![An angry John Boehner (R-OH) lashed out at conservative groups who opposed the budget deal. The deal strengthens his hand with his caucus and in negotiations over changes to Obamacare. [Credit: Washington Post]](https://i0.wp.com/www.dougsbriefcase.com/blog/wp-content/uploads/2013/12/credit-washington-post.jpg)
An angry John Boehner (R‑OH) lashed out at conservative groups who opposed the budget deal. The deal strengthens his hand with his caucus and in negotiations over changes to Obamacare. [Credit: Washington Post]
Last week’s overwhelming House vote to ratify a modest budget agreement has been variously depicted as a defeat for the Tea Party, a rare instance of bipartisanship, and a moment of rationality in an otherwise chaotic and dysfunctional budget process. It is all of those things and something more: a new threat to the already troubled implementation of Obamacare.
The Senate is scheduled to vote tomorrow on invoking cloture on the agreement. Should the Senate follow the House’s lead, the likelihood of another government shutdown on January 15 will become infinitesimal. It would also serve as a rebuke to outside groups on the Left and Right. House Democrats backed the deal, despite criticisms from labor unions that it requires federal workers to contribute more to their pensions and allows unemployment benefits for an estimated 1.3 million Americans to expire later this month. House Republicans ignored their Tea Party wing, which argued that the deal marked a retreat from the discipline of across-the-board cuts.
The conservative argument in favor of sequestration is a curious one. Automatic cuts were conceived in the budget deal of 2011, a deal that many conservatives faulted as too timid. The measure called for the creation of a special committee to write a bill to reduce federal borrowing by $1.5 trillion over a decade. If that committee failed, which it inevitably did, automatic cuts totaling $1.2 trillion would take effect over a series of years. Those cuts would largely spare entitlement programs, which pose the most severe threats to the government’s fiscal health, slashing military and domestic spending instead.
Conservatives argued that these cuts were President Obama’s idea which, in their minds, is the cruelest insult imaginable. But in the wake of the President’s re-election, conservative thinking abruptly changed. They embraced the President’s sequestration proposal they once loathed, treating it as though it were their greatest achievement. Sequester, instead of the consequence of failure, became the goal. When it came to reducing deficits, conservatives suddenly preferred mindless across-the-board cuts to reasoned policy changes.
Their beef with this most recent budget deal does have some merit. They point out that, while the spending increases are immediate, the offsetting savings will take years to materialize. The chart below [click on it to enlarge] illustrates their point.
Under the budget deal, new federal spending will amount to $63.2 billion, but it will be offset by a total of $85 billion in deficit reduction over a ten-year period, meaning that it will reduce the deficit by about $22 billion. As conservative critics have noted, the spending increases will be immediate, while the savings will take a decade to materialize. The deal allows federal spending to increase by $63.2 billion over this year and next. Only $6.5 billion of that additional spending will be offset during that time. Advocates of the deal argue that savings mount over the years, and the chart corroborates that. Savings from 2016–2021 will amount to $31.2 billion. But even after eight years, the federal government will remain in a hole: having spent $63.2 billion in just two years, it will still have have recovered only $37.7 billion after eight. The bulk of the savings – and the entire $22 billion in deficit reduction — won’t be realized until 2022 and 2023. So it is fair to say that the deal allows the government to spend immediately and postpones the bulk of the savings for nine or ten years.
That savings are back-loaded is unavoidable. Republicans have often advanced, supported and voted for temporary relief from cuts whose costs are paid off over time. Sparing doctors from sharp drops in Medicare reimbursement – sometimes for a year, sometimes for less – has become a bipartisan Congressional tradition. The costs of that relief are incurred straightaway; the offsetting savings typically take a decade to accumulate. That is but one example of something that is characteristic of bills that Democrats and Republicans alike have supported. To object in this one case is just a bit disingenuous.
Such objections also are odd because the agreement is so small – the $63.2 billion amounts to a 0.77 percent increase in federal spending over the next two years; the $22 billion in deficit reduction a mere 0.3 percent improvement in projected shortfalls. It is simply too inconsequential to justify the ferocity of criticism that some conservatives have launched.
The deal was reached primarily because it came at the right moment, following a roller-coaster ride during which both parties threw up on themselves multiple times. The year dawned with the President winning his increase in income and payroll taxes, a dispiriting defeat for House Republican leaders. Congress then defied the President’s efforts to derail the first round of across-the-board cuts, leaving him to look weak and ineffectual as the public ignored his declarations about how devastating the cuts were. Republicans were next to soil themselves, insisting that they could defund Obamacare on a stopgap spending bill, producing instead a government shutdown that left them discredited. But not for long. Their blunder was followed almost immediately by stories about the bungled healthcare.gov website and the President’s grudging acknowledgement that millions had lost insurance coverage he had repeatedly promised they could keep.
Even politicians sometimes grow weary of political conflict, especially after serial humiliations. Both parties saw the benefits of a budget truce and both were happy to tell naysayers in their respective bases to take a hike.
Republicans stand to benefit most from the resulting period of tranquility. When Congress returns after the holidays, the real problems with Obamacare will begin to surface: many who had coverage for years will find that they are newly uninsured, many who thought they had enrolled in policies will learn that they don’t have coverage, many who are covered will find out that they can no longer see their doctor or receive care from hospital systems in their area. Consumers will complain about high premiums, burdensome cost-sharing, narrow networks and restrictive drug formularies.
Compared with those problems, a dodgy website and millions of cancellation notices will seem insignificant by comparison. The White House will need a distraction from the health law’s failings. That is one reason why Senate Majority Leader Harry Reid recently announced that the Senate would take up a bill to extend unemployment benefits in January. But such a bill, like initiatives to raise the minimum wage and change immigration laws, are unlikely to divert attention from the health care flop.
Another budget standoff, with the threat of another government shutdown on January 15, might have done the trick. The budget deal almost certainly takes that off the table, assuming the Senate follows the House’s lead and adopts the compromise.
Lacking that distraction, the President will find himself in a very weak position. Democrats who have been asked to trust the Administration despite the law’s stumbling roll-out may well wander off the reservation once the next wave of bad news breaks. They could begin to insist on changes to the law that could further damage its troubled implementation, presenting Republicans with a huge opportunity.
Which is why Speaker Boehner laced his statements last week with uncharacteristic rancor and bravado. After a year of having to accept ill-conceived legislative strategies devised by back-benchers, interest groups and radio talk show hosts, the budget vote leaves Boehner the unquestioned leader of his conference. That gives him the upper hand, should the White House and Congressional Democratic leaders lose their hold on members. By this time next month, the Speaker may be in a position to negotiate the contours of a bipartisan bill that would sever the tie between the insurance industry and the administration on which the success of Obamacare depends.
That outcome is hardly assured. The task is daunting, the politics delicate. But the budget deal accomplishes two important things for Republicans: it removes a potential distraction from Obamacare by averting a January government shutdown and it leaves the Speaker free to devise and execute a legislative strategy without interference from outside groups.