Just because a government shutdown was averted at the last minute doesn’t mean that the all of the political and economic issues that swirl around the budget process are resolved. Here is a road map to what lies ahead.
What has Congress done?
Both the House and the Senate overnight passed short-term spending measures that keep the government running until next Friday. Passage followed a negotiated agreement between the Republican-controlled House of Representatives and the Democratic-run Senate on a longer-term spending plan for the rest of the fiscal year. That plan is expected to be voted on next week after the agreement is turned into legal language and works its way through the legislative process.
What does the agreement call for?
The agreement cuts about $38 billion in spending for the fiscal year that ends on Sept. 30, a decrease that the parties call the biggest annual spending cut in history. Even so, it is just a fraction compared to the budget deficit, which is expected to run more than $1.6 trillion this year.
Can the deal be derailed?
In theory yes, but in reality, it's very unlikely. The leaders seem to have the votes to pass the compromise, but there is sure to be some drama in order to make political points. Some lawmakers will dissent from the compromise either because they feel it didn’t go far enough in cutting spending or it went too far in cutting needed programs.
What happens next?
Once the budget bill passes, Congress will brace for the next rounds: a fight over whether to raise the debt limit, and next year’s budget, which begins in about six months. Both confrontations are expected to be contentious as conservative Republicans seek to fulfill their electoral promises to decrease the scope and cost of government while Democrats seek to defend programs they argue will help women, the poor, students and the elderly, all core political groups.
What happens with the debt limit?
The administration has said it will seek to increase the ceiling on its borrowing, a limit that is expected to run out sometime in May, though the exact deadline can change as the government adjusts its borrowing. Without an increase, the administration argues that the United States could face a technical default. Conservatives oppose increasing the ceiling, arguing that the country needs to cut back on borrowing because the debt has become too large to sustain.
How important is the battle over the debt ceiling?
Very, but it is just the middle act. The final act is over the budget for the next fiscal year, beginning in October.
Republicans last week presented their version of the next budget, calling for major cuts in spending, but also calling for significant structural changes in Medicare, the health program for the elderly, and Medicaid, the health program for the poor. Both Democrats and Republicans agree that such entitlement programs will have to face significant changes, but the politics during the current, lengthy presidential election cycle makes compromise even more difficult than the battles over the recent budget.
What can we expect in the forthcoming battles?
The political fight will likely mirror the same alignment we have just seen. Republicans will continue to press for cuts in spending and philosophically argue that government should limited. Democrats will agree that cuts are needed, but will argue that the GOP is going too far and is seeking to placate its more conservative elements like the “tea party” movement.
President Obama will again seek to serve as mediator-in-chief even as the GOP questions his leadership.