The Bipartisan Budget Act of 2013 caps the federal government’s overall discretionary spending for Fiscal Year 2014 at $1.012 trillion and for Fiscal Year 2015 at $1.014.
This deal would eliminate some of the spending cuts required by the sequester by $45 billion of the cuts scheduled to happen in January and $18 billion of the cuts scheduled to happen in 2015. Federal spending would thus be larger in these two years, but would be less in subsequent years until 2023. The deal makes up for this increase in spending by raising airline fees and changing the pension contribution requirements of new federal workers, among other measures. Paul Ryan said that the bill would lower the deficit by $23 billion overall. The eliminated sequester cuts were spread evenly between defense spending and non-defense discretionary spending. The bill did not make any changes to entitlement programs.
The spending reduction provisions contained in the bill are:
• Federal fees associated with airline security were increased from $2.50 to $5.60 for a one-way, non-stop flight. It would also increase the current maximum $5 fee for a one-way, connecting flights to $5.60.The Transportation Security Administration would take in $12.6 billion over ten years as a result of this change. The industry association Airlines 4 America lobbied against the change because it could deter travel as a result of increased ticket prices. Airlines received two concessions in exchange for ending their lobbying against the increase: TSA agents to continue monitoring the exits of “sterile areas” that had passengers who had already been screened by security and the elimination of an Aviation Security Infrastructure Fee charged to airlines. Representative Mick Mulvaney indicated that members were told airlines had quit lobbying because “the airlines got something out of it. That’s how it works in this town. If you have a lobbyist you get something.” The bill states that any money raised by this tax will be placed in the government’s general fund.
• The deal would require newly hired federal employees to pay a larger share into their pension fund than they would have had to pay prior to this deal. This change equals a 1.3 percent decrease in their pay.
• American troops who have retired and are under the age of 62 would have cost-of-living adjustments (COLA) cut by 1 percent each year under the new deal. By the 2014 calculation of 1.5 percent the retired will receive .5 percent increase. Their COLA will still go up, however.
• The maximum salary of a federal contractor would be capped at $487,000.
• The Department of Commerce keeps a file called the “Death Master File” of everyone who has died and what their social security number was. This budget deal would try to prevent fraud by restricting access to this list and increasing the punishments for misuse.
• Reporting requirements and coordination were improved to ensure prisoners did not receive government benefits such as unemployment checks.
• The bill would end automatic payments to non-profit student loan servicers and change their payments to a yearly authorization. Paul Ryan’s office says that this change will save the government $3 billion.
• The sequestration caps, which would have expired after 2021, were extended to apply to 2022 and 2023.
Sources: CNN, The Hill, Congressional Budget Office