WASHINGTON — The Senate today passed a two-year budget deal that is expected to provide the U.S. economy with surer footing in 2014 by preventing a partial federal government shutdown and better spreading the pain of sequestration cuts.
The $2.016 trillion deal for discretionary spending heads to President Obama, who is expected to sign the bill into law. The House approved the bill 332-94 on Thursday, and the Senate approved the legislation 64-36.
Because the budget doesn’t deal with the long-term fiscal issues, such as the growing costs of Medicare, Medicaid and Social Security, the nation’s GDP in 2014 will still be trimmed by 0.5 percent to 1.75 percent, according to various economists. The cut to GDP, however, could be as high a 4 percent if the nation tumbled over a fiscal cliff, economists warn. Congress still has to decide whether to raise the debt ceiling early next year, and a default to the nation's creditors could still push the nation over the so-called fiscal cliff.
Despite the anticipated benefits for the general economy, the deal comes at a cost for the U.S. Merchant Marine and some U.S. importers. If signed by Obama, the bill would end reimbursements to agencies for the additional cost of shipping food aid on U.S.-flag vessels. The repeal of the ocean freight differential, or OFD, would save $731 million, but some argue it will further discourage agencies from using U.S.-flag ships.
The budget deal, which includes $85 billion in spending cuts and fees, would also extend U.S. Customs and Border Protection’s collection of fees for overtime, preclearance services and agency contributions to the Consolidated Omnibus Budget Reconciliation Act, or COBRA. The bill, signed into law in 1986, gave some workers and their families access to group health benefits for a limited time if they lost their health benefits.
The fee-collection authority was originally expected to expire in fiscal year 2020 but would be extended to fiscal year 2023, which begins Sept. 30, 2022, CBP spokesperson Jenny Burke said. Through COBRA, CBP collects processing fees on commercial trucks, railroad cars, commercial vessels, dutiable mail packages, broker permits, and barge and bulk carriers from Mexico and Canada. The extension of the fee would save $6.8 billion.
The deal could, however, help federal agencies, such as the Maritime Administration and the Department of Transportation, better deal with sequestration cuts. The $63 billion in relief would be evenly split between defense and nondefense programs. There are also expectations that federal agencies will be able to choose how they want to sustain the sequester pain, instead of facing across-the-board cuts.