Updated: Summarizing the Ryan-Murray Deal

Update: See our full analysis of the deal here

On December 10th, Budget Committee chairmen Patty Murray and Paul Ryan announced an agreement to set discretionary funding levels for 2014 and 2015 and provide a package of reforms to offset the costs of appropriating funds above the levels set by sequestration.

The package would provide $45 billion of sequester relief in FY2014 and $18 billion in FY2015, split evenly between defense and non-defense. This $63 billion in sequester relief -- which is projected to increase outlays by $62 billion -- would be offset with $85 billion of cuts and user fees over ten years, including from:

  • Increasing airline security fees (Read our discussion of this policy here)
  • Increasing PBGC premiums (Read our discussion of this policy here)
  • Increasing federal civilian retirement contributions and reducing COLAs for military retirees (Read our discussion of this policy here)
  • Extend Medicare and other mandatory spending sequester cuts into 2022 and 2023
  • Reduce overpayments and other fraud
  • Add a "self plus one" option to the Federal Employees Health Benefits program
  • Reduce compensation to guarantee agencies for rehabilitated loans
  • Other spending cuts and user fees, including extending customs fees until 2023, ending the ability of the Strategic Petroleum Reserve to accept oil, reforming some mineral leases, among many others

As more details become available, we will continue to study and analyze the proposal. At face, the package appears to replace some of the abrupt mindless sequester cuts with more gradual and targeted reform while reducing deficits by $15 billion over the next decade and more in the following decade.

Savings and Costs in the Budget Conference Committee Agreement


*Mandatory sequester and customs fees only are extended through 2023. They would save a comparable amount annually in the second decade if they were extended further.
**While airline fees continue after 2023, they are used as "offsetting collections" which are not considered deficit reduction. If these collections were used to lower the spending caps in those years, the savings would be about $20 billion.
^Could add $2 billion to the deficit over ten years if the reduced accrual payments are used to increase spending in other areas.

The budget agreement would have only a very minor impact on debt levels relative to keeping the sequester in its entirety. Under the CRFB Realistic baseline with the sequester, debt would have reached 68.7 percent of GDP in 2023 and 78.9 percent in 2030. Under this plan, it would be around the same place in 2023 at 68.6 percent and at 78.7 percent in 2030. Importantly, assuming the sequester remains in place permanently, debt levels would be several points lower than a baseline which repealed the sequester.

Debt as a Percent of GDP, 2010-2030

In a statement reacting to the announcement of the deal, the Fix the Debt Campaign congratulated Congressman Ryan and Senator Murray for working on a bipartisan basis to address the sequester and put in place at least some permanent savings. However, much more work is still needed to address the long-term debt.

This deal demonstrates that Republicans and Democrats in Congress can work together on a proactive basis, rather than relying on 11th hour deals and governing by crisis. All indications are that we will need to fix the system before we can fix the debt, and it is a small start that this agreement takes a responsible and bipartisan approach to dealing with policy trade-offs and paying for necessary changes instead of adding to the deficit.

To be clear, this deal falls well short of what is needed to deal with the nation’s fiscal challenges. It will have only a marginal impact on the debt and it does not tackle the difficult choices we will have to make. It does not address the growth of entitlement spending, provide for tax reform, or help target government spending away from consumption towards more productive investments. It does not even put in place any further steps to help deal with these challenges in a timely manner...

...Still, it is preferable to another round of punts, gimmicks, and showdowns. Lawmakers should pass this legislation with the understanding that it is a step forward not avictory. There is more work to be done.

Be sure to check back at crfb.org over the next couple of days for further analysis.

 This deal needed more

 This deal needed more spending cuts that take effect immediately, just like the Sequester cuts will take effect immediately.  Otherwise, eventually, lawmakers could just repeal some of the spending cuts before they take effect.  Also, getting FY spending under $1 trillion is a landmark, and should've been achieved in this deal.

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