Quick Hits - What it Means
Status of the Budget
Congress was very busy in the run up to their August recess. The House has passed 10 of the 12 appropriations bills and marked up the others so they now just need to be brought to the floor for a vote.
As reported in a previous Quick Hit, members of both parties and the White House have come to an agreement on the budget and debt ceiling which will allow for increases in both defense and non-defense spending for FY20 and FY21. President Trump signed the agreement Friday.
While a great deal of progress has been made in the House, the Senate still has much to do. With only 15 legislative days remaining after the recess until the end of the Fiscal Year on September 30th, Senate Appropriations Chairman Shelby has said that markups will begin on September 12th. Due to the compressed September legislative calendar it is likely that short term continuing resolutions will be used until the appropriations bills can make it through the Senate and be negotiated with the House bills.
Defense Funds for the Border
In a win for the White House, the Supreme Court has ruled that funds appropriated for defense can be used for the promised border wall. The ruling was made because the Supreme Court said that those who brought the case did not have the standing to do so. This leaves the door open for other challenges but allows the White House to move forward with their plan of using defense funds for the border wall in the near term.
Confirmations and Hearings
Before the recess, Congress made progress on filling several defense vacancies in the administration. The Senate has confirmed Mark Esper as the Secretary of Defense and David Norquist as the Deputy Secretary of Defense. Furthermore, General Mark Milley has been confirmed as the new Chairman of the Joint Chiefs of Staff and Vice Admiral Michael Gilday has been confirmed to fulfill the position of Chief of Naval Operations.Read more
The Budget Deal and Debt Ceiling Agreement Reached!
A deal has been reached between the White House and House Democrats to lift budget caps and increase the debt ceiling for two years. The agreement will allocate $738 billion for defense spending and $632 billion for non-defense spending in FY20 and $740 billion for defense and $634 billion for non-defense in FY21. The President had originally requested $750 billion for defense spending and $567 billion for non-defense spending in FY20.
Although the newly agreed defense levels are lower than originally requested in FY20, the tradeoff in having at least two years of stability is recognized by Defense committee and subcommittee leadership as a worthwhile tradeoff. These spending levels represent a three percent increase over the FY19 numbers for defense and four percent increase for non-defense spending.
What the Deal Means
Now that Congress and the White House have come to an agreement, appropriations legislation should be less politically charged allowing easier negotiation and conferencing of bills and reducing the likelihood of a budget showdown in the fall. Due to the limited number of legislative days remaining in the fiscal year, there will likely be a short-term CR required for some departments and agencies. With budget top lines agreed, the Senate can resume passing appropriations bills to be conferenced with the House. Appropriations leadership has indicated it will attempt to move the largest bills, such as defense, first. Being a two-year budget deal, it is likely that the FY21 appropriations bills will proceed more smoothly. Finally, with the debt ceiling relief, that issue is now off the table as a political concern during the runup to the 2020 elections.Read more
Rising Pressure – All Stop on Senate Appropriations
We’ve suggested it in the last several Quick Hits. Now the FY20 stall is upon us. Senate Appropriations Chairman Shelby has halted markups on 2020 spending bills until a deal is reached on spending limits under the Budget Control Act. Senate Majority Leader McConnell doesn’t want to do markups without having the final numbers agreed. This move increases pressure on negotiators.
The stalling move comes at a time when there have been significant changes in the staff on the Senate Appropriations Committee, an uncommon event midway through a cycle. A delay in Senate markups gives the reshuffled staff time to settle in before going to markup.
Senator Shelby says members of Congress will remain in Washington through the upcoming August recess if necessary, as the White House seems poised to put pressure on plans for the recess.
The Debt Ceiling Becomes More Urgent
Weak corporate tax revenues have added a new urgency to the debt challenges that Congress is facing. New projections show that the federal government could run out of money in early September instead of the previously projected October or early November. With the August recess approaching, an early September deadline means Congress should pass a bill to raise or suspend the debt ceiling before the recess. Failing to do so runs the risk of the government running out of money to pay for certain programs and possibly even defaulting on some of its debt, shaking faith in the government. This more urgent deadline means that the chances of raising the debt ceiling and setting spending limits for 2020 and 2021 in one agreement is less likely. Look for another short-term fix on debt ceiling relief.Read more
On Thursday, the Senate took the unusual step of moving the FY20 National Defense Authorization Act (NDAA) through quickly by packing 93 amendments into one vote instead of the more conventional process of lengthy debates and votes over each.
