Budget Deal Passed: Next Steps

As the year winds to a close, the House and Senate have both approved a bipartisan budget deal, which sets allocations for the remainder of Fiscal Year (FY) 2014 and for FY 2015. The President is expected to sign the deal.

The agreement provides $1.012 trillion for FY 2014 and $1.014 trillion in FY 2015.  While it does not completely address sequestration, the budget deal provides some relief from the sequester for discretionary spending; $63 billion for both years.  For more information on the specifics of the deal click here: http://www.budget.senate.gov

So what happens next?

The House is now home for the holidays and the Senate will follow shortly. Appropriations Committee staff will be working overtime to try to draft language for the remainder of FY 2014 that Congress will consider when they return in the New Year. The current Continuing Resolution (CR) expires on January 15th.

There are a number of different scenarios as to how FY 2014 will play out:

  1. An omnibus of all 12 bills
  2. Large package including some bills and CR for others where there is not consensus
  3. A CR with just a date change to carry the federal government to September 30, 2014 (least likely)

A few things to keep in mind:

  1. The current CR expires on January 15th, which does not allow for much time to draft language and get consensus. We could see another short term (possibly just a few days) CR to buy Congress some more time to work on the funding bills.
  2. Even though there has been agreement on FY 2014 and FY 2015 top line numbers and some sequestration relief, the debt ceiling will be another fight early in the New Year.
  3. The budget deal included a three month fix to the SGR (or doc fix), however, discussions around finding a permanent fix to this expensive issue will continue in the early part of the New Year.
  4. While the budget deal did provide some sequestration relief, the issue is certainly not resolved and will continue to plaque Congress going forward.
  5. The sequestration relief that was provided only addresses the discretionary side of spending and in fact extended the sequester for mandatory spending—meaning that Medicare providers will see another 2 percent cut to their reimbursement in 2014.
  6. The President’s budget for FY 2015 is usually delivered to Congress in mid-February but could be delayed until after the FY 2014  spending is resolved.
  7. Elections – wild card. While the general feeling is that most lawmakers want to get FY 2014 resolved, it is hard to tell how primaries and elections will influence the playing field. This will be something to watch.

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