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What the budget deal means for Americans

December 19, 2013 at 12:00 AM EDT
The bipartisan budget plan passed by Congress will avert another government shutdown, give the Pentagon some relief from automatic spending cuts and restore billions of dollars to domestic programs. Gwen Ifill talks to Lori Montgomery of The Washington Post about how most Americans will experience effects of the budget plan.
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GWEN IFILL: There’s been a lot of talk about the politics behind the bipartisan budget agreement.

We take a closer look now at the devil in those details.

Senate Democrats were happy today to tout the budget deal headed to the president’s desk.

Budget Committee Chairwoman Patty Murray said, the agreement was about more than just funding the government.

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SEN. PATTY MURRAY, D-Wash.: We showed the American people that members of Congress can work together, that we can listen to each other and get into a room and talk frankly without trying to hurt each other politically. Secondly, by breaking through the partisanship, we finally ended the seemingly never-ending cycle of lurching from one crisis to the next.

GWEN IFILL: The budget plan averts another government shutdown like the one this past October that lasted for 16 days. It also gives the Pentagon some relief from automatic spending cuts and restores billions of dollars to domestic programs, including scientific research.

The $62 billion price tag will be paid for in part by scaling back benefits for military retirees under the age of 62. But, already, there is talk from both sides about finding the money somewhere else instead.

The deal won nine Republican votes yesterday, but others, including Tom Coburn of Oklahoma, argued it does more harm than good.

SEN. TOM COBURN, R-Okla.: But I want to describe who it’s a compromise for. It’s a compromise for the politicians. It’s not a compromise for the American people, because what it really does is increase spending and increase taxes.

GWEN IFILL: At the White House, aides to President Obama released a statement after the vote, saying, in part: “It’s a good first step away from the shortsighted, crisis-driven decision-making that has only served to act as a drag on our economy.”

The agreement now awaits the president’s signature.

Now here to walk us through some of the lingering debate about the budget deal is Lori Montgomery of The Washington Post.

Welcome back, Lori.

LORI MONTGOMERY, The Washington Post: Thanks for having us.

GWEN IFILL: So, does this deal mean that all those sequester cuts that we talked about, those across-the-board budget cuts have been permanently eased?

LORI MONTGOMERY: No, in fact, they have not been permanently eased.

This is a very modest deal. And Paul Ryan and Patty Murray said from the outset that they weren’t going to try to solve all the world’s problems. So what they have done is for the current fiscal year, they have walked back half of the sequester cuts. So $45 billion goes back to the agencies, $45 billion in cuts stays in place.

Next year, there is a slightly smaller relief from sequester. And after that, sequester stays put. So Republicans have won something, in the sense that they have maintained the spending caps that will reduce spending for the next 10 years.

But, in the short-term, for now, there’s going to be a big boost in spending for domestic agencies and the Pentagon that they hadn’t been expecting.

GWEN IFILL: So when you raise — when you raise that cap and you talk about domestic spending for the Pentagon, there are other agencies which I imagine benefit as well. Somebody got a benefit out of this.

Among them, for instance, during the shutdown we heard a lot about the National Institutes of Health, and children being turned away from medical trials. Do they now get more money?

LORI MONTGOMERY: Well, see, all of that has yet to be decided. And it’s been a little like premature celebrating around here. We have all been saying, oh, this avoids another government shutdown.

In fact, they have yet to — they have to pass another bill to avoid a government shutdown…

GWEN IFILL: Oh.

 

LORI MONTGOMERY: … which could still happen on January 15. I mean, in a rational world, it wouldn’t because Republicans and Democrats have now agreed, OK, here’s the number, this is what we’re going to spend on these things this year.

But they still have to, like, apportion out all this extra money that they have just decided to spend. And that will happen over the next month. And they will pass that bill, hopefully, when they get back in January.

GWEN IFILL: But the way things look now, for instance, we say somebody benefits, somebody pays. Are military retirees paying? There has been a lot of talk about that this week.

LORI MONTGOMERY: Yes. So this is by far the most controversial pay-for in this package.

This package doesn’t give away any of the extra money, but it does identify all of the savings that allow us to spend more now. So, those $85 billion in cuts, fees, airline passengers will pay more. There’s a bunch of stuff. But by far, the group that is yelling the loudest and getting hit most dramatically are military retirees.

