Public Safety

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

Budget and Appropriations: Where Do We Go From Here?

As the Senate and House move to finalize fiscal year (FY) 2017 funding for the federal government, it is becoming increasingly clear that three obstacles – two pieces of legislation and an on-going congressional investigation – stand in the way of a rapid and conclusive FY2017 funding bill.

The current continuing resolution (CR) expires on April 28, at which point a new CR or other funding bill must be passed to avoid a government shutdown. While April 28 may seem like a long way off and plenty of time for Congress to complete the appropriations process, the reality is that Congress will only be in session for 26 legislative days before the CR expires and funding for the federal government runs out. Additionally, most of the work has to be completed in March because Congress will recess for two weeks in April for the Easter and Passover holidays. As if these limitations were not enough, Congress must deal with two pieces of legislation and an on-going congressional investigation that may substantially slow the legislative process.

The first obstacle to rapid completion of the appropriations process is the defense appropriations bill. It is a must pass appropriations bill and a priority for many members of Congress. The outcome of this bill will set the tone for the rest of the debate around funding, which is why there is little-to-no work being done on other appropriations bills.

The second obstacle is the American Health Care Act (AHCA), which House leaders introduced this past Monday, March 6. Designed to repeal and replace the Affordable Care Act (ACA) – often referred to as Obamacare – House and Senate leaders have indicated that they want this bill passed and on the president’s desk before the April recess.

The third obstacle is the on-going turmoil around alleged collusion between the Trump campaign and Russian President Vladimir Putin.

The outcome of each of these obstacles will have a tremendous impact on non-defense discretionary program funding.

Why do they matter? 

The calendar matters because there is actually very little time to resolve all of the outstanding appropriations issues.

The defense appropriations bill that Congress will pass and the president will sign will matter greatly. Under current budget rules, there must always be parity between defense and non-defense discretionary programs. That means for every dollar increase or decrease in funding for either half of the discretionary pot, there must also be an equal increase or decrease on the other side. But Congress could change that and permit defense discretionary funding to increase so long as there is an opposite reaction in non-defense discretionary funding. In other words, Congress may choose to pay for an increase in defense spending with a decrease in non-defense discretionary funding. And even if this does not happen this year, there is clear evidence that it will happen with the FY2018 budget when the majority is expected to increase defense discretionary spending by $54 billion. According to appropriations committee staff, that kind of an increase in defense spending could result in a 13 to 20 percent cut in non-defense discretionary funding, cuts that on a program-by-program basis could even be more.

The AHCA matters greatly, as well. The effort to repeal and replace the ACA may prove much more difficult than originally expected. Already, several senators and many House members have expressed significant reservations about the bill, which was just released on Monday, March 2. If that happens, efforts to pass the AHCA may eat up a significant amount of legislative time, leaving little time for either chamber to address appropriations issues. More importantly, public opinion of Congress is likely to diminish if it cannot complete the work leadership has been promising to do for eight years, and further loss of public support would severely hamper Congress’s ability to adopt other legislation.

Investigation into alleged collusion between the Russian government and the White House also matters. It has become an albatross around the necks of the Administration and Congress, and the way this issue plays out over the next weeks and months will determine the political clout that the president will have in his dealings with Congress. The more clout he has, the easier it will be to push through his legislative agenda that includes a substantial increase in defense funding.

Of course, all of this is speculation. Congress could find a way to get its work done and pass the appropriations and other bills. The Russian albatross could vanish. Agreements around funding could emerge and help prevent the kinds of cuts that we are anticipating. But if the past is prologue, Congress will not be able to do its job and will only pass an appropriations bill in the form of a continuing resolution or omnibus appropriations bill at the very last minute, without significant input from the public, the minority party, or public interest groups like NARC.

By Neil E. Bomberg, NARC senior policy advisor

Next week:  What can we expect in the president’s “skinny” budget and what does that mean for programs important to regional councils?