GM 15-076

Two-Year Budget and Debt Limit Accord Reached

Congressional leaders and the White House this week reached agreement on a two-year (FYs 2016 and 2017) budget agreement, HR 1314, the Bipartisan Budget Act of 2015. It raises the spending caps above the levels set in the previous budget accord (PL 112-25, the Budget Control Act of 2011). The agreement also addresses the debt limit issue by increasing the United States’ borrowing authority, thus averting the Nation from defaulting on our financial obligations. The predicted default date was November 3 of next week. We attach a detailed summary of the agreement prepared by the House Rules Committee.

The House approved the bill October 28, 2015, by a vote of 266-167, largely with Democratic votes. Of the yes votes, 187 were from Democrats and 79 from Republicans. The Senate is expected to approve the bill this Friday (October 30) or over the weekend, but it will require a vote to limit debate (invoking cloture) before a final vote on passage. The President has stated that he will sign the legislation.

Under the agreement, the discretionary spending caps will be raised by $80 billion over two years, evenly divided between defense and non-defense programs. The FY 2016 cap is raised by $50 billion ($25 billion each for defense and non-defense) and $30 billion for FY 2017 ($15 billion each for defense and non-defense). Additional money is added for the Overseas Contingency Operations war funds account; those funds do not count toward the cap.

President Obama had said he would veto appropriations bills which adhere to the existing spending caps; he had proposed a $37 billion increase for FY 2016 for discretionary domestic spending, $12 billion more than is provided for in the budget agreement.

The next step is for the Appropriations Committees to complete their work on FY 2016 funding bills, taking into account the new, higher budget caps. It is not certain whether any of the appropriations bills will be enacted as free-standing statutes or whether they will be combined into an omnibus bill or that several bills will be combined into mini-omnibus bills. The Appropriations Committee chairs will have the lead in deciding how the additional funding authority will be allocated. There are significant differences between the pending House and Senate appropriations bills on programs affecting tribes and tribal organizations, and so the allocation process and Subcommittee decisions are of great interest. We provided a comparison of the pending FY 2016 House and Senate Indian Affairs and IHS appropriations bills which highlight the funding and policy differences. See our General Memoranda 15-048 for Indian Affairs and 15-049 for the Indian Health Service (both July 7, 2015).

Included in the combination of spending cuts, savings, and revenue increases which collectively cover the cost of the budget agreement are:

• Repeal of the provision in the Affordable Care Act which required that employers who offer qualified health plans and have more than 200 full-time employees: automatically enroll new full-time employees in health insurance coverage and automatically extend the coverage of current full-time employees.
• Limitation of the scheduled increase in Medicare Part B monthly premiums for those enrollees not in the “hold harmless” category to $120 per month rather than the projected $159 monthly rate. About 30 percent of Medicare Part B enrollees are not in the “hold harmless” category.
• Reduction of the projected increase in Medicare Part B deductibles from $223 to $167 for all enrollees.
• Extension to generic drugs the requirement currently in effect for brand-name drug manufacturers to provide a rebate to Medicaid if increase in prices exceeds inflation.
• The reimbursement rate for newly acquired off-campus physicians’ offices purchased by hospitals will be at the lower inpatient rate.
• Efforts to decrease waste, fraud, and abuse in the Medicaid and Supplementary Security Income programs.
• Sale of a portion of the Strategic Petroleum Reserve.
• Auction of a portion of the federally-held spectrum. Funds from the Spectrum Relocation Fund would be used to study which portions of the spectrum could be available for auction.
• Protection of the Social Security Disability Insurance fund via a reallocation of how payroll tax revenue is allocated.
• Increase in single employer pension plan annual premium rates for both fixed rate and variable premiums.
• Cancellation of $1.5 billion from the Crime Victims Fund. (See our General Memorandum 15-050 of July 10, 2015, regarding legislative efforts to provide tribes with direct access to the Crime Victims Fund. That legislation has since been marked up by the Senate Committee on Indian Affairs).
• Increase in the rate of return for crop insurance providers under Standard Reinsurance Agreements, a provision that caused strong opposition among members representing rural districts. Apparently, Congressional leadership has said they will pursue a change to this provision in an omnibus spending bill.
Please let us know if we may provide additional information regarding the Bipartisan Budget Act of 2015.