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Congress Unveils $1.1 Trillion Plan to Fund Government

By Derek Wallbank
January 14, 2014 2:27 PM EST 80 Comments
The bill, announced last night by lawmakers probably will reach the House floortomorrow.
Photographer: David Rogowski/Bloomberg
The bill, announced last night by lawmakers probably will reach the House floortomorrow.

House and Senate lawmakers agreed to a bipartisan compromise to fund the U.S. government through Sept. 30, unveiling the measure days before financing for federal agencies is scheduled to lapse.

The $1.1 trillion measure includes $1.01 trillion for U.S. government operations, plus war financing known as overseas combat operations. Republican efforts to derail some regulatory initiatives and to deny funding for implementation of the 2010 health care law were left out to ensure passage and avoid a repeat of the 16-day partial government shutdown in October.

The bill, announced last night by lawmakers including House Appropriations Committee Chairman Hal Rogers, a Kentucky Republican, and Senate Appropriations Chairman Barbara Mikulski, a Maryland Democrat, probably will reach the House floor tomorrow, Rogers said.

Related: Congress Spending Bill Demands Details About NSA Spying

“Not everyone will like everything in this bill, but in this divided government a critical bill such as this simply cannot reflect the wants of only one party,” the lawmakers said in a joint statement. “We believe this is a good, workable measure.”

Negotiators had agreed on a $1.01 trillion base spending level in December as part of a two-year, bipartisan budget agreement. The spending measure unveiled late yesterday would support defense spending at about $573 billion for the current fiscal year, with $85.2 billion for overseas combat operations in Afghanistan, about $2 billion less than in fiscal year 2013.

‘Step Forward’

The bill “represents a positive step forward for the nation and our economy,” Sylvia Mathews Burwell, director of the White House Office of Management and Budget, said in a statement. President Barack Obama’s administration “urges Congress to move quickly to pass it,” she said.

Government funding runs through tomorrow, so lawmakers plan to pass a separate three-day bill at current funding levels to push the deadline to Jan. 18.

The House passed the stopgap measure today by voice vote, sending it to the Senate.

In an effort to win support from Democrats, House appropriators omitted contentious policy provisions such as one blocking Obama’s health-care law law. Republican efforts to thwart the law were at the center of a spending-legislation dispute that caused the October shutdown.

“There is nothing in the bill that blocks Obamacare,” Mikulski said.

Regulatory Changes

The measure also leaves out several regulatory changes sought by House Republicans, including to keep the Environmental Protection Agency from regulating greenhouse-gas emissions.

“We tried to keep those political riders out,” said Richard Shelby of Alabama, the top Senate Republican appropriator.

Even so, Republicans were able to place several provisions they’ve sought into the final measure.

The Office of Management and Budget would have to study the cost of implementing Wall Street regulatory changes mandated by the Dodd-Frank Act. Lawmakers preserved language that would block federal funding for abortions. The legislation would also prevent Washington, D.C., from spending any money to legalize marijuana.

One provision would stop Vice President Joe Biden and other senior officials from getting a pay raise.

CFTC, SEC

The Commodity Futures Trading Commission, which was empowered by the 2010 Dodd-Frank Act to oversee swaps traded by firms including Goldman Sachs Group Inc. and JPMorgan Chase & Co., received a small budget boost in the funding measure.

The agency has warned during the past three years that it lacks the funding to fully oversee markets blamed for fueling the 2008 credit crisis. It received $215 million, about $20 million more than its budget under last year’s spending cuts and $100 million below Obama’s request.

The spending bill would fund the Securities and Exchange Commission at $1.35 billion, or $324 million less than the SEC sought for 2014. It would cut $25 million from a reserve fund that pays for the agency’s big technology projects while mandating the SEC spend $44 million on economic analysis. That would require cuts from other programs.

While Congress approves how much the SEC can spend, the agency’s budget is fully offset by fees imposed on securities transactions.

