Democrats and Republicans Team Up to Pass $1.8 Trillion Spending Package

Omnibus signals future of Obamacare, federal budget battles.


Gage skidmore / Foter / Flickr

One way to understand the massive federal spending package is as a compromise between Republicans and Democrats to ignore the deficit.

The deal is made of two different elements—a 2,009-page omnibus that folds in 12 appropriations bills and calls for $1.1 trillion in spending, and a separate 233-page tax "extenders" bill that continues about $650 billion worth of supposedly-but-not-really temporary tax cuts. All together, the package is worth about $1.8 trillion.

Many of the tax breaks in the extenders bill are the sorts of tax "cuts" that are the sort of targeted, incentives-and-behavior altering tax cuts and deductions that are best thought of as spending laundered through the tax code. (This includes the child tax credit, various business expensing provisions, and a credit to help people under 40 pay for tuition expenses, as well as credits for wind and solar power.)

Broadly speaking, that's the sort of spending that Republicans tend to like. The other part of the package, meanwhile, contains the sort of spending that Democrats tend to like.

And so, as The Washington Post notes, in the House, each party will be chiefly responsible for passing the part that they prefer, with Democrats largely backing the spending plan, and Republicans backing the tax plan. Afterwards, the two bills will be combined and sent to the Senate, which is expected to proceed in passing the plan and sending it to President Obama for approval.

If there is good, or at least non-terrible, news to be found in the bill and its all-but-certain passage, it comes less from the bill itself and more from what it signals about the future of federal budgeting, and, in a different way, Obamacare.

As I wrote earlier this year, the best thing about this particular end-of-year budget negotiation is that it avoids a last-minute shutdown showdown, which, while perhaps satisfying as a protest maneuver, would likely be counterproductive overall. In avoiding a shutdown and moving quickly toward passage, it sets the stage for a more sensible budgeting process next year, one that does not rely on midnight hour dealmaking and brinksmanship. Indeed, through a spokesperson, House Speaker Paul Ryan told The Washington Post  that the goal going forward is to avoid the process that led to this deal and move back toward budgeting through regular order.

Whether or not that will actually happen—and what sort of results it will produce if it does—is of course an open question, but the budget messes of the last few years are driven as least in part by a broken process overly reliant on midnight-hour dealmaking, and it is good to hear that Ryan intends to take measures to avoid such drama in the future.

The other notable news in the package is what it signals for Obamacare. The bill makes a number of changes to the law, including a Democrat-driven two-year delay of the Cadillac tax on expensive health plans, a repeal of the law's medical device tax which has long been a target for members of both parties (especially those who represent states with lots of medical device manufacturers), and a continuation of a previous provision capping the law's risk corridor payments to insurers (which is paired with a temporary lifting of another tax on insurers).

By itself, the repeal of the Cadillac tax is not a great idea, but the fact that Democrats are willing to alter the provision is a big deal, because it signals that Obamacare is not set in stone. For the last five years, Democrats have generally resisted meaningful legislative changes to the law, but the Dem-driven delay of the Cadillac tax—long hated by their union allies—suggests that they are willing to rethink and renegotiate the law. As Yuval Levin notes at National Review, the bill "offers evidence of both parties setting the stage for the next health-care debate, and the Democrats acknowledging that such a debate won't exactly start from Obamacare as we know it as an established premise."

All in all, then, the budget package is far from ideal. But it offers a few hints of a way forward, and out of the frustrating impasses that have defined the Obama era. It's effectively a teaser for the domestic policy battles and compromises of the era to come.