House, Senate negotiators reach budget deal

J. Scott Applewhite/AP -
House Budget Committee Chairman Rep. Paul Ryan, R-Wis., left, and Senate Budget Committee Chair Patty Murray, D-Wash., on Capitol Hill in October.

By Lori Montgomery, E-mail the writer

House and Senate negotiators have reached agreement on an $85 billion package to fund the government past Jan. 15, avoid another federal shutdown and end the cycle of budget crises that have dominated Washington for much of the past three years.

The deal would not extend long-term benefits for the unemployed, a key demand of House Democrats. But Democrats said they would continue to press Republicans on the issue in hopes of preventing more than 1 million people from losing their unemployment checks at the end of the month.

Senate Budget Committee chairman Patty Murray (D-Wash.) and House Budget Committee chairman Paul Ryan (R-Wis.) scheduled a news conference for 6 p.m. to unveil the deal, which would partially repeal sharp agency spending cuts known as the sequester in fiscal 2014 and 2015.

Those savings would be replaced by roughly $63 billion in other policies, including fee increases for airline travelers, cuts to federal-worker and military pensions and higher payments for federal insurance of private pensions, according to people familiar with the talks.

Ryan and Murray were rushing to file legislation before midnight so the House could vote as soon as Thursday and leave town for the year by the weekend. The Senate, which is scheduled to leave town next week, would vote thereafter.

The agreement would set the budget for the Pentagon and other federal agencies at $1.012 billion for fiscal 2014 and $1.015 billion for fiscal 2015, preventing a new $20 billion hit to defense spending from taking effect in January.

Domestic agencies would get a bump up of equal size, according to people familiar with the deal. The $63 billion pricetag would be covered with a mix of policies, roughly half spending cuts and half new non-tax revenues.

Among those policies: $20 billion in reduced contributions to federal pensions, split evenly between new civilian workers and military retirees. For those in the military, the reduction would take the form of lower cost-of-living increases for retirees under age 62, many of whom take other jobs while collecting their military pensions.

In addition to partially replacing the sequester, the deal calls for another $25 billion in deficit reduction by extending a small part of the sequester into 2022 and 2023. That shift would primarily affect Medicare providers.

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