A Budget Mess


To say that things are a mess on Capitol Hill around the budget and appropriations process may be an understatement. Here are six reasons for the mess:

  1. Earlier this year congressional leaders committed to completing the appropriations process for fiscal year 2017 by April 28th, the date on which the current continuing resolution (CR) expires. However, senators from both parties are now expressing concern that the appropriations process is so far behind schedule that they may need to adopt another temporary funding bill in the form of a CR, something they are loathe to do.
  2. Democrats, who are deeply concerned that the president will demand that the April funding bill includes money for “the wall” between Mexico and the United States, have indicated that they are prepared to prevent such a funding bill from passing Congress, thereby shutting down the government. The ramifications of a shutdown can only be conjectured.
  3. Many economists are predicting that the president’s budget is so bad for discretionary non-defense programs that mass federal employee layoffs and a shrinking housing market and economy are likely in states with large numbers of federal employees.
  4. According to the Washington Post, the president’s budget proposal is “expected to seek a historic contraction of the federal workforce” that would “shake the federal government to its core if enacted.” Noting that this will be the first time since the drawdown following World War II that the government would execute “cuts of this magnitude,” the Post goes on to say that while funding for the military and homeland security will increase substantially, other areas such as housing, environmental programs, and research will be slashed substantially. Again, the ramifications can only be conjectured.
  5. The New York Times is reporting that some Republicans on Capitol Hill believe that the president’s budget may be going in the wrong direction by cutting “too much from already lean department accounts while leaving untouched the massive benefit programs” that have been blamed by Republicans for contributing to the nation’s deficits, and that many of the proposed cuts to foreign aid and domestic programs are a non-starter, especially in the Republican-led Senate as well as the more conservative House. It seems that they are prepared to oppose efforts to cut federal funding to non-defense discretionary programs. For example, House Appropriations Committee Chairman Rodney Frelinghuysen (R-NJ) told the Times that “we’ve reduced our discretionary spending over the last seven or eight years an incredible amount. Maybe some people don’t like those agencies, but it’s been pretty difficult for them to meet their mandate.”
  6. Democrats are claiming that if the president has his way, discretionary non-defense programs would be cut by anywhere from 13 to 20 percent. In simple terms, nearly one-fifth of all funding for transportation, infrastructure, housing, health, education, and economic development programs would be cut, and programs like those funded through the Environmental Protection Agency, U.S. Department of Housing and Urban Development, U.S. Department of Energy, and Economic Development Administration could be eliminated completely.

The question of course is where does this leave us? The answer is neither simple nor straightforward.

Presidential budgets are often dead on arrival (DOA) and summarily rejected by Congress for any number of reasons, not the least of which is that Congress has its own priorities that may differ dramatically from those of the president. But presidential budgets, regardless of party or person, set a tone for further discussions and are often incorporated into Congress’ plans, even when congressional leadership announces that the budget is DOA.

Adding to the complicated environment on Capitol Hill is that the majority party is very divided, with many wanting to see more cuts to domestic discretionary programs coupled with a substantial increase in military spending and significant tax cuts. Others are calling for caution, arguing that many of the domestic programs slated for slashing are critical to the nation’s economic growth and safety.

But here is the bottom line. If these cuts do come to fruition – if education, job growth, housing, community and economic development, environmental, and aging programs are cut to the extent the president wants and Democrats predict – we will see, without a doubt, a significant reduction in programs designed to support economic development, help businesses and industry obtain well-trained staff, protect seniors, provide safe and secure communities, support affordable housing, address homelessness, and so on. Regional councils across the nation are likely to see substantial reductions in the federal funds they receive necessitating either additional funding from their states and localities or a significant reduction in the services they provide for their regions. And the larger impact on our economy may be more far reaching than anyone, including the president, could have anticipated.

Tomorrow the president’s “skinny” budget will be released. At that point, we will have a clearer idea of what he wants, what Congress is willing to accept, and how far Democrats may go to defend non-defense discretionary programs. And of course, we will have more to share with you.

By Neil E. Bomberg, NARC senior policy advisor