No ‘grand bargain,’ but the budget pact is a big deal for millions of Americans

The two-year budget deal that congressional leaders negotiated with the White House may not be the kind of sweeping accord that House Speaker John A. Boehner and President Obama once tried to hammer out, but its provisions will directly affect the lives of millions of Americans.

Senior citizens will be spared a 52% increase in Medicare premiums that would otherwise have taken effect next year. The Social Security disability system will be shored up for a decade, ending the threat of a 20% reduction next year in benefits for the disabled. And rather than being cut once again, spending will increase at the Pentagon and on domestic programs, including medical research and Head Start preschool programs.

That last point, in particular, represents a setback for congressional Republicans, who have campaigned for a steady shrinking of most government functions. But despite the protests of many on the GOP’s conservative flank, the deal seemed to tap into enough priorities on both sides to ensure passage by the House, probably on Wednesday, and the Senate in the days ahead.

Representing just 1% of the government’s nearly $4-trillion budget, the deal rolls back most of the mandatory budget “sequester” cuts that Congress had approved as a last-ditch compromise during the budget battle of 2011.

So instead of the federal budget being slashed by $80 billion, the cuts will be reversed under the agreement, and government spending will rise slightly for the remainder of this fiscal year and next. The money will be divided equally between Pentagon accounts that Republicans favor and domestic programs pushed by Democrats.

Protests from conservative lawmakers will make it almost impossible for Boehner to rely solely on his Republican majority for votes. Passage instead will come from an unusual alliance of GOP defense hawks, who welcomed the $40-billion boost to military budgets, and Democrats, who will get the same amount, allowing them to safeguard $1 billion in medical research funding at the National Institutes of Health and keep thousands of children in Head Start programs.

“Overall, we’re quite pleased with the outcome,” said Sen. Charles E. Schumer (D-N.Y.).

Changes in the disability program pleased some Republicans as part of their effort to stem the rising costs of the safety net entitlements. But the changes did not go far enough for others, who had wanted to impose tougher work requirements. They had to settle for new anti-fraud provisions. Many on both sides remain unhappy that the money needed to keep the fund solvent will be drawn from the payroll tax devoted to Social Security.

Republicans also counted as a win changes to the Affordable Care Act that will no longer require big employers with more than 200 workers to automatically sign up their workers for healthcare plans. The GOP wants to chisel away at Obamacare and what they consider its onerous requirements on business owners.

Perhaps the only bipartisan crowd-pleaser was a provision negotiated by House Minority Leader Nancy Pelosi (D-San Francisco) that halts a sharp rise in Medicare premiums this year that could have been devastating for some seniors.

As many as 30% of seniors receiving Medicare would have seen their premiums soar by as much as 52% in the coming year — when Social Security recipients will not receive a cost-of-living increase.

“By finding a sensible solution to keep premiums manageable for over 16 million beneficiaries, Congress is helping to prevent financial hardship for many beneficiaries,” AARP wrote congressional leaders in a letter Tuesday.

The full price tag for the package rises to $112 billion after including contributions from an account that’s supposed to be set aside for military action overseas.

“This deal isn’t perfect,” Boehner said Tuesday. The package stands as his final legislative accomplishment as he prepares to retire this week.

“A bipartisan agreement in a town that isn’t known for a lot of bipartisanship,” he said. “You’re going to see some bricks flying. ... It’s a solid agreement.”

Obama, speaking to 14,000 police chiefs meeting in Chicago, sounded a similar chord of optimism.

“It’s an actual bipartisan compromise, which hasn’t been happening in Washington a lot lately,” Obama said. “It locks in two years of funding for budgets that finally free us from this cycle of shutdown threats, last-minute patchwork fixes. … That’s good news for everybody. It’s a step forward.”

The rest of the package is paid for with fresh cuts and fees that have left all sides grumbling.

As much as $11 billion will come from new tax filing fees, particularly on hedge funds and private equity investors. Other revenue will be generated from auctioning the federally owned broadcast spectrum, changing the strategic petroleum reserve and extending the sequester cuts — which are set to resume after the two-year deal expires — to 2025.

Agriculture state lawmakers are concerned about last-minute subsidy cuts to the crop insurance program. Many threatened to withhold their support for the package if those remained part of the deal because it would make it too expensive for farmers to insure their crops. “That could kill this,” Rep. Dennis A. Ross (R-Fla.) said.

Prospects in the Senate also could be bumpy after key Republicans, including Sens. Marco Rubio of Florida and Ted Cruz of Texas, who are both running for president, opposed it.

“Make no mistake: The speaker’s golden parachute is a victory for the Washington cartel,” Cruz said.

Some conservative groups complained Tuesday that the initial assessment by the nonpartisan Congressional Budget Office concluded that the deal would add slightly to the deficit.

The ambitious two-year budget provides a career-capping end to Boehner’s tumultuous tenure, but may also complicate Rep. Paul D. Ryan’s rise to become the next speaker.

Boehner had promised to “clean up the barn” before stepping down this week, hoping to spare Ryan the divisive budget battles that have dogged his leadership. The budget accord will become a notable achievement in Boehner’s otherwise thin record of leading a deeply divided Republican majority.

For Ryan, though, who is set to become the new speaker after elections this week, the deal could set the Wisconsin Republican on a collision course with the same conservative faction that nudged Boehner to early retirement.

In one sense, the accord clears the deck for Ryan, pushing the next major budget battles past the presidential election and well into 2017.

But Ryan told reporters Tuesday that he wasn’t ready to endorse the deal and said the process under which it was reached “stinks.”

In the end, however, he may have little choice but to support it lest he appear to be shrinking from a leadership role. Also, Ryan was the chief architect of a similar deal that lifted the spending caps two years ago.

Conservative lawmakers, including some members of the influential House Freedom Caucus that helped topple Boehner, want Ryan to put up a fight against the deal.

A supermajority within the Freedom Caucus voted to support Ryan as the new speaker, and their votes for him will be crucial to his ascent in Thursday’s speaker election.

Rep. Dave Brat (R-Va.), a caucus member, called the deal “terrible.”

“It doesn’t look like compromise to me,” he said.

Others appeared ready to give Ryan a pass, shielding him from blame for a deal Boehner negotiated.

“This is the speaker’s swan song, and Ryan does not hold the position yet,” said Rep. David Schweikert (R-Ariz.). Ryan, he said, is “on the other side of the intellectual wall.”

Emerging from a meeting of House Republicans on Tuesday, Boehner was teary-eyed — colleagues gave him a golf cart with a license plate that reads “MR SPKR” as a parting gift — but also newly emboldened after clinching a final fiscal deal that had appeared elusive.

“Ye of little faith,” Boehner said Tuesday. “I, frankly, never had any doubt that we’d get to an agreement.”

lisa.mascaro@latimes.com

Christi Parsons in the Washington bureau contributed to this report.

For more, go to www.latimes.com/politics

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