Budget Stalemate Ends

Congress and the Obama Administration have ended the 16-day budget crisis by funding programs at current levels through January 15 and raising the debt ceiling until February 7. The measure requires the House and Senate to complete a budget conference agreement by December 13 which would fund the government through the end of the federal fiscal year and perhaps make other longer-term spending cuts to discretionary programs, reform entitlements and increase revenues. That package would then go to the House and Senate floors for a vote.

Democrats will likely continue to push for the Senate’s top-line spending figure of $1.058 trillion and resist cuts to entitlements. Party leaders would also like to replace the sequester’s across-the-board spending cuts with new revenue. On the other hand, Republicans will fight to preserve the $967 billion discretionary spending level set for FY 2014 under the 2011 Budget Control Act (PL 112-25), and will push back against anything that resembles a tax increase. Whether those vast spending and policy differences can be reconciled will be the focus of Capitol Hill over the next two months.

Passage of the three-month continuing resolution paved the way for hundreds of thousands of furloughed federal employees to return to work. All federal employees will receive back pay retroactive to October 1. Meanwhile, states that used their own funds to implement operations normally paid by the federal government will be reimbursed for those expenses.

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