Federal budget deal looks promising but watch out here comes the debt ceiling!
The Senate will vote this week on a bipartisan two-year federal budget that was approved by the House last week. The Senate is expected to pass the budget proposal by Thursday.
If passed, the deal will set federal spending at $1.012 trillion for fiscal year 2014, and $1.014 trillion for 2015.
Aside from eliminating the threat of a government shutdown until 2016, the budget deal will save $28 billion over 10 years and cut the deficit by $22.5 billion. To make up the windfall, the budget will increase TSA fees (costing air travelers), raise premiums that companies pay the government to guarantee pension benefits, and increase border protection fees.
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"As an American over the last couple of months, it has been so nice to see the government actually do its job," says The Daily Ticker's Henry Blodget. "Hey, a budget comes along, two sides stake out their positions, they compromise in the middle and go. No huge crisis, no weeks of America at the precipice, no grandstanding about how the greatest country in the world is going to voluntarily default on its debt."
This deal also helps restore faith in an ailing Republican party. As of October 2013 Republican party favorability was at a record low of 28%.
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"It was good politics for [Republicans] because they want us all to be focusing on the Affordable Care Act which has been a debacle," says Aaron Task. "It's good politics to be seen as a responsible party that's going to agree to a compromise."
While it appears that the threat of a shutdown is off the table for now, it may not be time to put on party hats and get out the champagne glasses. The dreaded debt ceiling fight could once again rear its ugly head. According to The Wall Street Journal, Republicans are gearing up to make big demands of President Obama in order to increase the ceiling (which some predict we'll hit by early March 2014).
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"Imagine, we get out into next year, we're setting the tone for the year and suddenly the government is in crisis again, people are thinking about forcing the country to default," says Blodget. "And what do they want in exchange? More budget cuts. The deficit shrank a huge amount this year...but now apparently the talk is going to be that we need more. If that's really what Republicans want fine, but I suspect that the point is 'let's use the budget deficit to trim the programs we hate.'"
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