Category: Budget

Congress is expected to approve a continuing resolution (CR) this week to keep government operating past the September 30^th end of the federal fiscal year.  The House will take action on the bill early this week, which would provide funding for government programs through November 18^th. The bill would set the discretionary funding at 1.5 percent below current levels as called for in the August debt agreement (PL 122-25).  The extra seven weeks could allow Congress time to pass some stand-alone FY12 spending measures but it is more likely that appropriators will use the extra time to assemble an omnibus spending agreement that would contain most, if not all, FY12 spending bills, and could move to the floors before Thanksgiving.

The bill contains $3.65 billion in disaster relief funding, including $1 billion in immediate aid for FY11, which would be offset by cutting $1.5 billion from the Energy Department’s Advanced Technology Vehicles Manufacturing Loan Program.  Democrats in both chambers have expressed concerns about the offset and argued that disaster relief in the past has not been paid for with cuts from other programs.  Instead, Senate Democrats want the House to consider their measure (H J Res 66), which would provide $6.9 billion for disaster aid without offsets.  It was passed by the Senate, 62-37, last week.  Senate Democrats may move to strip the offset from the House bill when it reaches the Senate, but in the meantime are touting their “bipartisan” plan, which funds the administration’s disaster relief request for this year and next.   Both chambers will need to work out a deal by the end of the week if they want to proceed with their planned weeklong recess period next week.

In other appropriations news, the Senate Appropriations Labor-HHS-Education Subcommittee is scheduled to consider its annual spending bill on Tuesday, which is expected to be slightly below FY11 spending levels.  NIH may be safe from cuts in the Senate as committee members have expressed that NIH funding is important for economic growth.

Also on Tuesday, the Senate Transportation-HUD Subcommittee is prepared to take action on their FY12 bill, which is anticipated to be in line with the House proposal for just over $55 billion.  The House bill, approved by subcommittee on September 8^th, would provide $55.15 billion in discretionary spending for the Transportation Department, Department of Housing and Urban Development (HUD), and related agencies.  The priorities set in the measures, however, are likely to vary.  The House bill does not include funding for high-speed rail or intercity passenger rail service and would cut funding for HUD by $3 billion — about 7 percent below current levels.

To date, Senate appropriators have approved eight of the 12 annual spending bills, but only one, the Military Construction-VA bill (HR 2055), has passed in the full Senate.  House appropriators have completed work on nine of their 12 bills and six have passed in the full House.  Congress has yet to clear any FY12 spending bills for the President’s signature.

The House released details of their continuing resolution (CR) proposal yesterday, which would fund federal government operations through November 18^th.  The federal fiscal year ends on September 30^th, and Congress is far from completing work on FY12 appropriations.  The measure would fund the government at the $1.043 trillion annual level included in the debt limit agreement (PL 112-25), which is 1.4 percent below current levels.  It also includes $3.65 billion in disaster aid money for both FY11 and FY12, with $1 billion of that funding offset with cuts to a Department of Energy vehicle efficiency program.  Several House Democrats, including our own Norm Dicks, have expressed concerns about the offsets used to fund disaster relief.  This opposition could complicate the bills progress.  House and Senate leaders hope to move the measure by the end of next week with both chambers slated to go into recess during the last week of September.

Meanwhile, Senate appropriators continue to press forward on their FY12 spending bills, including Defense and Commerce-Justice-Science (C-J-S).  The Senate subcommittee approved the C-J-S bill yesterday that would provide $52.7 billion, $626 million below current levels, and $2.1 billion above the level set in the House version of the same bill (HR 2596).  In order to prioritize certain accounts, Senate Democrats propose eliminating funding for 30 programs that had been supported in the FY11 measure.   We are waiting to see the final version of the bill, to be released later today, to fully understand the implications of these eliminations.

The Senate draft C-J-S bill would fund NSF at $6.7 billion, which is $162 million, or 2.4 percent, below the FY11 enacted level.  NASA would receive $17.9 billion, which is $509 million, or 2.8 percent, below the FY11 enacted level.  The measure includes $530 million for the James Webb Space Telescope, an amount that would enable sufficient progress to aim for launch of the space telescope by 2018.  The bill is scheduled for markup in the full Senate Appropriations Committee this afternoon.

