The measure also mandates at least $2.1 trillion in spending cuts, in phases, over 10 years.
Final congressional approval came on Aug. 2 when the Senate cleared the measure by a 74-26 vote. President Obama signed the bill, the Budget Control Act of 2011, within hours of the House action.
Congressional approval and the bill's enactment came nearly at the deadline. The Treasury Dept. has said unless the debt limit were raised by the end of Aug. 2, the government would go into default and be unable to pay all of its bills due at that time.
Enactment of the bill is a relief to business, including the construction industry, which feared a default-sparked runup in interest rates and a pullback in plans for building and infrastructure projects.
Obama moved quickly after signing the bill to certify that the debt limit would need to be raised. That triggered an initial $400-billion hike in the debt cap. Two more debt-limit increase installments, totaling at least $2.1 trillion, by the end of 2012--unless a congressional "resolution of disapproval" is enacted.
But construction's worries are far from over. Industry will have to brace itself for a share in the spending cuts that would total about $1 trillion over 10 years as part of the package. How deep the construction-related portion of those reductions will be is unknown so far.
The text of the proposed legislation doesn't provide that level of specificity.
In a speech announcing the agreement late on July 31, President Obama said the deal includes two phases. The first phase would trim the deficit by $917 billion over 10 years, mostly via cuts in discretionary spending, according to the Congressional Budget Office's Aug. 1 analysis.
CBO says that total includes $741 billion in discretionary-spending reductions, plus $156 billion in lower interest on the federal debt, offset a bit by a $17-billion increase in Pell Grants for college students.
Obama added that the new lower spending level "still allows us to make job-creating investments in things like education and research." He went on, "We also made sure that these cuts wouldn't happen so abruptly that they'd be a drag on a fragile economy."
A second round of cuts of at least $1.2 trillion would hinge on recommendations from a bipartisan committee composed of House and Senate lawmakers. Their recommendations are due just before Thanksgiving and would then go before Congress for a vote. The committee will look at further discretionary-spending cuts, but also consider reductions in entitlement programs as well as changes in the tax code.
Construction's big question is: how deep will the cuts be in infrastructure and other building accounts?
It's worth underlining that the reductions would be spread over 10 years.
Second, it will be up to congressional appropriators to fill in the specifics each year over that decade. And with a horizon of 10 years, that will mean five Congresses, whose makeup and policies are impossible to predict, will be responsible for determining where to slice spending.
The text of the newly enacted doesn't include line-item figures for individual federal accounts, such as highways or General Services Administration federal buildings.
It does, however, set overall levels for domestic discretionary spending--that's the broad budgetary category where most construction programs are located.
The bill sets spending levels for discretionary "security" programs and discretionary "non-security" spending. The security category includes the Depts. of Defense, Homeland Security and Veterans Affairs, as well as the National Nuclear Security Administration (which is part of the Dept. of Energy).
According to the office of the House Democratic Whip, Steny Hoyer (Md.), the plan's caps are:
Fiscal 2012: $1.043 trillion
Fiscal 2013: $1.047 trillion
Those compare with enacted fiscal 2011 appropriations of $1.050 trillion.
Hoyer's office also says that of the $10-billion combined cut (vs. the 2011 enacted level) over the two years, non-security and security each would absorb $5 billion in reductions.
The bill sets the following spending caps for 2013 through 2021:
FY 2013: security $546 billion, nonsecurity $501 billion
FY 2014: security $556 billion, nonsecurity $510 billion
FY 2015: security $566 billion, nonsecurity $520 billion
FY 2016: security $577 billion, nonsecurity $530 billion
FY 2017: security $590 billion, nonsecurity $541 billion
FY 2018: security $603 billion, nonsecurity $553 billion
FY 2019: security $616 billion, nonsecurity $566 bilion
FY 2020: security $630 billion, nonsecurity $578 billion
FY 2021: security $644 billion, nonsecurity $590 billion