Analysis: Budget deal raises airfares, maybe price of milk
Five key things ordinary people should know about the bipartisan budget deal.
The Washington Post
WASHINGTON — After a major vote in the House on Thursday, a bipartisan budget deal that would keep the government open into 2015 appears likely to become law. You might not be all that interested in the effect this compromise will have on the economy or in the feud between Republican leaders and the conservative faction in their party.
You might be too jaded to ask whether this compromise marks the beginning of a grand new era of cooperation on Capitol Hill or whether it’s just a fluke. But you should still know what’s in the deal. Here’s why:
1. Airline tickets will become more expensive.
Negotiators, led by Rep. Paul Ryan, R-Wis., and Sen. Patty Murray, D-Wash., didn’t want to raise taxes, but the money to restore some of the sequester cuts had to come from somewhere, so they found some creative ways of getting it. One of their solutions is to increase the fee you pay to the Transportation Security Administration when you purchase a plane ticket.
A typical fee of $5 on a round-trip ticket would more than double to $11.20.
Many passengers might not notice, but airline officials are livid. Delta’s chief executive, Richard Anderson, wasted no time in making investors aware of his displeasure, saying his company would pass the cost to its customers. At a news conference, he was especially careful to call the higher fees a “tax increase,” according to The Associated Press.
2. Milk will not become more expensive, at least not right away.
Technically, this isn’t part of the budget deal, but you might have heard that the price of a gallon of milk was about to increase to as much as $7. That won’t happen, at least for another month or so.
The current farm bill, which sets agricultural policy for the country, lapsed last year. If Congress doesn’t take action, eventually dairy prices will increase dramatically as federal price supports revert to 1949 levels.
This week, Agriculture Secretary Tom Vilsack told legislators that they have until early January to avoid the increase. The House passed a strictly formal extension of the old farm bill into January on Thursday, temporarily avoiding the increase, but it remains to be seen whether the two chambers will be able to agree on a new farm bill.
3. If you’ve been unemployed for a long time, you’re on your own.
The budget deal does not include an extension of expiring unemployment benefits, and it doesn’t look as though Republicans will agree to an extension anytime soon.
About 1.3 million people who have been without jobs for at least 26 weeks will lose their unemployment insurance, and an additional 3.5 million people are likely to lose their insurance next year.
4. If you work for Uncle Sam, your pension plan could be cut.
Retirement programs for some federal civilian employees and members of the armed forces will become less generous as part of the budget deal.
Retired servicemen and women who are younger than 62 will have to make do with a smaller annual increase in their payments. Relative to inflation, their benefits will decrease slightly every year.
New federal employees hired after the end of this year will be required to contribute an additional 1.3 percent of their salaries to their retirement program. On the other hand, it doesn’t look like Congress will stop President Obama from giving all federal workers a 1 percent raise at the end of the year, as he’s said he plans to do. It will be the first raise for them in four years.
5. None of that is very encouraging, but stay tuned for some good news.
The deal restores $45 billion to the budget in 2014, about half of the spending that had been eliminated as part of the automatic sequester. Of that, about $22 billion is for nondefense discretionary purposes, the miscellaneous category that includes spending on infrastructure, research and education.
How this money will be used hasn’t been determined, but parents, among others, can be optimistic. Spending on programs for children with special needs may be restored, and some kids who were kicked out of Head Start because of the sequester might be able to go back to school.