The House has gone on recess without voting on their version of the NDAA but will vote on it soon after their return from recess on July 9th. Conference of the two bills to reconcile differences awaits agreement on budget toplines – see more below.
The Border Supplemental
On Thursday, Congress passed a $4.6 billion bipartisan Emergency Border Supplemental bill to provide funding to help deal with issues at the border. This funding is not tied to the politically volatile wall but instead provides funding for humanitarian aid and the federal agencies working at the border. It also sets aside funding for thirty new immigration judges to handle a backlog of cases.
House democrats were frustrated that they were unsuccessful in putting specific restraints on President Trump to assure that this funding was spent on exactly what was intended and not diverted in any way to fund a border wall. While the bill still awaits the President’s signature, it is expected to be signed into law quickly.
The Looming Budget Caps Challenge
As a reminder, The Budget Control Act (BCA) of 2011 placed caps on the discretionary funding of the federal government that would be lowered if the government failed to meet deficit reduction targets. Because the government hasn’t reached these targets, the caps automatically lower for FY20 – meaning a lower topline budget is allowed.
In recent years exceptions to the budget caps have allowed overall funding levels to continue to increase each year. As we’ve reported in prior Quick Hits, no such agreement has been reached for FY20 as of yet, although intermittent talks among Congressional leadership and the White House continue.
Timeline for the Fiscal Year
The House has made progress on the twelve regular FY20 appropriations bills, passing two “mini-bus” bills containing 9 of the 12. They include defense, commerce and justice, military construction and veterans affairs, and education among others. Together the two bills total over $1.3 trillion but three more bills still need to be passed by the House. However, the Senate has yet to pass its versions of any appropriations bills. Congress has 24 legislative days remaining before the fiscal year ends September 30th.Read more
This is a big week on the Hill with significant legislation moving to the floor in both chambers while budget and debt ceiling negotiations with the White House continue – here’s what you need to know.
The House Minibus(es)
It’s moving to the floor for a vote. The minibus is one spending package of $1 trillion, covering Defense, Labor-HHS-Education, Energy & Water, and State-Foreign Relations.
Democrats NEED almost unanimous support or the measure won’t pass because Republicans aren’t going for it. The test will be whether the Congressional Progressive Caucus (Democrats), will choose to vote against the measure and break with the party, as they did back in April. Democratic party leaders are hoping that by lumping Defense and Labor-HHS-Education together the Progressives sign on.
There is a second (smaller) package also expected to advance to the floor this week covering Agriculture-FDA, Commerce-Justice-Science, Interior-Environment, Military Construction VA, and Transportation-HUD.
Senate Armed Services Committee has passed their version of the FY20 NDAA out of committee recently, and it moves to the Senate floor this week. Expect floor debate to take as much as two weeks with hundreds of amendments to be considered prior to a final vote
Quick recap on what’s in it:
- $750 billion total funding (Breakdown: $642.5 billion in Base; $75.9 billion in OCO)
- 3.1% pay raise for troops
- More policies to address issues of sexual assault
- $3.6 billion to replenish funds previously reallocated to the border by the DoD
Defense by the Numbers
Breakdown of the Big Numbers as passed out of committee to date:
|DoD Base |
|SASC||$642.6 B||$75.9 B||$750 B|
|HASC||$632.9 B||$69 B||$724.9 B|
|HAC-D||$622.7 B||$68.1 B||$690.2 B|
|President’s Request||$544.5 B||$174 B||$718.5 B|
Budget Agreement and Debt Ceiling: WH vs. Congress
Budget negotiations between Congressional lawmakers and the White House have been ongoing, while the expiration of limits on the debt ceiling looms.
Last week, Treasury Secretary Steven Mnuchin, the administration’s lead negotiator in the talks, said the WH’s “preference,” would be for an agreement on the debt ceiling to coincide with any and all budget deals made in Congress.
The main issue is some sort of agreement must come to pass before the end of the fiscal year on Sept. 30th – or mandatory sequestration will kick in as required by the 2011 Budget Control Act (BCA). Since its passage, legislative work-a-rounds have kept the full force of the BCA from being felt in the intervening years. Given our proximity to the 2020 primary season, we look for a similar relief agreement to be struck, preventing such a budget crisis.
June 17th: House not in session
June 19th: SAC-D markup
June 19th – 20th: Senate Foreign Relations Committee – Nominations Hearings for Kelly Craft as UN AmbassadorRead more
Disaster Aid, “Minibus,” and Markups:
So much for a do-nothing Congress. Plenty is finally happening and it’s challenging to keep up. Despite public perception of a singular focus on whether to proceed with impeachment, A LOT is happening.
