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Category: Budget

Budget Deal Moves to the Senate

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Today the Senate will resume consideration of pending nominations and then turn to the budget deal on Tuesday with a vote likely by mid-week. Top appropriators are beginning negotiations on an omnibus FY2014 spending package in anticipation of the Senate clearing the $85 billion budget deal this week that would boost overall spending levels. Congress will need to approve that omnibus before January 15th to avoid another government shutdown.

But appropriators face challenges in advancing some domestic spending proposals. Appropriators are assembling a $1.012 trillion omnibus spending package that will continue fresh FY2014 dollars for most but not all federal agencies. It is possible that the most contentious measures, like Labor-HHS-Education and Interior-Environment, may be carried forward through continuing resolutions rather than be included in the omnibus in order to avoid bitter partisan debate on those topics. Defense and security spending measures including Homeland Security, Military Construction-Veterans Affairs, and Defense enjoy the broadest levels of support in the two chambers and are all but certain to be included in an omnibus.

The House is not in session. They will return after the New Year.

House Approves Two-Year Budget Framework

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The House passed a budget agreement today by a vote of 332-94. The two-year budget deal, crafted by Senator Patty Murray (D-WA) and Rep. Paul Ryan (R-WI), will bring back “regular order” to the annual appropriations process that has eluded Congress for the past couple of years. Lawmakers voted 332-94 on the deal that sets a $1.012 trillion discretionary spending level for FY2014 (current fiscal year) — halfway between the $967 billion sequester level and the far-higher number Democrats were seeking. It also sets a $1.014 trillion for FY2015. It finds savings through recalculating federal workforce pensions and requiring government employees to contribute more toward retirement. With this action, the House is now in recess until after the New Year. The Senate is expected to take up the budget measure next week where is should garner plenty of support for passage.

House to Consider Budget Deal Thursday

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The House Leadership is expected to consider the Budget deal on Thursday. Although there have been small rumblings of discontent by some Republican House Members with the deal because it does allow funding over Sequester levels, the measure is expected to pass the House. The Senate will consider it soon after.

Budget Deal’s Impacts on Student Aid Servicers

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The agreement reached on Wednesday by Senator Patty Murray and Congressman Paul Ryan reverses some sequestration cuts without raising taxes or making changes to entitlement programs. If approved, Congressional appropriators would have at their discretion $492 billion for non-military spending. That is about $23 billion more than would be available if Congress were to allow a second round of automatic sequester cuts to take effect in January. And yet, it is still about $14 billion below the original level of non-defense funding before the cuts first took place in March.

Within the confines of those top-level limits, lawmakers would have the discretion to restore and theoretically increase funding to campus-based financial aid programs and federal research agencies such as the National Institutes of Health and National Science Foundation, which would otherwise suffer more cuts if a second round of mandated “sequestration” reductions take place in January.

However, in order to pay for the $63 billion worth of increases to federal discretionary spending over the next two years, the negotiators identified various sources of revenue, such as hiking airline security fees and requiring federal workers to kick in more money for their pension plan.

Two of the cost saving provisions in the the agreement impact student aid servicers, but are not expected to have any immediate impacts on students. The first calls for Congress to cut payments to guarantee agencies in the now-defunct Federal Family Educational Loan Program, and changes how certain federal student loan servicers are paid. Not-for-profit and state loan agencies won a special provision in the 2010 Student Loan Bill that ended federal bank-based lending that guaranteed the entities loan-servicing contracts with the Education Department without having to go through a competitive bidding process. These payments will now be made with discretionary, not mandatory, funds. This change would save approximately $3 billion.

The second provision reduces the compensation that guaranty agencies receive for rehabilitating a loan from the Federal Family Education Loan (FFEL) program, beginning July 1, 2014. It will save more than $2 billion over ten years

Budget Deal Announced

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Earlier this evening, Budget Conference Chairs Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA) announced a two-year budget agreement that would replace $63 billion of sequester cuts over FY2014 and FY2015. For FY2014, the discretionary top line budget would be set at $1.012 trillion, offering an additional $45 billion over FY2013 numbers, and will be evenly split between non-defense and defense spending. The numbers agreed to for FY2014 and FY2015 are below the levels established by the Budget Control Act and the sequester remains in place for FY2016 and beyond.

The sequester relief is fully offset by savings elsewhere in the budget. The agreement includes dozens of specific deficit-reduction provisions, with mandatory savings and non-tax revenue totaling approximately $85 billion. The agreement would reduce the deficit by between $20 and $23 billion. The House is expected to take up a bill on Friday, followed by the Senate next week. If this bill is signed into law, the appropriations committees will then be able to work on spending bills at an agreed-upon level in advance of the January 15th deadline (when the current CR expires).

While House Appropriations Chair Hal Rogers (R-KY) praised the deal, there is expected to be some opposition from both sides of the aisle. The White House has indicated support for the proposal.