Hopes were high when the President introduced his FY 2011 budget proposal last February.  After years of erosion in funding levels for human needs programs, the Obama budget provided above-inflation increases for many education, health, social services, and housing programs, despite a budget that  level-funded domestic appropriations overall.  But the deficit fever gripping Washington caused the House and then the Senate to set total appropriations levels below the President’s in July.  Not satisfied, Senators seeking more reductions threatened to deny the needed 60 votes for upcoming appropriations bills if spending were not further cut.  Before the Senate left for the August recess, Majority Leader Harry Reid (D-NV) acknowledged that the funding set by the Appropriations Committee in July would have to be reduced by another $6 billion in order to secure the votes to enact spending bills later this year.
Total appropriations (aka “discretionary spending”), even with an anticipated lower number in the Senate, will still exceed regular appropriations for FY 2010.  However, economic recovery funds worth hundreds of billions of dollars were approved for FY 2010, with far less recovery money expected to be spent in FY 2011. That makes it likely that the federal government will spend less on discretionary items next year than in FY 2010.  With many signs that the economy is losing steam, increasing numbers of economists are recommending more federal spending, not less.

Adding together all forms of regular appropriations (not counting economic recovery or emergency funding), $1.090 trillion is being spent in FY 2010.  The President proposed spending about $46 billion more on comparable items in FY 2011 than in FY 2010.  The House would spend $31 billion more, and the Senate, if it makes the additional cut expected by Majority Leader Reid, will spend $18 billion more.

*The Senate total assumes the further $6 billion cut to attract 60 votes.  But the domestic/international and military/security columns are based on the previous total, $1.14 billion.

Labor-HHS-Education in the Senate.  The full Senate Appropriations Committee approved FY 2011 spending levels for Labor-HHS-Education on July 29.  The Committee provides $169.6 billion for these departments, the amount allocated to them when the total for appropriations was expected to be $1.114 billion; some share of the $6 billion cut below this level may have to be subtracted from the amount passed by the Committee.  The funding priorities in the Senate Committee bill differed some from the President’s.  The Senate provides $300 million more than the President’s request for the Department of Health and Human Services, but $937 million less than the President for the Department of Education.  The Senate bill only provided about half of the President’s request for new funding to pay for its Race to the Top education initiative.  The House Labor-HHS-Education Subcommittee has finished work on its bill, providing $176.4 billion, or $6.8 billion more than the Senate’s proposal.  The House full committee has not yet acted.

Appropriations (In)Action.  The full House has passed two Appropriations bills (Military Construction-VA and Transportation-HUD).  The Senate has passed none, although its full Appropriations Committee has approved nine of its bills, while the House full Committee has only finished work on the two appropriations bills it passed.  It has long been recognized that Congress will have to pass a Continuing Resolution (CR) with a temporary extension of discretionary funding to allow government programs to continue operating after October 1, the start of the new fiscal year.  In the last two election years, appropriations were not finalized for four or five months into the fiscal year, creating long stretches in which programs had to operate with flat funding and program managers could not plan for any new initiatives.  This year, the CR may extend into November, where final action on a combined omnibus spending bill would be slated for a lame duck session.  However, if the composition of Congress changes substantially in the election, there may be no stomach to take action on a big spending bill until the new Congress takes office, leading to another CR likely to extend for a few months into the new calendar year.  Such a scenario would increase the chances of further cuts below the President’s budget request.

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