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Author: Christy Gullion

Budget Negotiations on Hold for Thanksgiving

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Congress is on break starting today through the Thanksgiving holiday. The House returns to work December 2nd for two weeks and the Senate returns the following week of December 9th. Unfortunately, budget negotiations did not result in top-line numbers for FY2014 spending before lawmakers left town, leaving appropriators very little time to draft an omnibus spending bill before the current continuing resolution (CR) runs out on January 15th. Appropriators and their staff say they need at least 30 days to put together an omnibus bill to keep the government running when the current stopgap spending measure (PL 113-46) expires on January 15th.

House leaders have stated that they will try to advance a new CR at the sequester level of $967 billion for discretionary spending set under the 2011 Budget Control Act (PL 112-25) if budget negotiators can’t produce a deal.

But appropriators are concerned not only about the current year but that the appropriations cycle for FY2015 will face the same challenges that the FY2014 process has faced. The House and Senate Budget Committees traditionally pass concurrent budget resolutions in April each year that provide the framework for appropriators to proceed on the 12 annual spending bills. Work on FY2014 bills fell apart in August after the House and Senate appropriations committees spent months working under different top lines, known as 302(a) allocations, and no compromise was forged to bridge the $91 billion gap between the House and Senate plans. Appropriators believe now is the best chance to create a top line number for FY2015, several months ahead of schedule, which could help restore regular order to the appropriations process.

But now nothing will happen for at least a week or two while everyone enjoys their Thanksgiving break. The game clock, however, keeps ticking toward the January 15th deadline of the existing CR.

Budget Negotiators Continue to Talk

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Just when all seems lost, it appears that there may yet be hope that Budget negotiators could reach a deal to replace a portion of sequestration. Any potential deal would be small in comparison to the $17.1 trillion national debt, potentially with proposals to replace one year of sequestration cuts — worth $110 billion — or something smaller, with more targeted cuts.

While the outlines of the agreement are certainly far from solid, they could include some mandatory savings, along with revenue, but no new taxes. Potential revenue raisers being discussed include increased Transportation Security Administration fees and money generated from wireless spectrum sales. As an extra bargaining chip, Republicans would consider including an extension of extended unemployment benefits, which expire on December 28th.

This all seems like a small glimmer of hope that the next round of sequestration will be avoided, and maybe topline budget numbers for FY2014 and FY2015 would be agreed to. This would give some certainty – or mock regular order – at least through next years mid-term elections.

Budget Deadline Closing In

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Both the House and Senate will be busy this week as they attempt to wrap up a number of issues before they take a two-week break for Thanksgiving. The Senate will try to finish work on the annual Defense Authorization bill that the House completed back in June. This could be one of the few substantial pieces of annual legislation that Congress acts on this year.

But the big news is what’s not happening. With the deadline less than a month away, budget conference committee negotiators say there has been almost no progress in their attempt to address the $91 billion chasm that continues to separate the House and Senate FY 2014 budget plans. The December 13th deadline is fast approaching, with a two-week break in there for Thanksgiving. While Congress set the arbitrary December 13thdeadline, there are no consequences for missing it. In fact, the next deadline that does have consequences is January 15th when the current continuing resolution (CR) runs out. The hope is that negotiators can reach an agreement on an outline that could provide an overall budget number for FY2014 and possibly FY2015 as well as some relief from sequestration before the next round of sequestration take effect in January.

Obama Nominates Two from Academia

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The White House nominated two university professors to lead the Energy Department’s science operations. Franklin Orr, a Stanford University professor of petroleum engineering, has been nominated to be DOE’s undersecretary for science and energy, a recently redesigned position. Orr also directs Stanford’s Precourt Institute for Energy. The new undersecretary job includes all five energy offices, such as nuclear and fossil energy, as well as the Science office, which previously fell into separate positions that have now been combined. Marc Kastner, who is dean of MIT’s School of Science, has been tapped to be director of DOE’s Office of Science. Kastner, a former head of MIT’s physics department where Energy Secretary Ernest Moniz had been faculty member for decades, has worked in materials science and superconducting electronics.

Budget Conference Committee Meets Today

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Formal budget negotiations begin today with Democrats pushing for a multibillion-dollar job creation package aimed at speeding up economic growth. That will be in contrast with Republicans who want to maintain spending cuts under sequestration that will keep government operations running at reduced levels through the rest of FY2014. One thing that leaders in both parties already agree to: no grand bargain. The conference has until December 13th to recommend a plan under an agreement linked to spending and debt limit legislation that was passed October 16th (PL 113-46).

The goal for most of the budget conference committee members is to find a way to replace sequestration and agree on an overall FY2014 spending limit. While the House and Senate budget plans introduced earlier this year are far apart on tax and spending policy, they are somewhat closer on the more immediate issue of FY2014 discretionary spending. The House proposes an overall discretionary cap of $967 billion, $91 billion less than the Senate’s limit of $1.058 trillion. Absent an agreement on FY2014 funding, automatic spending cuts under the sequester would reduce spending by about $20 billion from current levels, to $498 billion for defense and $469 billion for domestic programs.

The House and Senate are both scheduled to recess next week through Veteran’s Day, and then will return to DC to continue negotiations. They will work for two weeks in November, and then take a two-week recess for Thanksgiving (November 25-December 6). That will leave just one week in December to complete work on the budget negotiations before the December 13th deadline. Again, most of the real negotiations will take place behind the scenes so the truncated work schedule should not affect the outcome that much. If a deal is not reached by the December deadline, Congressional leaders may need to consider another continuing resolution to keep government funded beyond January 15th.