An Upside For Feds, No Federal Pay Freeze

Later today the House will vote on a plan to effectively lift the debt limit for four months, removing, or at least postponing, the threat of default. The bill, HR 325, temporarily extends the debt limit without seeking any concessions on spending, and allows Republicans a way to avoid having to actually cast a vote to raise the debt ceiling. Senate Majority Leader Harry Reid (D-NV) has indicated he won’t oppose the plan, and the Obama administration has already indicated it will sign the bill.

The fight moves to the sequester and the CR
The move effectively moves the spending fight to the two other elements of the budget crisis, the $85 billion sequester now scheduled for March 1, and the March 27 expiration of the continuing resolution (CR). In return for gaining conservatives’ support for the debt ceiling extension, Speaker John Boehner (R-OH) has pledged to seek some $73 billion in additional spending cuts for the remainder of FY13.

If successful, that plan would reduce the discretionary level for the current fiscal year from $1.047 trillion, the cap that was set by the 2011 deficit reduction agreement, to $974 billion, and would replace the $85 billion across the board reduction that would come due on March 1 if no agreement is reached. The bill also requires the Senate to pass a budget by April 15 and if not, have Senators’ pay held in escrow until January 2015, although that provision is obviously a gimmick and of questionable legality.

Ryan moves a budget resolution
In addition to seeking the $73 billion in cuts for FY13, House Budget Committee Chairman Paul Ryan (R-WI) also pledged to draft an FY14 budget resolution that will outline deep, dramatic spending cuts that will seek to eliminate deficits within ten years.

The previous Ryan budget, which Democratic opponents and many economists criticized for its austerity, sought to eliminate deficits over a thirty year period. Achieving a balanced budget in ten years without significant increases in revenue, which Republicans have vowed to oppose, would require extraordinary cuts in both discretionary and entitlement spending.

Effectively moving the budget fight away from the debt ceiling increase is clearly positive in a number of respects, and given that public opinion polls that were highly critical of congressional Republicans, a smart move politically as well. It does nothing, however, to move the two sides any closer to solving the long term fiscal crisis.

An upside for feds
There is one small bit of good news for feds. Yesterday the House Republican leadership scheduled, but later postponed consideration of H.R. 273, a bill that would have extended the federal pay freeze for civilian personnel through the remainder of FY13. A similar bill passed the House in the final days of the 112th Congress, but wasn’t brought up for consideration in the Senate. It’s likely that the House will vote on and pass the bill later in the session, and equally likely that the Senate won’t bring it up for a vote.

Read the full newsletter for more insight from the Government Affairs Institute