U.S. budget negotiators are working in Washington D.C. to iron out the details of a new plan to replace automatic sequester cuts in 2014 with a new long range budget agreement that could pass both chambers on Capitol Hill and avoid a government shutdown next month.
The 29 member bipartisan budget committee led by Senator Patty Murray (D-Wash) and Rep. Paul Ryan (R-Wisconsin) are working to achieve a budget agreement before a self-imposed deadline of December 13th that would fund the federal government beyond the January 15th deadline when federal funding runs dry.
The latest proposal would cap government spending at $ 1 trillion and replace some of the “across the board” sequester cuts in defense and non-defense government agencies.
As a condition of the fiscal agreement to end the 16-day partial government shutdown in October, the House and Senate were required to appoint budget negotiators and work towards a budget agreement to fund the government beyond January 15th and avoid the “across the board” sequester cuts which came to fruition after the last bipartisan “Super Committee” which failed to work out a budget deal following the first fiscal showdown in 2011, leading to the adoption of sequester cuts in March of 2013.
Sequestration cuts lower government spending by approximately $1.1 trillion over the 8 year period from 2013 to 2021.
The Congressional Budget Office (CBO) estimated that sequestration lowers 2013 economic growth by about 0.6 percentage points.
New Budget Proposals
Democrats on the Budget Committee initially sought to close corporate tax breaks under the terms of a new budget agreement but Republicans voiced their opposition.
The latest proposal that is currently under review includes Republicans agreeing to cap spending at about $1 trillion, instead of the $967 billion that they were seeking.
Additional revenue would be generated from increasing user fees, including for airline passengers that is expected to generate up to $ 11 billion.
Another proposal includes reducing funding to federal government employees’ retirement programs.
These proposals do not raise additional tax revenues as Republicans have insisted while it also preserves entitlements from being slashed as Democrats have pledged to protect.
Wednesday’s ADP private payroll report