September is the Month for Budget Bipartisanship

Marge Clark
August 24, 2017

The House and the Senate will return to the Capitol on September 5 with serious tasks before them. There is not yet a federal budget for Fiscal Year 2018 (FY18), however members are proceeding to votes on funding all 12 appropriations bills without top line spending limits in either chamber. Current spending authority from the FY17 budget runs out on September 30, and additionally, the debt limit must be agreed to by September 29.

Members of Congress continue to work on tax reform, and they hope to use the reconciliation process to bypass the need for Democratic votes. If reconciliation is used, passage in the Senate needs 51 votes, rather than 60. Reconciliation, however, can only be used after a budget has been passed, the same in House and Senate. This is not looking promising. One escape from this requirement for Congressional leadership may be through use of the existing FY17 reconciliation approved for healthcare, which they were not able to use. This is possible if the parliamentarian is in agreement with the change.

The House has passed a package of four appropriations bills nicknamed the “security minibus” with hope of bringing an eight-bill “megabus” to the floor in early September. House appropriations bills exceed the defense spending caps set in a 2011 agreement by an additional $72 billion in defense spending for 2018. Nondefense spending is set at $4 billion below its cap of $515.7 billion. Surpassing the 2011 limits will trigger the sequestration process, unless there is a bipartisan deal to raise the caps – which has been done in previous years. The House will most likely pass appropriations bills along party lines – no need for any Democratic votes. However, Democrats continue to push for parity (that there be some increase in nondefense spending whenever there is an increase in defense spending). They have given up on an equivalent increase.

The House realizes its appropriations package would be very unlikely to pass in the Senate where it needs Democratic votes. The House bill, then, simply exists for the purpose of expressing the severity of cuts Republican leaders want to make to human needs assistance to the elderly, children, those unable to work, and people with physical and mental disabilities.

The Senate has yet to pass any appropriations bills. The appropriations committee has begun working on six bills, but none have gone to the Senate floor. Their bills are being set at current year spending levels. Even this would break the 20111 statutory cap by $2 billion (defense) and $ 3.8 billion (nondefense).

As previously mentioned, exceeding the caps triggers extreme, automatic across-the board cuts called sequestration, unless both chambers come together to form an agreement to raise the budget caps for FY18. This has been done in FY16 and FY17. It is unlikely that can be completed before the end of September, despite Speaker Paul Ryan’s assertion that talks with the Senate are happening, and that they will act before the deadline.

Appropriations are must-pass legislation. If there is not agreement by the end of September when the FY17 budget runs out, the options include a Continuing Resolution (CR) or a government shutdown. A CR could be put in place until December – which has frequently been done in recent years.

One issue contributing to the likelihood of a September 30 shutdown is President Trump’s insistence that funding for the southern border wall be included for FY18. If funding is not resolved through a CR, the border wall could also cause a shutdown in December.

Additional “must-pass” legislation includes raising the debt limit. It is clear that Congress cannot use accounting tricks to pay the bills any longer than September. We do not want to default on our debts as a nation. Treasury Secretary Mnuchin calls for a “clean” bill to raise the debt ceiling, meaning no spending or cost cutting demands attached. Members of Congress as less inclined to do this. The debt ceiling is a great place to put pressure on members to pass something that has split support and would be hard to pass.  It is possible that “the wall” would be attached to raising the borrowing limit – which cannot be put off past September 29, according to Mnuchin.

Funding of the Children’s Health Insurance Program (CHIP) is also must-pass in September, as its authorization and funding run out at the end of September. This could also be used as a place to raise the debt limit.

August is quickly coming to its end, and the September 5 return of Congress is almost here. Since members have not really started negotiations over raising budget caps, lawmakers on both sides of the aisle, in both chambers are predicting a short-term continuing resolution. Most do not want to chance a shutdown, and they need more time to develop a final spending plan. Stay tuned!

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