Congress returned after the Memorial Day recess and got straight to work. Some glimmers of positive movement on Capitol Hill on many fronts:
- The $19.1 billion disaster aid bill, which includes significant funding for farmers, Puerto Rico, Midwestern, states, Florida and defense military (re)construction required due to last year’s deadly Hurricanes. See the table below demonstrating the breadth of relief, courtesy of Bloomberg Government.
- Senator Richard Shelby (Chair of the Senate Committee on Appropriations) is initiating discussion to raise the spending caps within the next week – this effort will move us closer to an agreed upon budget topline. Chairman Shelby routinely demonstrates a deft hand at guiding these contentious negotiations.
- House Democrats
are negotiating the possibility of a $1 trillion “minibus” package – this would
be the Democrats solution to keeping the government open past Sept. 30th.
At this early stage, expect House Republicans to resist – pressure needs to
build significantly before these contours come into focus.
- What’s in the “minibus”? – Early reporting suggests $17 billion in additional funding for defense with no increase for Dept. of Homeland Security
- Democrats will demand the “non-defense” portion receive a similar increase.
- The House Rules Committee has announced the amendments process for the following 7 of 16 appropriations bills that will proceed jointly to the House floor as soon as next week: Labor, HHS, Education, Legislative Branch, Defense, State and Foreign Operations and Energy and Water. See the Rules Committee instructions here.
A large Congressional Delegation (CODEL) proceeds to Normandy later in the week to participate in 75th Anniversary ceremonies.
Upcoming Markup Schedule:
HASC subcommittee markups continue; anticipate detailed tables within the next week
SASC final release of its markups is imminent; anticipate detailed tables within the next week
SAC-D will likely complete its markup before the end of JuneRead more
The Senate NDAA Markup Is In – What Does it Mean?
Yesterday, the Senate Armed Services Committee released high level detail of its final markup for the FY20 NDAA (National Defense Authorization Act). Detailed tables will be released in the first week of June.
The Senate version of the bill differs from the one the House Appropriation Committee – Defense bill markup released Tuesday this week. The House Armed Services Committee has not yet marked up their authorization bill (scheduled for mid-June.)
Here are some key differences between the Senate authorization bill vs. the House appropriations defense bill:
Overall, the two bills represent slightly different program priorities that drive at two different topline budget numbers.
Of significance, since both the Republican led Senate and Democratic led House have rejected President Trump’s attempt to skirt the 2011 Budget Caps by moving $100 billion base budget funding to OCO, Congress will indeed have to pass a budget agreement to raise the spending caps. In other words, Congress must find a compromise between the current discrepancy between the $750 billion in the Senate bill and the $733 billion we anticipate HASC will request in their bill.
Lastly, until this morning, it looked as though the $19.1 billion disaster aid bill was on its way to passing through the House (after the Senate voted the bill through last night). However, in the eleventh hour, Republican Congressman Chip Roy (TX-21) put a stop to the bill. Many Members left Capitol Hill last night for the Memorial Day Weekend recess (which is typical) so, in order to pass the bill in the House this morning it would have required a unanimous vote from the House members still present, since a standard recorded roll call vote could not be done. Rep. Chip Roy rejected this motion. So, the bill has been delayed until June 4th when Members return from the week-long recess.
June 4: House Floor Vote on Disaster Aid Bill
June 4: June 5: HASC Subcommittee Markups on FY20 NDAA
June 7: SASC releases full details of its FY20 markup
June 12: HASC Full Committee Markup on FY20 NDAARead more
Appropriations Before Authorizations?
Yesterday, the House Appropriations Defense Subcommittee (HAC-D) passed its version of the defense spending bill for Fiscal Year 2020, approving $690.2 billion in overall discretionary spending. This number is an increase from FY19 but, below what President Trump and Republicans wanted.
The bills will now move to the full House Appropriations Committee for a vote, as early as next week, and likely move to the House floor in June. Republicans are expected to continue voting ‘no’ on the bill as it moves to the full committee because the party thinks the topline spending number is too low and meaningless if not part of a broader budget deal. Despite there not being an agreed topline in place, the House Appropriations Chairwoman Lowey is signaling a clear intent to keep the process moving.
