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Obama and Boehner made one last budget deal. Here’s what we know.

Parting is such sweet sorrow.
Parting is such sweet sorrow.
Jewel Samad/AFP/Getty
  1. The White House and Congress have reportedly struck a deal to raise the debt ceiling and fund the government through March 2017 — making it the last piece of budget policy in Barack Obama's presidency.
  2. Spending will increase by $112 billion over two years. Next year, both defense and non-defense will get $25 billion more each, while the year after each will get $15 billion.
  3. Additionally, $32 billion will go to the "overseas contingency budget," which has traditionally been a kind of war-related slush fund that the Pentagon gets to play with. But the funds will reportedly be split between the Pentagon and the State Department to maintain equality between defense/non-defense.
  4. One of the main expenses: The deal would slow the rollout of scheduled hikes to Medicare premiums. It would also increase funding for the National Institutes of Health (NIH) and National Science Foundation (NSF), for the Head Start program, for job training, and for veterans' health care.
  5. To pay for the additional spending, the deal would extend the sequester's cuts to Medicare, sell off some of the country's strategic petroleum reserve (even though oil prices are near rock bottom), do more telecommunications spectrum auctions, and change the crop insurance program that provides subsidies for farmers.
  6. It would also raise $11 billion in revenue through "significant reforms to improve tax compliance among investors in hedge funds, private equity funds, and other large partnerships."
  7. The deal will reportedly extend the solvency of the Social Security Disability Insurance program for six years by reallocating funds to the Social Security old age trust fund and enacting several small disability reforms.
  8. The White House Council of Economic Advisors estimate that the deal will modestly improve the economy, creating about 340,000 new jobs next year.
  9. Conservatives in the House and Senate are already criticizing the deal.

The deal extends a deal Paul Ryan struck in 2013 — and spares him from negotiating with Obama

Ryan, left; Murray, right
Paul Ryan and Patty Murray, who set the budget framework within which this deal is operating under.
Alex Wong / Getty

The timing of the deal could not be better for incoming House Speaker Paul Ryan. The deal was struck by the outgoing speaker, John Boehner, and so conservative ire can be directed toward someone who's already on his way out, rather than to Ryan. Then, once the deal is passed, Ryan really doesn't have much in the way of "must-pass" legislation. Congress still needs to pass a highway bill, but if that gets done, then Ryan can spend the first year of speakership without major spending standoffs with the White House.

That means he won't be put in the position of having to keep the government open without pissing off House conservatives — the same impossible place that Boehner's been in for years, and from which he's currently fleeing. If Hillary Clinton or Bernie Sanders wins in 2016, and Republicans keep the House, Ryan will have to negotiate then, but in the meantime he can focus on his true passions, like privatizing Medicare, slashing domestic spending, and cutting taxes.

It's also a major policy victory for Ryan, in that it closely mirrors a deal he struck as House Budget Committee chair with his then-Senate counterpart, Patty Murray, in December 2013. Ryan and Murray went above the sequestration spending limits enacted as part of the debt ceiling deal in 2011, and used the money to partially restore funding for Head Start, as well as defense and some other domestic programs like Section 8 housing subsidies and the National Institutes of Health. They restored about $63 billion in funding; the current deal reportedly restores about $80 billion, outside of the contingency budget. According to a fact sheet from House Democrats, the deal provides about 75 percent more sequester relief, all told, than Murray-Ryan did.

If this deal passes, then the Ryan-Murray bargain will hold, in some form, from December 2013 to March 2017, which is a really long time as budget compromises go. However, passage is far from certain, as a wide array of congressional conservatives are already vocally criticizing the deal, if stopping short of outright opposition.

Ryan isn't acting particularly grateful, telling reporters he thought the process behind the deal "stinks."

The deal reportedly includes changes to the Social Security disability program

One perhaps unexpected provision of the deal addresses the Social Security Disability Insurance (SSDI) program, whose trust fund is scheduled to be depleted by the end of next year, which would trigger an automatic cut to benefits of nearly 20 percent. This is a fairly easy matter to fix; in the past, Congress has addressed similar shortfalls by simply redirecting more Social Security payroll taxes to the disability program as opposed to old-age payments.

So Congress is doing that again, alongside some relatively modest reforms to the program. Negotiators are telling the press that they've extracted "$168 billion in long-term savings" through changes to the program, but the near-term savings are pretty modest: about $4 to $5 billion over 10 years, per the Huffington Post's reporting. As for specifics, the deal appears to include a provision requiring two doctors to certify that applicants are disabled, a restriction that is currently only in place in some states. HuffPo also reports that it will expand demonstration projects meant to make it easier for disability beneficiaries to work.

Congress appears to have avoided more fundamental reforms to the program (like replacing much of it with private insurance), which critics have called for over the years.


Update: This piece has been updated to reflect subsequent reporting clarifying the changes to SSDI.