April 14 (Bloomberg) -- Congress gave final approval to legislation cutting government spending by $38.5 billion as lawmakers’ first major battle this year over the federal budget drew to a close.
The Senate approved the measure, 81-19, and forwarded it onto President Barack Obama for his signature after it cleared the House, 260-167. House Republicans needed Democrats to approve the legislation; it was opposed by 59 Republicans while 81 Democrats supported it. A stopgap bill currently funding the government expires tonight and, without action, federal agencies would begin to close.
House Speaker John Boehner, an Ohio Republican, urged his colleagues to back the legislation to implement the budget deal worked out last week among himself, Obama and Senate Majority Leader Harry Reid, a Nevada Democrat.
“Is it perfect? No,” Boehner said. “I’d be the first one to admit that it’s flawed. Well, welcome to divided government.”
Many of his Republican colleagues were unhappy after a Congressional Budget Office report said the bill would cut this year’s deficit by only $352 million. Most of the savings wouldn’t take effect until the next fiscal year, which begins Oct. 1.
The agency also concluded that some of the money lawmakers took from program budgets wouldn’t have been spent anyway, so it wouldn’t have any effect on the deficit. Boehner today rejected complaints of budget gimmicks as “total nonsense -- a cut is a cut.”
A $61 billion budget-cutting measure approved in February by the House would have cut $9 billion from this year’s $1.4 trillion deficit, according to CBO, with additional savings in subsequent years.
Top House Democrats split on today’s vote. House Minority Leader Nancy Pelosi of California, Assistant Leader James Clyburn of South Carolina and Democratic Caucus Chairman John Larson of Connecticut voting against it, while Democratic Whip Steny Hoyer of Maryland voted for it.
As part of the budget deal, lawmakers agreed to hold separate votes on Republican-backed provisions to bar federal funding for Planned Parenthood, which among its services provides abortion, and to defund the administration’s health-care overhaul. Both cleared the House today before being defeated in the Senate.
Republicans and the Obama administration already are beginning the next fiscal dispute over the need to raise the nation’s debt limit. The Treasury Department predicts that the government the legal cap on borrowing by May 16. Republicans have said they will lifting the cap without commitments from Obama for more steps to rein in spending
A fight over the 2012 budget also looms, with Democrats opposing a plan by Representative Paul Ryan, a Wisconsin Republican who chairs the House Budget Committee, that would cut $6 trillion over 10 years and phase out the traditional Medicare program for seniors.
Obama and congressional leaders agreed on today’s legislation just hours before the government’s spending authority was set to expire April 8. Democrats thwarted many of the Republicans’ proposed cuts, securing funding for National Public Radio, the AmeriCorps volunteer program, public financing of presidential campaigns and other programs that had been targeted for elimination.
Pell grants for college students, the Peace Corps and the National Endowment for the Arts will receive much smaller cuts than Republicans had sought.
The Environmental Protection Agency would be cut by $1.6 billion. Grants offered through the Clinton administration’s “Cops” law-enforcement program would drop by 17 percent. The National Institutes of Health would be cut by $260 million.
For all the debate about the deficit in Washington, bond market yields in the U.S. are lower now than when the government was running a budget surplus a decade ago, even though Treasury Department data show that the amount of marketable debt outstanding has risen to $9.13 trillion from $4.34 trillion in mid-2007. The yield on the benchmark 10-year note is below the average of 6.92 percent since 1980 and compares with the average of 5.48 percent in the 1998 through 2001 period, according to Bloomberg Bond Trader prices.
Ten-year note yields rose 3 basis points, or 0.03 percentage point to 3.49 percent at 4:04 p.m. in New York, according to Bloomberg Bond Trader prices.
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