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Ryan-Murray Budget Compromise Set to Increase Spending


Demian Brady
December 11, 2013

The Congressional Budget Office (CBO) released its cost estimate for the provisions of the Ryan-Murray budget compromise, known as the Bipartisan Budget Act of 2013. As was widely reported, the House's and Senate's budget leaders crafted their compromise around reducing the discretionary spending limits set in place under the bipartisan Budget Control Act of 2011. These cuts, automatically enforced across-the-board through a process known as sequestration, were effective and helped rein in the budget: not since the 1950s had federal spending dropped in two consecutive years. The numbers reported by the CBO show that this budget compromise would weaken the fiscal discipline that Congress and the President agreed to just a few years ago.

The Ryan-Murray compromise would lift the budget caps by nearly $45 billion in FY 2014 and $19 billion in FY 2015. The new spending resulting from gutting the caps would be spread over the next six years, but the bulk would occur in the first two years: $26.3 billion (42 percent) in the first year and $21.6 billion (35 percent) in the second year. At an annualized rate, spending would increase by an average of $12.4 billion through the first five years.

A part of this new spending would be offset through various changes in direct spending. Unfortunately, on an annualized rate, the spending cuts will not keep pace with the increases. While nearly 75 percent of the new spending occurs up front, nearly 75 percent of these savings occur after the first five-year budget window. The proposals would reduce spending by $19.5 billion through the first five years and by an additional $58.8 billion over the next five years. At an annualized rate, the changes to direct spending programs would save $3.9 billion a year through the first five years.

While many of the direct spending changes would enact some real reforms, such as increasing the amounts that new federal employees and members of the military will contribute towards their pensions (a savings of $1 billion over five years and $6 billion over 10 years), or reducing fraudulent payments to inmates ($33 million over five years and $80 million over 10 years), a large portion of the savings would result from increases in user fees and premiums.

The Ryan-Murray plan would increase aviation security fees, extend customs user fees by two years (currently set to expire in 2021), establish a new user fee for beneficiaries of conservation planning technical assistance, and would increase premiums to the Pension Benefit Guaranty Corporation. Combined, these four proposals account for $8.8 billion in savings through five years -- 45 percent of the total savings reported by the CBO.

On net, the Ryan-Murray plan would increase spending by $42.3 billion over the next five years, and, on paper, would eventually lead to spending cuts of $16 billion through 10 years. But if Congress can't even abide by the modest discipline it imposed on itself just a few years ago, it would be foolish to believe in the durability of these long-term, promised cuts.


 

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