U.S. Sen. Tim Kaine said today that the budget agreement struck by House and Senate negotiators will boost Virginia’s economy by averting another round of automatic defense cuts and removing the prospect of another federal government shutdown.
“A two-year budget deal means we’re not going to be doing that kind of brinksmanship,” Kaine said in a telephone interview .”That is going to have a positive effect on the Virginia economy.”
Kaine and fellow Virginia Democrat Mark Warner were on the bipartisan conference committee that struck the deal with House negotiators. The agreement would fund federal agencies through October 2015 and replace automatic defense and discretionary spending cuts with targeted reductions and some fee increases. It also would restore some budget normalcy in a Congress that has lurched from one fiscal crisis to another over the last three years.
“I liked the fact the we got a deal and I like the fact that we stretched it and got a two-year deal,” Kaine said. “I like the fact that we’ve replaced $63 billion of sequester cuts over two years with more targeted cuts and some revenues through fees. The across-the-board cuts make no sense. You should make cuts and all decisions based on priority judgments and performance data rather than across the board.”
Kaine noted that the conference committee agreed to a fiscal 2014 spending level of $1.012 trillion, splitting the difference between the House and Senate proposals. And like most compromises, Kaine found some things in the deal he doesn’t like.
The compromise makes adjustments to military retirement benefits and will require new civilian federal employees to contribute an additional 1.3 percent of their pay to their pensions. It also would end a 14-week extension of the eligibility period for unemployed workers. The Richmond-based Commonwealth Institute for Fiscal Analysis projects that 10,000 Virginians could have their unemployment benefits cut off shortly after Christmas.
“I’m disappointed in that,” Kaine said. “The House position was: ‘Look, this was supposed to be a temporary kind of extension; it’s already been extended a couple of times, we should go ahead and let it sunset.’ I thought for the good of individuals and, actually, for the good of the economy, it would have been better to extend it.”
Kaine predicted that the deal will inject some certainty into the economy.
“Watch the stock market, watch the economic indicators,” he said. “I think if we pass a two budget, companies that have been holding back a little bit on investments will feel some certainty and more able to make them. Companies that have been holding back on hiring will feel some more certainty and will move forward on hiring.”
Warner said in a statement on Tuesday that the compromise “allows us to step away from the irrational harm of sequestration, which hits Virginia harder than any other state.”
“This is a productive step forward that avoids another shutdown and allows the government to operate with more predictability over the short term,’ Warner said. “I have some concerns about the impact on the federal workforce and our military retirees, which is another reason why we need to tackle the larger and more important issues of tax and entitlement reforms to fix our balance sheet over the long term.”