Budget battle is likely to heat up next year

Budget battle is likely to heat up next year

Congress last week barely managed to approve a funding bill negotiated by a bipartisan group of lawmakers, working under spending guidelines set by each party’s budget gurus.

Next year could get even uglier.

After four years of a divided Congress, Republicans will take full control of both chambers in January with hopes of passing individual spending bills under an orderly process rarely seen in recent years. But complicating their task will be the return of the across-the-board spending cuts known as the “sequester” birthed out of the 2011 debt-ceiling deal, which set caps on spending for the next decade.

A two-year bipartisan budget deal brokered by Senate Budget Committee Chairman Patty Murray (D., Wash.) and House Budget Committee Chairman Paul Ryan (R., Wis.) eased those cuts for fiscal years 2014 and 2015. But the $1.1 trillion bill passed over the weekend, which will fund most of the government through September 2015, marks the final stretch of that agreement.

In fiscal 2016 the cuts return in full force. Lawmakers broadly agree the reductions inflict blunt pain on the federal budget. But Democrats and Republicans are at odds about how to mitigate them in a dispute likely to grow in intensity during the coming months.

“The big-ticket budget item that really will be the hard one is replacing sequestration in a responsible way,” Murray said in an interview. “Without action, without an agreement, the sequester will kick in and the effects will be devastating to defense and nondefense” spending, she said.

The sequester’s effect is largely to rein in the rate of growth of federal spending through 2021. The Murray-Ryan deal extended some of the reductions through 2023 to soften the sequester’s cuts in 2014 and 2015.

For fiscal 2016, which begins Oct. 1, funding for discretionary spending—the chunk of the federal government that Congress must approve each year—will stay relatively flat. The cap on military spending will rise slightly, to $523 billion from $521 billion, while the cap on nondefense discretionary spending will fall slightly to $492.3 billion from $492.4 billion. Democrats note the government’s purchasing power is diminished when inflation is taken into account.

Democrats and Republicans initially had agreed to divide the cuts evenly between defense and nondefense spending in the 2011 deal that established the reductions. But some Republicans, including incoming House Budget Committee Chairman Tom Price (R., Ga.) have raised the possibility of redistributing the cuts to free up more money for military spending.

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