House, Senate Negotiators Reach Budget Deal

The two-year budget deal approved by House and Senate negotiators may be most notable for what it doesn’t do.

BUDGETThe agreement, unveiled on Dec. 10, aims to keep the government from running out of money in January, avert another government shutdown, cut $23 billion from the federal deficit over two years and ease automatic spending cuts in military and many domestic programs. But the deal doesn’t make major changes in Medicare and Social Security, which many Republicans favored, and it doesn’t include major tax increases, which many Democrats favored.

In a statement, President Barack Obama said, “This agreement replaces a portion of the across-the-board spending cuts known as ‘the sequester’ that have harmed students, seniors, and middle-class families and served as a mindless drag on our economy over the last year.”

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Some spending cuts in the agreement would affect public and private retirement programs.

Federal workers hired after Jan. 1, 2014, would contribute 1.3 percent more of their salaries toward their pensions, saving the government $6 billion over 10 years. The agreement, the Washington Post notes, would create a three-tier system, with workers hired before 2013 paying 0.8 percent, those hired in 2013 paying 3.1 percent, and future hires paying 4.4 percent.

Under the deal, military retirees who are still working age would see smaller cost-of-living increases for their pensions. And private companies would have to cover more of the cost of guaranteeing their pension benefits by paying $7.9 billion more in federal insurance fees.

In the shorter term, people who have been out of work for more than 26 weeks could lose their extended unemployment benefits starting Jan. 1, because the deal does not address that issue. Extended benefits have been offered since 2008, and older workers, who have been hit particularly hard since the recession, could be disproportionately affected. According to the White House, 1.3 million Americans will lose the benefits immediately and another 3.6 million could lose the extra benefits as the year rolls on.

The deal also calls for an additional $22 billion in deficit reduction by extending a small part of the sequester into 2022 and 2023, primarily affecting Medicare providers, who would face two more years of 2 percent across-the-board cuts.

The budget deal goes first to the House of Representatives and then to the Senate. Some liberal and conservative lawmakers likely will oppose it. But Paul Ryan (R-Wis.), the chairman of the House Budget Committee, predicted that it will pass.

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