The Approaching Crunch: Agreement on Spending Nowhere Near as Deadlines Loom

The Approaching CrunchAgreement on Spending Nowhere Near as Deadlines Loom

Once upon a time, the House and Senate Appropriations Committees sent 12 separate spending bills to the floor of each body, after the full Congress agreed on the total funding they had to divide up.  Conference committees would resolve the differences, and bills would be enacted and sent to the President.  That was then.

This year, the House and Senate are $91 billion apart on their FY 2014 appropriations totals, with the House assuming that spending will not exceed the limits set by another year of sequestration cuts, and the Senate assuming sequestration will not take place.  The gap is made even larger by the fact that the House violates the Budget Control Act’s requirement that defense and “non-defense” are cut equally.  Instead, the House spares defense and cuts domestic programs more deeply.

On the House side, the domestic cuts are so deep that there may not be a majority to pass them.  That was the case when the House leadership had to pull the Transportation-Housing and Urban Development bill from the floor for lack of votes.  In the Senate, the leadership sought to bring big domestic bills to the floor, to show the funding they were willing to provide and contrast it with the deep cuts the House is making.  (See the July 22 Human Needs Report  for more detail about the Senate Transportation-HUD bill.)  However, while a large bipartisan majority in the Senate was at first willing to end debate on the Transportation-HUD spending bill, the bill was stymied later when only one Republican, Senator Susan Collins (R-ME) would join in voting to advance the bill towards final consideration on the floor.  So Congress left for its August recess with neither body able to pass the T-HUD bill.

While it was always a safe bet to assume that Congress would not be able to enact many individual appropriations bills, by the time Congress left town it seemed clear that they would be hard-pressed to pass any.  So in order to keep programs running after the October 1 beginning of FY 2014, Congress will have to agree upon a temporary spending measure, a.k.a. a Continuing Resolution, for as long as they choose, as they continue to work on spending choices for the rest of the fiscal year.

Ordinarily, that would not be too difficult.  Congress would continue spending with each program at this year’s level for a temporary period.  But this year, continuing at this year’s level would run afoul of the deficit reduction law (the Budget Control Act).  If Congress cannot agree on ways to stop the sequestration cuts by changing the law, it must appropriate about $20 billion less in FY 2014 than this year’s spending, and complying with the law means that the full $20 billion must be cut from defense (the domestic programs will have already taken their share of the hit).  That would not be very popular, but if Congress refused to make that cut or to enact changes in the Budget Control Act, the $20 billion Pentagon cut would be triggered automatically across each defense account 10 days after Congress adjourned at the end of 2013.

So Congress has to decide something before the end of 2013, at least if they want to avoid those Pentagon cuts.  And if they do not approve some form of spending bill by September 30, great swaths of federal programs will shut down – also not popular.   They don’t have much time to do it.  The House calendar for September includes only 9 days in session.  They will be out the week of September 23-27, and will return on the very last day of the fiscal year, September 30.

Forestalling the Crunch.  When Congress is at home in August, they will hear from constituents and gauge how much people object to the current sequester cuts and the additional ones looming for FY 2014.  Some, including House Appropriations Committee Chair Harold Rogers (R-KY), saw the failure to take up the Transportation-HUD bill as proof that sequestration has to go.  “With this action, the House has declined to proceed on the implementation of the very budget it adopted just three months ago. Thus, I believe that the House has made its choice: Sequestration — and its unrealistic and ill-conceived discretionary cuts — must be brought to an end,” Rogers said.  But for Rogers, the preferred approach would replace the appropriations cuts (also called cuts to “discretionary” programs) with cuts to mandatory programs such as SNAP/food stamps, Medicaid, Medicare, or Social Security.  The Transportation-HUD implosion did illuminate divisions among House Republicans.  Some of the most right-wing members are willing to make deep cuts in discretionary as well as mandatory programs, while other members are more supportive of funding programs (including the Pentagon). The Senate-passed budget resolution took a different approach, getting rid of most discretionary cuts by a combination of nearly a trillion dollars of new revenue over ten years plus some mandatory savings (generally attempting to avoid service reductions).  The President has also opposed achieving all the deficit reduction through domestic cuts, either discretionary or mandatory.

Out of this mix, it is hard to predict whether some may push so far in the direction of cuts that others simply cannot agree, leading to an impasse that forces a government shutdown.  Funding will stop for federal employees, nutrition aid, housing and home energy assistance, Head Start, education, environmental protection, public health, justice, children’s services, and many other areas.

Whether or not that occurs, some kind of temporary Continuing Resolution will probably pass.  If it keeps government going for about two months, the search for a longer-term solution will bump right into the next deadline to extend the U.S. Treasury’s authority to borrow (the “debt ceiling”).  Treasury’s capacity to borrow is likely to be exhausted by sometime in November (the exact date is uncertain).  It could be that Congress will be trying to work out spending options when the debt ceiling is reached – a kind of double crunch that those most opposed to spending may want to use to force cuts.   But with the public strongly opposed to self-inflicted crises, and with Republicans divided about how far to go with cuts, such brinksmanship may not work.

FY 2014 Appropriations box score:

The full House has passed the following appropriations bills:
Defense, Energy-Water, Homeland Security, and Military Construction-VA .
The full House Appropriations Committee has passed all appropriations bills except Interior-Environment and Labor-HHS-Education.

The full Senate has not passed any appropriations bills.
The full Senate Appropriations Committee has passed all appropriations bills except Interior-Environment.

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