Civil service workers, non-military workers will also see a reduction in their pensions, but that’s just for new employees. In the case of military retirees, if you are currently retired, and you’re under the age of 62, you will see a 1 percent knockoff of your cost-of-living increase.

GWEN IFILL: So, for instance, we know a lot of military people, especially here in the Washington area, who retired after 20 years in the military. They weren’t even 50 years old yet, and they’re the ones who would be targeted in something like this.

LORI MONTGOMERY: Exactly.

And so the argument is, well, these people are still of working age. They’re under the age of 62. They can retire as young as 38, 40, and many of them go on and currently have second careers. So, you know, they can afford to give away a 1 percentage point reduction.

But the argument on the other side, and it’s been coming primarily from the Republicans in the Senate, but I think Democrats are starting to concede, OK, maybe you have a point, is that these people have planned their lives around these benefits, and they see it as a breach of trust for them now to take a hit, you know, sort of retroactively.

GWEN IFILL: But isn’t there a defense authorization bill that is going through as well and it also has its protectors? Is the Pentagon one of those uncuttable agencies?

LORI MONTGOMERY: Well, the Pentagon is seeing its share of cuts. It’s not getting all of its money back. It’s getting half of its money back this year.

But there’s also a commission dedicated to military pay and benefits, which is — you know, we talk about Social Security. That’s almost nothing compared to cutting the benefits of our active-duty an retired military men. And that commission is supposed to report next year, because entitlements, you know, retirement and health care is eating the Pentagon alive, as it is in so many other parts of the country.

GWEN IFILL: If this stays in place, is there any way to calculate how much the average retiree would have to pay extra?

LORI MONTGOMERY: It’s not — it’s what they don’t get. So…

GWEN IFILL: Right. It’s a little backwards.

LORI MONTGOMERY: Yes.

So, they would — this year, for example, the cost-of-living increase was 1.5 percent. They would have seen a 0.5 percent increase instead of a 1.5 percent increase. And it can add up to real money. The union that represents military officers has said that this could be a hit of like $70,000, $100,000 if you are in that sort of doughnut hole from age 40 to age 62 for the entire period.

GWEN IFILL: Let’s talk a little bit about another area of the budget that this might affect real people, assuming it stays in place as it is now planned, which is payment to Medicare providers. This is not — we don’t necessarily know how much of this might trickle down to the actual patient. But doctors and clinics might be — have to pay more.

LORI MONTGOMERY: So the real danger here, this is another thing that is already in place. This is a part of a sequester that will not be relieved.

And what it does is, it cuts across-the-board, a two percent reduction in payments to providers of all types, hospitals, nursing homes.

GWEN IFILL: And that was a part of the original across-the-board cut?

LORI MONTGOMERY: And it stays in place and it’s not going it away.

So what this agreement does is it says, we would like to continue the sequester for Medicare providers for two more years, in 2022 and 2023. It’s a huge chunk of money. You know, it’s way out in the future. The complaint about this is, it may never happen so we may never see those savings. But, you know, the danger of making these kind of cuts is really, you know, whether doctors choose not to treat Medicare patients.

GWEN IFILL: Well, so the one thing that we know is true about all of this is, this is maybe a temporary patch and we might be facing another challenge very quickly. What happens next?

LORI MONTGOMERY: OK, so, first, we have to pass the funding bills and actually keep the government open, you know, per this agreement by January 15.

But then, on February 7, we hit the debt limit again because the last deal we made to reopen the government after we shut it down in October said, we will suspend the debt limit, but only until February 7. So we have got this new potential debt limit conflict coming.

Republicans in the House are saying, you know, we really don’t want a lot of fuss. It’s an election year. We would like to get through this easily. This modest bipartisan budget compromise could be a model. Maybe we can do this again.

But you have got all those Republicans in the Senate who are facing Tea Party challenges. And you are starting to hear from the Senate, oh, no, we want to fight, we want to cut spending again. So…

GWEN IFILL: Back on the merry-go-round once again.

(LAUGHTER)

LORI MONTGOMERY: Exactly.

GWEN IFILL: Well, I hope you and all the other reporters up on Capitol Hill get a little time off over the holidays to prepare for the next round.

LORI MONTGOMERY: Thank you. I hope so too.

GWEN IFILL: Lori Montgomery of The Washington Post, thanks.