President and Leaders in Congress Agree on FY 2011 Spending Levels

Keeping us on the edge of our seats until the very end, Speaker John Boehner (R-OH) announced late Friday night that a deal had been reached on spending levels for the current fiscal year, just an hour before a government shutdown was set to occur. Though the President and leaders in Congress agreed to a six-month CR, a one-week CR was enacted to give Congress time to put the agreement into legislative language. The details of that CR are not crystallized yet except for the overall funding level (about $38 billion below 2010 levels, $78 billion below President Obama's 2011 request), but we do have some idea of what is in it, which you can see in today's Wall Street Journal.

  • Agency cuts: According to WSJ, the CR would cut $13 billion from the President's request for 2011 from the Departments of Labor, Education, and Health and Human Services. This represents about a $5 billion reduction from 2010 levels. Still, it seems that Obama's priorities, specifically Head Start and Pell Grants, were preserved. State Department and foreign-aid programs will be frozen at 2010 levels, which represents an $8 billion cut from the President's budget. The Defense Department will get off easy, getting a $5 billion increase in its budget from 2010 levels, although this is less than the levels proposed by both the President's budget and Congressional Republicans.
  • Policy riders: The most talked about policy rider in the final days before the shutdown was a provision which would have denied Planned Parenthood the ability to use federal funds for abortions. However, this rider was not included in the final package, nor were any of the other proposed riders, including one which would have prevented EPA from regulating greenhouse gases and another to defund health care reform. The package did include two DC-related riders -- one that would revive a school voucher program and another that would prohibit the DC government from funding abortions. As part of the deal, the Senate also agreed to hold two up-or-down votes: one on Planned Parenthood funding and one on defunding health care reform.
  • CHIMPs/Mandatory cuts: As Senator Schumer (D-NY) and other Democrats had called for, the package includes "changes in mandatory programs" (CHIMPs) which essentially allows some mandatory cuts to be counted as discretionary. In fact, almost half the savings -- $17.8 billion of the $38 billion -- comes from cuts to mandatory programs. This does include two changes to the health care reform law that will affect mandatory spending. These changes would cut $2 billion from the budget for non-profit health insurance co-operatives (the CO-OP program, which is intended to function as a weaker version of the public option) and it would eliminate a part of the law that would allow low-income earners to opt out of employer-sponsored health insurance to purchase insurance on the new exchanges. Other details about the CHIMPs are unknown at this point.

We will have further coverage of the deal in its entirety when the final specifics are announced. With the battle over funding for FY 2011 behind us, leaders in Congress and the Administration must now look toward dealing with some much more significant fiscal challenges in the coming weeks, with the debt ceiling limit due to be reached just as negotiations over the budget for FY 2012 and beyond heat up.