Budget Deal Strategy : A Little Now But More Later?

This is a bad deal but maybe the only one that will pass the clutches of Harry Reid in the Senate. And if, and it's a huge if, the Republicans and Conservatives will take control of the Senate back in 2014, maybe they can forge a real lasting deal to solve the catastrophic economic problems that we are facing. But as it stands now, the fight between the republican establishment and the new breed of Republican legislators is not going to end any time soon. I believe the party is headed for a change and it might get bloody, but it is long over due. The status quo is no longer in the best interest of the party, and more importantly, that of the nation.

 

National Center for Policy Analysis

Budget. The House voted 332-94 this week to pass a compromise budget crafted by House Budget Committee Chair Paul Ryan (R-WI) and Senate Budget Committee Chair Patty Murray (D-WA). The budget allocates $1.012 trillion in federal spending for 2014, roughly $45 billion more than what House Republicans wanted and $46 billion less than what Senate Democrats wanted.

The compromise also increases spending by $63 billion over the next two years to alleviate the automatic sequester cuts that were imposed back in 2011 (see chart above: the red line projects spending after the 2011 sequester deal, while the green area reflects the new budget agreement that adds spending for the next two years). The two-year spending increase is offset ( in theory (Preview)

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) with $85 billion in deficit reduction over the next decade, including cuts in mandatory spending. Other spending offsets are cobbled together by increasing fees for airline travelers, requiring federal employees to pay more into their own pension funds, and cracking down on prisoners who receive unemployment checks. The next question is whether the Senate will pass the bill.

Although most economists seem happy with the budget deal, some significant players in the conservative movement are not. After helping outside groups formulate an opposition strategy against the budget deal, the executive director of the conservative Republican Study Committee was sacked. Uncharacteristically, Speaker of the House John Boehner went on the offensive, skewering the outside groups who are trying to derail the agreement. It is too soon to tell whether this will turn into a civil war within the Republican Party.