IRS Funding

The measure gives the Internal Revenue Service $11.3 billion, leaving the agency’s budget little changed and finding a middle ground between a reduction of more than $2 billion sought by House Republicans and an increase of more than $1 billion sought by Obama.

The bill bars the IRS from targeting groups based on their ideological beliefs, in response to the agency’s scrutiny of Tea Party groups seeking nonprofit status. It doesn’t include Republican-backed limits on the tax agency’s paying bonuses or implementing the 2010 health-care law.

IRS officials have said that budget cuts would limit their ability to answer taxpayers’ calls and prevent tax cheating. Recent data showed the audit rate for individuals hitting the lowest point since 2005.

Representative Ander Crenshaw, a Florida Republican, said Democrats resisted policy provisions limited to the IRS.

“If you look at the IRS, funding was probably the most important thing, just because you don’t want to reward bad behavior,” said Crenshaw, who oversees the agency’s budget.

Phone Records

One provision would require the National Security Agency to turn over data about the collection of bulk phone records, including how many Americans have had calls intercepted by the agency.

Lawmakers also included a provision that would block USDA from spending money on meat inspectors for horses, effectively blocking horse slaughter for human consumption.

“There’s a lot of things in here to be for, a lot of other things that you’d rather not have, but this is a negotiated deal as opposed to a dictatorial edict,” said Texas Republican Representative Michael Conaway. “If the principle is to cut spending, then we’re cutting spending. If the principle is how much, then you know, you get to decide for yourself.”

Flood Insurance

Louisiana Democratic Senator Mary Landrieu, chairman of the appropriations subcommittee that allocates disaster assistance, won inclusion of a provision that would grant an eight-and-a-half-month reprieve to homeowners and businesses facing higher flood insurance premiums.

The provision originated as a House floor amendment offered by Landrieu’s 2014 Republican opponent, Representative Bill Cassidy.

The Heritage Foundation, led by former South Carolina Republican Senator Jim DeMint, kept a tally of what it called “pork projects, ineffective government programs and giveaways for corporate cronies” in the bill.

Among them were an increase in the maximum Pell grants to college students, $1.9 billion in renewable energy funding and $562 million for the oil, coal and natural gas industries.

“The fossil energy industry makes plenty of money to support its own research and development,” Heritage fellow Nicolas Loris wrote. Government funds “either simply offset spending that the private sector would have undertaken or supports efforts that have no market viability.”

Asked how many Republicans would vote for the bill, California Republican Darrell Issa replied, “There will be enough.”

Postal Service

Issa said he didn’t get everything he wanted. He pushed for five-day mail delivery for the U.S. Postal Service as a way to cut costs, while the bill requires six. That’s on Heritage’s list, too.

The Senate plans to take up and pass the short-term extension once the House completes action. Any senator could delay passage of either measure for about four days, though no senators have said they will do so.

Lawmakers struggled to trim more than $25 billion from military spending amid lobbying from defense contractors including Lockheed Martin Corp. (LMT), Boeing Co. and General Dynamics Corp. (GD) The top customer for each of the top 10 federal contractors was a unit of the Department of Defense, according to a Bloomberg Government compilation of contracting records.

The bill would cut funding for buying and developing new and upgraded weapons systems and defense technologies, though it would reverse benefit cuts for disabled veterans under the December budget deal.

Veterans Benefits

“We came up with a fix for the disability and survivor part, which is a down payment,” Mikulski told reporters. She referred to disabled veterans of working age and survivor benefits that were reduced in December.

The measure didn’t include a proposed $63 billion contribution to the International Monetary Fund’s permanent capital fund, according to a summary provided by the House Appropriations Committee.

The $1.1 trillion measure will be offered as an amendment to H.R. 3547. The stopgap bill passed by the House today is H.J.Res. 106.

To contact the reporter on this story: Derek Wallbank in Washington at dwallbank@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

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