Share This Article

Facebook LinkedIn
Twitter Reddit
Print Email
Pinterest Gmail
Yahoo
Money Morning
×
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
  • Retire
    • Income Investing Guide
    • Retirement Articles
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
Login My Member Benefits Archives Research Your Team About Us FAQ
  • Invest
    • Best Stocks to Buy
    • Stock Forecasts
    • Stocks to Sell Now
    • Stock Market Predictions
    • Technology Stocks
    • Best REITs to Buy Now
    • IPO Stocks
    • Penny Stocks
    • Dividend Stocks
    • Cryptocurrencies
    • Cannabis Investing
    • Angel Investing
    ×
  • Trade
    • How to Trade Options
    • Best Trades to Make Now
    • Options Trading Strategies
    • Weekly Trade Recommendations
    ×
  • Retire
    • Income Investing Guide
    • Retirement Articles
    ×
  • More
    • Money Morning LIVE
    • Special Investing Reports
    • Our ELetters
    • Our Premium Services
    • Videos
    • Meet Our Experts
    • Profit Academy
    ×
  • Subscribe
Enter stock ticker or keyword
×
5 Ways to Beat the Fed (and Crush Inflation)
Twitter
Tags: Washington

U.S. Budget Deal Softens Sequester, Does Little Else

By: Charles Rice, Associate Editor, Money Morning | December 12, 2013

Start the conversation

Comment on This Story Click here to cancel reply.

Or to contact Money Morning Customer Service, click here.

Your email address will not be published. Required fields are marked *

Some HTML is OK

Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA) come with tidings of great joy this week: They have crafted a U.S. budget deal that solves the government's fiscal problems.

Or, not really...

They have cobbled together a U.S. budget deal that lightly papers over the problems of the previous budget deal with savings projected over the next decade.

And the paper job is only good for the next two fiscal years. But it's better than another round of shutdowns and brinkmanship - in the same way that only paying the minimum on your credit card is good for your finances, buying time that lets you promise yourself you'll manage your money better next month.

The deal - officially the "Bipartisan Budget Act of 2013" - would amend the Balanced Budget and Emergency Deficit Control Act of 1985 to fund the government through October 2015. Congress last amended that act with the Budget Control Act of 2011, which introduced us to "sequestration."

Right now, combined security and nonsecurity discretionary spending budget authority - the details that Congress and the president fight over - will be $967.4 billion for 2014, and $995.1 billion for 2015. Under the deal, discretionary spending will go up to $1,012 billion for 2014 and $1,013 billion for 2015.

Sign up for SMS so you never miss special events, exclusive offers, and weekly bonus trades.
In other words, the deal creates a softer, gentler sequester that doesn't raise taxes, increases spending, and, according to Ryan, still reduces the deficit.

Here's how they pulled it off...

The Magic of Congressional Accounting

Ryan and Murray have accomplished this feat in much the same way that Congress has always accomplished its budget magic: with tomorrow's money and today's workers.

The 2011 bill required a 2% annual cut in the pay rates for doctors handling Medicare patients. Those cuts originally ended in 2020. The 2013 proposal extends those cuts into 2023, providing tens of billions of dollars in assumed savings.

Profit Alert: It's the market's most powerful trading indicator - and it can deliver triple-digit profits if you know how to use it...

Ryan's proposal also calls for an increase in the aviation security fees travelers will pay at the airport. Right now, travelers pay between $2.50 and $5.00, depending on whether they have a connecting flight. This bill would raise that to a flat $5.60 per one-way trip. According to the legislative summary, this will offset TSA's aviation security costs by about 40%.

The final, and probably most typical, source of new revenue is from the federal pension systems for civilian personnel. The 2011 bill required that new civilian hires contribute 3.2% of their gross pay into the Federal Employee Retirement System. This new bill ups that to 4.3% and affects employees who are hired after Dec. 31, 2013, or who were in their position for fewer than five years before the new bill goes into effect.

Due to the arcane vagaries of government budgeting, mandatory contributions are necessary for the pension system. However, more senior civil servants - those hired before 2013 - are only required to contribute 0.8% of their gross salary.

Like Obamacare, the Paul/Murray budget deal forces newer, presumably younger, workers to make up for the waste of the past while expecting nothing from older workers.

The bill still has to pass both houses of Congress. And since the House goes into recess on Dec. 13, they will either do so today, or opposition factions in both parties will have time to derail the process. If that happens, we can expect another round of sound, fury, and nothing.

There are more dire consequences to congressional inaction than higher travel fees and pension contributions. If you think shutdowns are bad, just wait until you're paying $8.00 for a gallon of milk.

Join the conversation. Click here to jump to comments…

Login
guest
guest
0 Comments
Inline Feedbacks
View all comments


Latest News

June 3, 2023 • By Garrett Baldwin

Postcards - Do This Whenever You See Buffett Buy OXY

June 2, 2023 • By Nick Black

Market Roundup: Digital Assets to Watch for the Weekend of June 2

June 2, 2023 • By Shah Gilani

earnings
How to Profit on a "Bankruptcy Wave" Hitting Markets Hard
Trending Stories
ABOUT MONEY MORNING

Money Morning gives you access to a team of market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

QUICK LINKS
About Us COVID-19 Announcements How Money Morning Works FAQs Contact Us Search Article Archive Forgot Username/Password Archives Profit Academy Research Your Team Videos Text Messaging Terms of Use
FREE NEWSLETTERS
Total Wealth Research Power Profit Trades Profit Takeover Penny Hawk Trading Today Midday Momentum Pump Up the Close
PREMIUM SERVICES
Money Map Press Home Money Map Report Fast Fortune Club Weekly Cash Clock Night Trader Microcurrency Trader Hyperdrive Portfolio Rocket Wealth Initiative Extreme Profit Hunters Profit Revolution Quantum Data Profits Live Trading Alliance Trade The Close Inside Money Trader Expiration Trader Flashpoint Trader Darknet Hyper Momentum Trader Alpha Accelerators Weekly Profit Cycles Brutus Alerts Resource Traders Alliance

© 2023 Money Morning All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning.

Address: 1125 N Charles St. | Baltimore, MD, 21201 | USA | Phone: 888.384.8339 | Disclaimer | Sitemap | Privacy Policy | Whitelist Us | Do Not Sell or Share My Personal Information

wpDiscuz