With the end of the federal fiscal year looming, congressional leaders are drafting a continuing resolution (CR) for FY12 in order to avoid a government shutdown when the fiscal year ends on September 30^th.  The CR is expected to run through November 18th, and would set spending levels at those agreed to in debt limit legislation agreed to last month (PL 112-25).  Both House and Senate leaders want to pass the bill the week of September 19^th in order to go ahead with plans for a scheduled recess the last week of September.

To date, no stand-alone spending bills for FY12 have been approved.  The House has no plans to take up appropriations measures this week.  The Senate, however, hopes to move four of their bills through committee this week:  Commerce-Justice-Science, Defense, Legislative Branch, and Financial Services.  The Senate bills are expected to include some significant differences in comparison to the House bills and administration proposals, in both overall funding levels and spending priorities.

Congress returns to work this week after a long August recess period.  Appropriations measures will move quickly over the next few weeks, and the deficit reduction committee will begin their work.  Adding to an already busy first week back, President Obama is scheduled to release a new jobs package during an address to a joint session of Congress tomorrow night.  Check back frequently for updates. 

FY12 Appropriations Process Continues:  With lawmakers focused on the new joint deficit committee and long-term spending cuts, House and Senate appropriators are pressing to wrap up the FY12 spending process as quickly as possible though some partisan clashes are still likely.  House appropriators are set to advance two bills this week that have yet to see action in that chamber – Transportation-HUD and Labor-HHS-Education. 

Meanwhile, the Senate will begin long-delayed markups and formally set appropriations allocations.  With the end of the federal fiscal year quickly approaching (September 30^th), a continuing resolution is almost certain to be needed and many insiders are hoping to avoid a repeat of the showdown over FY11 spending that took place earlier this year.  A senior House Appropriations aide said Tuesday that lawmakers will strive to complete the FY12 budget process before November 23^rd, when the debt reduction committee is required to submit a plan for trimming the deficit by $1.5 trillion.

Senate appropriators will approve appropriations allocations and advance Agriculture, Energy-Water, and Homeland Security bills today.  The spending allocation levels in the Senate are expected to differ significantly from the numbers approved in the House, reflecting both the increased overall spending level agreed to in the debt limit agreement (PL 112-25) and different priorities between the Democratic-controlled Senate and Republican-controlled House.  

Meanwhile, the House Appropriations Committee is moving forward with its remaining bills, announcing Tuesday that it will mark up the Transportation-HUD bill on Thursday and the Labor-HHS-Education bill Friday. 

Deficit Reduction Committee Begins Work:  With the bipartisan panel set to hold its first meeting Thursday, some spending cuts proposed earlier this year could gain momentum and a perennial Pentagon target could once again be on the chopping block.  A starting point for the panel could be the recommendations of a bipartisan group of negotiators led by Vice President Biden, which identified hundreds of billions of dollars worth of potential reductions in the deficit on the mandatory side of the federal budget earlier this year.  The committee also may draw on the work of the Senate’s “Gang of Six” and on the recommendations made late last year by the President’s debt commission.

Staff for members of the super committee met yesterday to discuss options for moving forward with their charge to cut $1.2 trillion from expected federal deficits over the next decade.  Sources say that the super committee is close to finishing up a package of rules governing its activities.  In addition to the rules laid down in the law creating the super committee, the panel is trying to blend House and Senate committee rules to come up with a formula that works for the overall group.  

It is predicted that the super committee will recommend some cuts but not enough to prevent the automatic across-the-board reductions.  It’s important to remember that the debt bill requires automatic cuts imposed by a trigger, which are based on the difference between the goal and what the committee, Congress, and the President agree to.  If the committee comes up with nothing, the automatic cuts are based on $1.2 trillion.  If the committee can get $1.2 trillion through Congress and the President, then there are no automatic cuts.  But rather than making it an all-or-nothing equation, the framers of the bill allowed for a hybrid.  If, say, the committee can agree to $500 billion in deficit reduction, the automatic sequestration is based on $700 billion – or the difference between $1.2 trillion and the $500 billion all sides agreed to.  

Presidential Address Thursday Night:  President Obama will address a joint session of Congress on Thursday evening to unveil his new jobs package.  Early indications are that this package will attempt to lift the ailing economy through $300 billion worth of tax credits, school renovation projects, job training for the unemployed, and a program to prevent teacher layoffs.  All of this could help state governments that are continuing to make serious cuts in education and health services.   In his speech, Obama may also ask lawmakers to renew the 2 percent payroll tax cut that was approved in December and to extend jobless benefits.  More details will be posted here after this package is released.