.

The bipartisan deal, proposed by Sen. Patty Murray (D-Wash.) and Rep. Paul Ryan (R-Wis.), explicitly does not strike the long-sought-after “grand bargain” to settle the national debt through tax and entitlement reform. Instead, the new budget focuses its energies on capping the federal government’s discretionary spending: they can’t spend more than $1.012 trillion next year and $1.014 trillion in 2015. The deal also addresses the sequester, a series of automatic and highly unpopular spending cuts that took effect starting this year. While those cuts that have already been put in place will remain, further sequester cuts scheduled for the next two years will be cancelled.

The budget deal does include some sweeping cuts to reach its target spending levels, though, and some of these are proving to be quite unpopular. Veterans of the U.S. armed forces that are under the age of 62 will see a lower cost-of-living adjustment to their benefits. Currently, veterans’ benefits are tied to the inflation rate, going up as prices for rent, bills, gas, groceries, and so on go up (hence the name). The budget deal will reduce this rate of increase by 1%, so if they would have been entitled to a 2% increase in benefits next year before the bill passed, now they will only receive a 1% increase. While this measure is expected to save as much as $6 billion over ten years, critics and veterans’ groups have described the measure as Congress practically “turning their back” on veterans. By one estimate, the new budget could potentially cut as much as 20% of a veteran’s benefits, depending on when he or she retires. In defending their decision, the House Budget Committee claims they are simply bringing veterans’ benefits into line with the benefits other federal government employees receive upon retirement.

The new budget deal also lets a highly popular unemployment insurance program expire. Normally, when someone loses his or her job, state governments allow him or her to keep receiving some pay for up to 26 weeks while he or she looks for work. In 2008, a temporary federal government program was enacted that extended these benefits for a further 47 weeks. That program expires today, automatically cutting aid to 1.3 million unemployed Americans, and potentially affecting as many as 4.9 million people by the end of next year. Allowing the program expire will save $19 billion, and Congressional Republicans insist that it is time to let the program go, now that unemployment is down to 7.3%. Sen. Rand Paul (R-Ky.) told reporters “I do support unemployment benefits for the 26 weeks that they’re paid for. If you extend it beyond that, you do a disservice to these workers. When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy.” The Washington Post reports that it currently takes 35 weeks for an average job-hunter to find employment.

Here are some of the other highlights of the new budget:

  • Security fees charged to airline passengers at airports will go up to $5.60 per one-way trip. This will save $12.6 billion over 10 years.
  • It will raise the pension contributions of newly-hired federal employees, and make changes to the way federal employees can receive health benefits, raising or saving a total of $9 billion over 10 years.
  • Companies that pay the federal government to guarantee their employees’ pensions will have to pay more, saving $7.9 billion over 10 years.
  • Going through customs to get into the United States will still cost money. The deal allows Customs and Border Protection to keep charging fees through 2023, saving $6.8 billion.
  • There will be some changes to certain federal student loans. Student loans from non-profit lenders used to be counted as “mandatory spending”. Now, they will be categorized as “discretionary spending”, meaning they will be based on amounts set by Congress. This will save $3.1 billion.
  • Federal contractors’ pay will be capped at $487,000 per employee.
  • State Medicaid programs will be allowed to delay payment to doctors for a patient’s treatment, provided that doing so won’t actually affect the patient’s care. This will save $1.4 billion over 10 years.
  • Access to Social Security death records will be restricted to reduce the risk of identity theft problems.

To be clear, the budget bill only sets how much money the federal government can spend in total. It does not determine where, specifically, our tax money will go. That decision will be made by Congress in the coming weeks through a series of so-called “appropriations” bills that must be passed by Jan. 15 to avoid another government shutdown. The deal also doesn’t raise the debt ceiling, a measure that Congress must pass by February in order to prevent the U.S. government from defaulting and being unable to pay its bills.

One Response to U.S. has a Budget at last! So, what’s in it? How does it affect you?

  1. AuntLeesie says:

    So… nothing about the farm bill yet?

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