Taxes & Spending

Boehner Wins: Historic Spending Cuts and No Government Shutdown

Speaker of the House John Boehner (R.-Ohio) announced at 10:55 p.m. on Friday night that he had finalized a deal with Senate Majority Leader Harry Reid (D.-Nev.) and President Obama to cut $38.5 billion, which is the biggest one-time cut in government spending in history.  

“I’m pleased that Sen. Reid and I and the White House have come to an agreement that will in fact cut spending and keep the government open,” said Boehner in front of a row of American flags.  “This has been a lot of discussion and a long fight.  But we fought to keep government spending down because it really will, in fact, help create a better environment for job creators in our country.”

With only 20 minutes left before a government shutdown, the Senate passed the short-term Continuing Resolution (CR) by voice vote.  The CR will keep the government funded until a vote on the final deal next Thursday.

The House then passed the same measure at 12:30 a.m. on Saturday, 30 minutes after the midnight deadline.  The House vote was 348 to 70, with 28 Republicans voting against it. White House’s Office of Management and Budget (OMB) had prepared for a slightly late CR and would not shut down the government because of the slim time margin.  President Obama must sign the short-term CR for the government shutdown to be averted.

The final agreement will be for $38.5 billion in cuts from current spending over the remaining six months of the current fiscal year, which ends on Sept. 30.  The spending cuts, although historic in size, account for only 2.5% of this year’s projected budget deficit of $1.6 trillion.

Boehner went into the weeks-long negotiations with Reid and Obama at the starting point of the House-passed $61 billion in spending cuts.  Reid never offered an alternative plan for spending cuts.  Obama wanted to freeze the current, bloated spending levels for the next five years.

Remarkably, Boehner ended the budget battle with almost two-thirds of the amount he demanded, while only controlling one-third of the positions in the deal-making.

Many give the Tea Party the credit for the strong House Republican position in the budget negotiations.  “They are having a more profound impact than even their leaders think they are,” said a House GOP aide.

“The Tea Party can take pride for causing a significant change in Washington culture.  The debate is no longer if we’ll cut, it’s how much and how soon.”  

Because the cuts demanded by Boehner will lower the level of bottom-line spending for future years, the impact of the $38.5 billion cut will have a longer-term impact.  The Tea Party members of the Republican caucus say that they came to Washington to shrink the size of government.

“There’s no way Congress could possibly, short of an emergency, go back to business as usual, where you automatically ‘plus up’ every single program every single year,” said the House aide.  “Everything is on the chopping block.”

The final agreement includes six key policy riders for conservatives, which Boehner deemed as “critical” for passage in the Republican House. The policy riders, which are spending limitations for specific programs, are:

1.  ObamaCare repeal vote:  The Senate will be forced to have a vote on the repeal of President Obama’s health care law, known as ObamaCare.  The House passed a repeal of ObamaCare in January.

2.  New tools to repeal ObamaCare:  The deal will require numerous studies to illuminate the true cost and impact of the President’s health care law on Americans.  The studies include determining how individuals and families will see increased premiums as a result of certain ObamaCare mandates, a full audit of all the waivers that the Obama administration has given to corporations, organizations, and unions, a full audit of the comparative effectiveness research funding in ObamaCare, and a report on the number and cost of government contractors hired to implement the law.

3.  IRS:  The deal denies the Obama administration’s request for increased federal funding for the Internal Revenue Service (IRS).

4.  Planned Parenthood:  The agreement with Senate Democrats guarantees a Senate debate and vote on legislation that would end federal funding for Planned Parenthood.

5.  Bans taxpayer-funded abortions:  The agreement includes a complete ban on federal funding of abortion in the District of Columbia (D.C.), applying the pro-life principles of the Hyde Amendment.

6.  Dodd-Frank audit:  The deal mandates audits of the Consumer Financial Protection Bureau bureaucracy created under the the Dodd-Frank law.  The yearly audits by both the private sector and the Government Accountability Office will monitor its impact on the economy and job creation.

When announcing the deal, Boehner said that a short-term “bridge” CR would be necessary to “allow for time for this agreement to be put together in legislative form and brought to the floor of the House and Senate for a vote.” 

The first $2 billion of the $39 billion in spending cuts would come during the bridge CR period from Saturday until the vote on the budget deal on Thursday.

Boehner has said throughout these budget talks that the GOP House would not pass any short-term CRs without spending cuts.  During the five weeks of debate, the House Republicans have forced through $10 billion in spending cuts by insisting on short-term CRs that cut $2 billion per week.  Boehner kept to this promise until, quite literally, the last hour.

Moments after Boehner spoke briefly off-the-cuff, Reid read a joint statement on the Senate floor.  “We have agreed to an historic amount of cuts for the remainder of this fiscal year, as well as a short-term bridge to avoid a shutdown as we get the agreement through both houses and to the President,” said Reid.

Reid also said that he and Boehner had “reached agreement on all of the policy riders.”  Until the announcement, Reid spent all day Friday claiming that the parties had reached an agreement on the budget number at the White House on Thursday night, but the deal was being held up by policy riders on defunding Planned Parenthood and the other conservative policies.

Boehner and other Republicans said on Friday that the closed-door negotiations were about the amount and type of spending cuts, and that the policy riders had already been resolved.

The budget battle was a carry-over from last year when the Democratic Congress did not pass a budget, for the first time since the budget rules were put in place in 1974.  The Democrats punted the final budget until after the midterm elections, and then were unable to pass a spending bill in the lame duck Congress.  Since the beginning of this fiscal year on Oct.1, the government has been funded through a series of short-term CRs, with the final and sixth one passing early Saturday morning.

Obama gave a prepared speech late on Friday night to acknowledge his loss in the budget battle.

“Like any worthwhile compromise, both sides had to make tough decisions and give ground on issues that were important to them, and I certainly did that.  Some of the cuts that we agreed to will be painful,” said Obama.  “And I would not have made these cuts in better circumstances.”

After the final six-month CR is drafted and passed by Congress next Thursday, the Republicans will raise the stakes even higher on cutting government spending.  Budget Chairman Paul Ryan (R.-Wis.) will have a vote on his Fiscal Year 2012 budget next week, and within a month, the President’s request to raise the debt ceiling will be before Congress.

The CR battle was a victory for fiscal conservatives, and hopefully will empower them to fight even harder for the bigger battles yet to come this year.

Senate Minority Leader Mitch McConnell (R.-Ky.) said late Friday night that, “this is an important first step, but just the beginning of what we need to do to get our house, our fiscal house, in order.”


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