Before adjourning in mid-December, the 113th Congress agreed on a $1.1 trillion government spending bill, keeping the federal government operational until the end of the next fiscal year in September 2015.
Funding for all government agencies except the Department of Homeland Security (DHS) was included in the “cromnibus bill,” a combination of “continuing resolution” and “omnibus bill.”
The budget for DHS was separated from the larger spending bill early in the bill’s genesis, as part of congressional Republicans’ plan to use DHS funding as leverage against President Barack Obama’s November 2014 executive action to shield illegal immigrants from deportation. DHS’s budget is scheduled to begin running dry in February 2015, at which point the new Congress elected in November 2014 will have taken office.
Despite the increase in the amount of funding over last year’s omnibus bill, Senate Democrats essentially threatened during floor arguments to push for a government shutdown, objecting to provisions in the cromnibus weakening some parts of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a set of financial regulations enacted in response to the 2008 recession.
Specifically, the year-end spending bill removes the Dodd-Frank “swap push-out rule” requiring banks to segregate certain classes of derivatives trades from their primary actions. The push-out rule prevented banks from holding derivatives trades in banking units insured under the Federal Deposit Insurance Corporation.
Efforts to chip away at the sweeping power of Dodd-Frank had begun earlier in 2014, over Democrats’ vigorous objections. In testimony before the U.S. House Appropriations Committee in June 2014, Rep. Kevin Yoder (R-KS) explained an early, standalone version of the provision as being “about the farmer in your district who wants to get a loan.”
Sen. Elizabeth Warren (D-MA), leading a small contingent of dissenters in the U.S. House and Senate, called the rider “risky for our economy” and had urged her counterparts in the House of Representatives to remove the provision.
House Democrats such as outgoing Rep. Carl Levin (D-MI) voiced displeasure about the changes to Dodd-Frank, but they accepted the deregulatory move as the price of passing the larger bill.
At a breakfast meeting sponsored by the Christian Science Monitor, Levin told reporters he would “be voting to keep the government open,” even if that included small measures of deregulation as a concession.
“Now, what do people like me do who want to keep the government going? I end up voting for the bill,” he said.
Other concessions Republicans extracted include a $345 million reduction in the Internal Revenue Service budget and a ban on taxpayer bailouts of insurance companies through the Affordable Care Act. Additionally, the extension of a year-long moratorium on local and state taxation of Internet access, the Internet Tax Freedom Act, was included in the cromnibus bill.
“Any bill that requires bipartisan support to pass probably contains a mix of good and bad,” explained Romina Boccia, a federal budgetary expert with the Heritage Foundation’s Roe Institute for Economic Policy Studies.
“The bill helps to prevent a taxpayer bailout of Obamacare insurance companies, but more is needed to make that fully waterproof,” Boccia added.
Jesse Hathaway ([email protected]) is managing editor of Budget and Tax News.