Lawmakers Agree to Undo Some Sequestration Cuts

The heads of the congressional budget committees on Tuesday announced a federal budget deal that would partially shield the Defense Department from automatic spending cuts.

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, and Sen. Patty Murray, D-Wash., his counterpart in the Senate, unveiled an agreement that would undo about $63 billion of the across-the-board reductions, known as sequestration, over two years.

The relief would be split evenly among defense and domestic programs, meaning the Pentagon would receive more than $30 billion in additional funding in 2014 and 2015.

The deal, known as the Bipartisan Budget Act, was crafted with support from conservatives and defense hawks who oppose military spending cuts, though it would be paid for in part by reducing pension contributions to working-age military retirees.

Ryan, the GOP's 2012 vice presidential nominee, in a press release acknowledged the agreement wasn't ideal but said "it's a firm step in the right direction." Murray in the same statement said the pact "breaks through the recent dysfunction" and would prevent another government shutdown next month.

The Defense Department faces about $1 trillion in spending cuts over the next decade as part of 2011 deficit-reduction legislation known as the Budget Control Act. That includes almost $500 billion in reductions already planned and another $500 billion in automatic cuts that will take effect unless Congress and the White House agree on an alternative spending plan.

The bill proposed by Ryan and Murray may soften that blow.

The Defense Department requested about $527 billion for its base budget, excluding funding for the war in Afghanistan, for fiscal 2014, which began Oct. 1. The budget agreement calls for setting defense discretionary spending for the year at almost $521 billion -- far higher than the levels prescribed under sequestration.

Of the $63 billion in total sequestration relief in the pact, $45 billion would be applied in 2014 and another $18 billion in 2015. That means the Pentagon would receive an additional $22.5 billion in the current fiscal year and another $9 billion the following year.

The relief would be offset by raising revenue and cutting costs elsewhere in the budget, from increasing security fees for commercial airline passengers to reducing contributions to civilian and military pensions.

Military retirees between the ages of 40 and 62 would receive an annual cost-of-living increase that's 1 percent less than the rise in consumer prices. The reduction would be introduced over three years and take full effect in 2016.

While Ryan praised the agreement for providing as much as $23 billion in overall deficit-reduction -- a level he said was more than what was mandated under the 2011 legislation -- it remains to be seen whether it will be supported by House Republicans, especially those aligned with the Tea Party who back sequestration as a tool to curb government spending.

Political gridlock on Capitol Hill over taxes and spending, including President Barack Obama's signature health-care law, the Affordable Care Act, led to a 16-day partial government shutdown in October -- the first such shuttering of federal agencies since the mid-1990s.

The House may vote on the budget bill Dec. 12. The chamber is scheduled to adjourn for holiday recess the following day. If it passes, it would advance to the Senate. It wasn't immediately clear how the agreement may impact a similar last-minute compromise on the annual defense policy legislation.