Removing Barriers Blog

Two-Year Budget Deal Reached to Avoid Debt Ceiling
Posted October 27, 2015 by CUNA Advocacy

A two-year budget deal has been reached between congressional leaders in both parties and the White House, and is scheduled for voting tomorrow. It has no substantial effect on credit unions or financial services. This package will suspend the debt ceiling until March 16, 2017, well after the next presidential election.

It lifts separate caps on defense and non-defense spending in equal amounts in fiscal 2016 and fiscal 2017. For 2016, the caps would be raised by $25 billion in each category and in 2017 the caps would be lifted by $15 billion. Negotiators were able to handle the pending shortfall in the Social Security Disability Insurance program months ahead of time. The deal would allow the adjustment, temporarily increasing the contribution to 2.37 percent of wages from 1.8 percent.

Some other assorted items in the deal include:

Obamacare: The deal also would repeal a provision of the Affordable Care Act that required employers with more than 200 full-time employees to automatically enroll new employees and re-enroll current employees in a company health plan.

Medicare: The deal would prevent a major increase in Medicare premiums next year for some recipients.

Energy: As one “pay-for”, the deal calls for the sale of 58 million barrels of oil from the Strategic Petroleum Reserve from 2018 to 2025.

Pensions: Lawmakers have gone back to the Pension Benefit Guaranty Corp. once again to find a budget deal offset. The PBGC has faced shortfalls and this deal would shore it up while generating savings. Premiums used to guarantee single-employer plans would rise to $68 in 2017 from $64 today. The premium would go to $78 after 2018.

Farm subsidies: The White House and some Republicans have been aligned in calling for cuts to farm subsidies for years. The deal eschews real subsidy cuts and would gain savings by accelerating a renegotiation between the Agriculture Department and reinsurance companies that handle crop insurance. The deal would cap the overall rate of return under the renegotiated reinsurance agreement at 8.9 percent of retained premiums.