This week, members of Congress announced a final deal on a federal budget for fiscal year 2016. This counts as a serious win.
The deal is far from perfect, but it represents a few major victories:
- Dangerous “poison pill” policy riders that would have denied safe haven to refugees, defunded Planned Parenthood, and dismantled parts of the Dodd-Frank Wall Street reform were rejected;
- Funding increases for domestic spending, from the National Institutes of Health to Head Start, were maintained;
- Expansions of the Earned Income Tax Credit and the Child Tax Credit – two rare tax breaks that benefit lower income families instead of corporations or the wealthy – were made permanent.
The budget is also a win for a very rare thing in Washington these days: bipartisan compromise. There’s something for everyone to like, and something for everyone to criticize.
The budget deal signed in November spelled out more funding for both Pentagon spending, and domestic priorities, to the tune of an additional $80 billion combined over the next two years, evenly split between the Pentagon and everything else.
“No Riders” Succeeds
A period of quiet followed November’s budget deal, which set overall funding levels for Pentagon and domestic spending, but left the details for later. Then rumblings began to surface of “poison pill” policy “riders”: damaging little bits of legislation that could undermine the whole budget agreement and have devastating effects in real life.
Spoiler alert: it didn’t happen that way. Instead of a budget full of poison pill riders, members of Congress agreed to a budget with many imperfections, but with none of the most disastrous policy riders attached.
Here’s what we escaped: damaging riders on refugees, Planned Parenthood, Dodd-Frank Wall Street reform, consumer protections, the environment, labor, fair housing and more.
How did we do it? Because people like you contacted your members of Congress to demand “no riders.” And Congress listened.
This is how democracy is supposed to work.
Domestic Spending: Housing, Health Care, Child Care and More
The November budget deal reinstated $80 billion in cuts to federal spending, split over two years between Pentagon and all other spending.
- On the domestic side, that would mean increased funding for the National Institutes of Health, Head Start, K-12 schools, job training, special education, meals for seniors, substance abuse and mental health, and even refugee assistance.
- These increases are badly needed, and the loosening of sequestration’s restrictions on investment in proven programs that we know address inequality is a major victory. But it’s also just the start of what must be a more fundamental shift in budget priorities. The basic balance of our federal budget hasn’t changed. In 2016 we will once again spend more than half of our discretionary budget on one thing: the Pentagon and related spending.
Pentagon Spending: F-35 and Pentagon Slush Fund Live On
Half of the budget increases negotiated in November’s deal will go to the Pentagon and related spending, and now we’re learning about what the Pentagon wants to do with that money.
- Here’s one mind-blowing decision: instead of backing off of the ill-conceived F-35 aircraft that even Pentagon champion Senator John McCain has called a “tragedy,” “incredibly expensive,” and accused of “cronyism,” Congress committed to investing an additional $1.3 billion for to buy 11 more F-35s.
- And the Pentagon will continue to benefit from a “slush fund” loosely justified as a war fund, to the tune of $58.6 billion. With little oversight, this fund has been used to pad Pentagon spending in ways that have nothing to do with any current conflict or threat.
Tax Package: Wins for Struggling Families, and Corporations too
In a related negotiation, members of Congress reached an agreement on a tax package worth $622 billion over the next 10 years. Among other things, the deal makes permanent some of the tax breaks known to insiders as “tax extenders,” a set of 50+ corporate and individual tax breaks that have previously been extended for a year or two at a time. Here are highlights of the deal:
- Permanently extends expansions to the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). This prevents a tax hike on millions of low- and middle-income families in 2017, when the expansions were set to expire.
- Delays implementation of the Affordable Care Act’s “Cadillac tax,” which imposes a tax on expensive healthcare plans, and suspends its medical-device tax, which imposes a 2.3 excise tax on medical devices, until 2018.
- Permanently extends widely supported tax breaks like the research and development tax credit that encourages companies to take up research activities that might lead to new medicines or technologies, and not-so-popular tax breaks like the “active financing exception” that benefits some corporations that earn income abroad.
- Temporarily extends other tax breaks like “bonus depreciation,” which gives businesses a bigger deduction for equipment purchases.
All in all, the budget deal is far from perfect, but the defeat of the “poison pill” riders, the rollback of sequestration spending limits, and the extension of tax breaks for ordinary working families are tantalizing examples of how we can change our future when Americans speak up for the budget priorities we want to see.