Of note here, it is highly atypical for Congress to pass an appropriations bill BEFORE authorizing the funds through the passage of legislation like the National Defense Authorization Act (NDAA). Although the Democrats on HAC-D crafted their bill to align with what the House Armed Services Committee is planning to authorize in their committee, that legislation has not yet passed out of committee.
Right now, we are continuing to watch as other appropriations bills move through their subcommittees to full committee markups. But, as we’ve stated in prior Quick Hits, until there is a budget agreement, it is unlikely Republicans will vote through any appropriations legislation, forcing Democrats to carry bills forward with party line votes.Read more
Friday, the House formally began the process of “marking” appropriations bills by beginning to advance bills from subcommittee level. Three of the twelve appropriations bills moved out of their respective subcommittees: Labor / Health and Human Services (HHS); Legislative Branch; and, Military Construction / VA. Marks signify recommended changes to the President’s Budget request by the subcommittees.
As previously reported in Quick Hits, the House-approved target topline of $1.3 trillion in discretionary funding has not been agreed by the Senate. Without an agreement between the two chambers, we are making forward, but uncertain progress, toward an end game.
Adding to the continued ambiguity, there is an ongoing debate surrounding disaster aid relief for Puerto Rico and the Midwestern states that have suffered from recent record flooding.
The House will vote this week on a proposed spending measure from the Democrats that would provide an additional $17.2 billion for the relief effort. Senate Republicans are not in favor of these supplemental funds (the House already passed a measure in January). So far, Chairman of the Senate Appropriations Committee Richard Shelby says “nothing’s moved” on the bill.
Sen. Patrick Leahy and Sen. Richard Shelby are scheduled to meet today to try to find a compromise on disaster relief.
The Defense Subcommittee of the House Appropriations Committee (HAC-D), will mark its FY20 bill on May 15th.
May will be a busy month as subcommittees continue to release their respective marks on the President’s FY20 funding request.Read more
Why Do “Caps” Matter?
- President Trump’s budget cuts non-defense programs by $53 billion and raises defense by $34 billion.
- House Democrats are not happy…but neither are Senate Republicans.
- It is possible for Congress to negotiate some of these major cuts by raising the budget spending caps enacted by the Budget Control Act of 2011 but, they would need President Trump’s sign-off, and he won’t budge – or will he?
- After the Easter recess, Congress will feel the squeeze to come up with a budget plan quickly to allow appropriators in both chambers to start drafting their spending legislation for FY20.
What It Means
Some Senate Republicans are almost as resistant to President Trump’s budget as House Democrats because they also don’t want to see major cuts to certain high-level non-defense agencies (like the State Department.) The severity of President Trump’s cuts put Senate Republicans in a tough spot to defend his plan, and many of them just don’t want to. Will Senate Republicans make this their stand?
Historically, one way Congress has navigated budget negotiations is to use the budget spending caps as a mechanism to balance the need to make significant cuts. If Congress is allowed to spend more, they don’t have to cut as much. The current cap levels were determined by the Budget Control Act (BCA) of 2011. House Democrats would like to see those caps raised (to the tune of $17 billion for defense and $34 billion for non-defense) so that there will be less pressure to make the kinds of spending cuts proposed in President Trump’s budget.
The problem is, President Trump has made it clear he will not engage in any negotiations to raise the spending caps. So, why won’t the “dealmaker” President sit down and make a deal? He doesn’t have to yet, the crisis must percolate first.
President Trump’s administration knows, as Congress does, that if the budget caps remain where they are, Congress will have no choice but to accept the cuts in the PresBud. If they can’t work within the constraints of the 2011 BCA, the law stipulates that across-the-board sequestrations will kick into effect for all mandatory and discretionary spending (excluding entitlement programs i.e. Medicare, Medicaid etc.) Those sequestrations would come by way of a stopgap Continuing Resolution (CR) in December 2019. For Congress, in both chambers and both parties, that is a worst-case scenario.
While President Trump refuses to talk, neither Senate Republicans or House Democrats want to debate the issue. There is no point in Congress struggling to reach a resolution to raise the spending caps and force members to make tough votes, if the President wouldn’t sign the legislation they come up with anyway.
So, for now, President Trump’s plan to remain unshakeable on cap deal negotiations appears to be working.
After recess, House Democrats and Senate Republicans will be on the clock to revisit the caps deal conversation because appropriations committees in both House and Senate are scheduled to start their meetings to write spending legislation for FY20. A difficult task for appropriators if they do not have an agreed upon, overall budget number to work with.
SASC and HASC are scheduled to begin the last week of May and first week of June. Appropriators appear to be targeting June.Read more