By Alexander Bolton and Sarah Ferris – 10/26/15 08:28 PM EDT
Senior White House officials and congressional leaders have struck a deal to raise the debt limit and set the federal budget for the next two years, say sources familiar with the talks.
The deal would extend the debt ceiling to March 2017 and bust budget limits set by a 2011 agreement that imposed a decade of reduced spending known as sequestration on the government.
It would raise those caps by a total of $112 billion in fiscal 2016 and 2017, according to a person briefed on the agreement.
Those funds would be divided equally between defense and nondefense spending, charting a compromise between Republican defense hawks pushing for more Pentagon spending and Democrats who wanted more spending on domestic programs as well.
The deal would also restructure benefits for Social Security Disability Insurance, a move that Republicans have pitched as the program’s first major change in decades.
The House could vote on the deal as early as Wednesday, and the legislation is expected to be unveiled late Monday night.
If approved, it would provide a fresh start for Rep. Paul Ryan (R-Wis.), who is expected to be elected Speaker later this week and has not taken part in these budget negotiations, aides said. Outgoing Speaker John Boehner (R-Ohio) has said he wants to “clean the barn up a little bit” to make life easier for his successor.
It would also ensure Congress would not have to deal with the threat of a government shutdown or default before the 2016 elections, a goal of Senate Majority Leader Mitch McConnell (R-Ky.).
Yet getting a deal through the House and Senate could be an enormous challenge.
Raising the debt ceiling by itself is political poison for many Republicans, who have argued for deep spending cuts to be linked to any hike in the nation’s borrowing limit. Instead, the emerging deal would break the sequester and increase spending.
In a special closed-door House GOP meeting scheduled Monday night to discuss the deal, several Freedom Caucus members stood up and complained to Boehner.
Rep. Justin Amash (R-Mich.) told Boehner that leadership negotiations were a “perfect example of how things are broken in Washington.
Boehner replied that he didn’t like the process either, saying he wants regular order. But the Speaker said Obama is looking for ways to shut down the government.
“We can fall into that trap or we can lead,” Boehner said, according to a source in the room.
Democrats likely will be expected to bring many votes to the package, but that could also be in doubt because of the budgetary offsets used to pay for the increased spending that include cuts to both Medicare and Social Security disability benefits.
The deal would specifically extend the 2 percent payment cut to Medicare under the sequester and create a “flat benefit” for disability recipients, which would be tied to the federal poverty line rather than an individual’s own savings. Budget experts at the Heritage Foundation have championed the flat benefit.
“This would be the first significant reform to Social Security since 1983, and would result in $168 billion long-term savings,” according to a source familiar with the talks.
Several House Democrats, led by Democratic Caucus Chairman Xavier Becerra (Calif.), have also said they would oppose any deal that decreased benefits.
Democrats speaking about the emerging deal on Monday tread carefully with their public comments.
“As I have been saying for years, it is past time that we do away with the harmful, draconian sequester cuts,” said Senate Minority Leader Harry Reid (D-Nev.), who did not mention any offsets used in the package. “We must also ensure that there are equal defense and nondefense increases,” he added.
The White House also took a cautious approach on a deal that lawmakers in both parties were still learning about Monday night.
“Not everything has been agreed to. That means nothing has been agreed to,” White House spokesman Josh Earnest told reporters. “We continue to urge Republicans to engage constructively with Democrats to find common ground and do the right thing for the country.”
White House budget director Shaun Donovan and legislative affairs director Katie Beirne Fallon crafted the package with staff representing McConnell, Boehner, Reid and House Democratic Leader Nancy Pelosi (Calif.).Talks first began Sept. 17, according to a House source.
Republican leaders presented the deal to their conferences in the House and Senate on Monday night.
The deal would increase spending caps for defense and nondefense programs by $25 billion each in fiscal 2016, according to a source briefed on the package. It would then boost defense and nondefense discretionary accounts by $15 billion each in fiscal 2017.
Another $32 billion spread over two years would be provided for the Overseas Contingency Operations (OCO) fund used to fight the war against the Islamic State in Iraq and Syria (ISIS) and for operations in Afghanistan. That boost nearly meets the president’s requested figure for 2016.
One source familiar with the deal said that the OCO funds were not offset and that the other $80 billion was paid for with separate budgetary moves.
Reaching an accord on the top-line budget numbers will allow the leaders of the Appropriations committees in both chambers to put together an omnibus spending package before Christmas.
Tying the spending deal, which includes reforms to mandatory spending programs, to the debt-ceiling measure allows Republicans to argue that they won some concessions in return for extending the nation’s borrowing authority.
Democrats have long insisted they will not negotiate over the $18.1 trillion debt limit, which the Treasury Department has said must be raised by Nov. 3 to avoid defaulting on the county’s bills.
Lawmakers also face a Dec. 11 deadline to fund the government.
The budget talks have additionally been linked to a long-term highway funding bill and a measure to renew the Export-Import Bank, but congressional leadership sources said those measures are not part of the final deal.
One leadership aide said the package would not prevent federal funding for Planned Parenthood, something sought by Republicans.
The source said the final deal did include language to prevent double-digit premium hikes that would hit 8 million Medicare enrollees in 2016.
Averting the 52 percent premium increases has been a priority for Pelosi and could help win Democratic support for the package.
Staving off the increases is expected to cost about $7.5 billion, and Democratic aides have said Pelosi’s office was quietly negotiating with Boehner on the offsets. That measure is fully paid for in the deal, a source said.
But President Obama and Pelosi would also have to make a major concession on the administration’s healthcare law.
The deal would repeal a major piece of ObamaCare known as the auto-enrollment mandate, which would require large employers to automatically enroll workers into healthcare plans. Any employees already under the plan would be rolled over into plans as well.
House Rules Committee Chairman Pete Sessions (R-Texas) said Boehner and Obama had been laying the groundwork for a possible deal for months.
“I think that there’s work that has gone on for several months on this so it just culminated before it had to happen,” he said.
Sessions praised the deal as fiscally prudent.
“I do know the levels that we’re talking about, and in the long run, the aggregate is keeping us on a glide path to being careful with how much money we spend,” he said.
“This Speaker had a long-term goal, and that was to end the process that we had in favor of a longer-term debt agreement,” he added.
Scott Wong, Jordan Fabian and Mike Lillis contributed.
This story was updated at 8:28 p.m.