The major budget deal negotiated by Congress and the White House to eliminate the looming double threat of a government shutdown and defaulting on the nation’s debt is generally a good deal for South Carolina.
It would preserve military spending, lessen the impact of an expected increase in Medicare premiums, and avoid a cut in the Social Security disability payments that would affect 192,000 South Carolinians.
The bipartisan bill would raise federal spending by $80 billion over the next two years, divided evenly between defense and domestic programs, and lift the debt ceiling until March 2017. The costs would be offset by a patchwork of spending cuts, policy changes and revenue raising.
The House might vote on the deal as early as Wednesday. Here’s what it could mean for South Carolina if the deal is approved.
While it’s not everything the Pentagon had been asking for, the budget deal would be good news for military bases and firms in South Carolina.
The defense budget would get almost everything the Obama administration asked for 2016, falling just $5 billion short. The caps on defense spending would be raised by $25 billion for each of the next two years, giving military spending $84 billion more than if sequestration had been allowed to go back into effect.
“The bottom line is that the general thrust of it does look very positive, both for South Carolina and for the whole military,” said Bill Bethea, chairman of the S.C. Military Base Task Force. “We’re keeping our fingers crossed.”
The cost will be offset by spending cuts and other savings, including the selling of strategic petroleum oil reserves and the use of public airwaves for telecommunications companies.
Cutbacks in defense spending would have hurt one of the most vital parts of the state’s economy. The military’s economic impact on South Carolina has increased substantially since 2012 and now approaches $20 billion, according to a report released earlier this year. The military supports more than 152,000 jobs across the state, which generate $8.6 billion in personal income and about $771 million annually in tax revenue, the study says.
“It’s a mixed bag,” said Rep. Mark Sanford, R-S.C., adding that the defense funding was partly “enticement” designed to get the votes needed for the deal.
“On the defense side there’s a lot that people in South Carolina would like. It’s a clear plus for Fort Jackson, the Air Force base in Charleston, the station in Beaufort, and there are elements to be applauded in this deal. But in terms of how you get there it gets dicier,” he said.
If passed, the agreement would also add $59 billion over two years to the Overseas Contingency Operations budget, a supplemental war spending fund. Its most recent budgets included funding for a few South Carolina projects, such as construction of trainee barracks in Fort Jackson and replacing fuel distribution facilities in Beaufort.
“It’s not perfect, no compromise ever is, but I think we’re in pretty good shape,” Rep. James Clyburn, D-S.C., said about the deal. “It protects the military presence that we have in South Carolina and I do believe our social security and Medicare beneficiaries have a much more solid program to look forward to.”
If passed, the deal would hold off an impending 52 percent hike in Medicare premiums that could affect a third of the program’s beneficiaries, or about 7 million seniors across the country. The deal’s terms spread out the increase in premiums over time, so beneficiaries don’t feel them as severely.
Medicare recipients make up 18 percent of South Carolina’s total population, the ninth highest in the country, according to Kaiser Health News, a non-profit national health policy group.
The budget deal’s spending cuts include plans to curb Medicare payments for outpatient services provided by hospitals, and an extension of a 2 percent cut in Medicare reimbursements to doctors through 2025.
The deal takes care of an expected shortfall in Social Security payments to the disabled, which would impact the program’s more than 192,000 beneficiaries in South Carolina.
It prevents a 20 percent across-the-board benefits cut to recipients that is scheduled to happen early next year, partly by shifting money from the old age fund into the disability fund.
“This comes at the expense of shortening the life span of old age survivors trust fund, which given the number of coastal retirees in our state is a concern,” Sanford said.
“This means that disability gets another shot in the arm, and for somebody that is indeed disabled that could be viewed as a good thing, but at the end of the day we haven’t addressed the real solvency issue and we’re just digging ourselves in deeper by kicking the can down the road.”
The agreement would include long-term structural entitlement reforms to bolster the program’s solvency in the long term, the first substantial reform to Social Security in 30 years.
In the short term, if the budget deal passes it will help states like South Carolina determine their fiscal planning.
“For states, it’s a plus in that the deal increases the certainty of federal funding going forward,” said Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers.
“States can have a hard time with long-term planning when they don’t know what federal funding levels are going to be, and this one looks like it’s going to keep them pretty stable,” he said.
If the House votes on the deal Wednesday, it’ll be the same day Republicans are expected to vote in Rep. Paul Ryan, R-Wis., as the speaker.