Quick Hits - What it Means
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
Here We Go Again – The Road to a Continuing Resolution
What it Means
Well, it was too good to last. Most FY19 spending bills flew through the system with relative ease last year, largely owing to the existence of a budget agreement at the beginning of the process. While the border wall caused some theatrics, defense and MILCON/VA were completed and in place by the start of the fiscal year (October 1st). That smooth process will not repeat this year.
That said, the FY20 process has been moving along quickly since the FY20 President’s Budget arrived to Congress in mid-March. Although the “PresBud” came later than expected and was received with dubious support, the legislative process of converting that budget “input” into legislative “outputs” (bills) kicked into high gear immediately. As we speak, meetings continue to take place across Capitol Hill with staff members from individual and committee Congressional offices. Assisting with and orchestrating these meetings are thousands of lobbyists, preparing and guiding clients to the correct place in the process in order to make a case for their requested policy or funding “outputs.”
What can we expect in the coming months?
Committees have begun to announce their subcommittee and full committee markup schedules; the first opportunity for Congress to publicly declare its initial view of the President’s “input.” Markups will begin at the end of April and run through the beginning of June across all oversight committees.
By the July 4th break, we’ll have a general sense of where the House and Senate each stand on major issues, but it is not likely the two chambers will have agreed upon a “topline” budget number by that time. The House, the Senate and the President all have a slightly different figure they believe is required to fund the government for FY20. Without a common topline number, bills will move through the House and Senate only to then sit and wait, and likely wait some more, while the political dynamics play out.
What will be the key issue that grinds the legislative process to a halt during the summer?
The quick answer is, it’s too soon to know for sure. But, there are a number of candidate issues: responses to Congressional subpoenas, the release of Mueller Report details, immigration, and health care reform all have the potential to slow the process while simultaneously producing leverage.
What can you do now?
Know that your government “customer” likely has a backup plan in mind come October when they find themselves living under a Continuing Resolution (CR). Are you a part of that plan?
***Now is the time to engage with your “customer,” to discuss how and why you should fit in to their year-end plan.***
 There are roughly 14,000 registered federal lobbyists representing every aspect of your life that is impacted by the federal budget
It’s not about “the wall.” The wall is a political lever.
Here’s what matters:
The budget for FY20 has finally been released to Congress. Before going down the rabbit hole of “border wall” funding, let’s look at a few definitions and facts.
- The Office of Management and Budget released the FY20 “President’s Budget” today, known as PB20 or the PresBud
- All President’s Budgets are political documents meant to highlight Presidential priorities; they never execute exactly as proposed
- PB20 signals the real start of the legislative process of delivering appropriations to be allocated within agencies
- The more worrisome budget to watch for is the Congressional Budget; it is nowhere close to being agreed, and until it is, movement of funding legislation will slow to a grind by summer
- In 2018, a two-year Congressional Budget agreement was reached, providing a two-year outline of FY18-FY19 spending thresholds, and allowed for “topline” relief from the 2011 Budget Control Act (BCA)
- Because there was already an agreement in place, the FY19 funding process moved quickly
- While part of the government funding was held up over the 2018 border wall debate, much of the government (including defense) was actually funded on time for the first time in 8 years
- For FY20, no relief from the BCA has yet been agreed, so PB20 is the opening argument to the negotiations
- With PB20 now delivered, President Trump has laid down markers to:
- Ignore the BCA spending caps
- Cut domestic spending by 5% across the board
- Fund DoD to the tune of $750B
- With PB20 now delivered, President Trump has laid down markers to:
Useful definitions when reading or listening to breathless media reports:
Allocation: The House and Senate Appropriations Committees, respectively, decide on how to apportion the budgeted amount to each of their corresponding 12 subcommittees. The amount assigned to each of the 12 subcommittees is known as a 302(b) allocation and taken together the 12 assigned amounts are known as 302(b) allocations.
Appropriation: The provision of funds, through an annual appropriations act or a permanent law, for federal agencies to make payments out of the Treasury for specified purposes.
Authorization: A statutory provision that obligates funding for a program or agency. An authorization may be effective for one year, a fixed number of years, or an indefinite period. An authorization may be for a definite amount of money or for “such sums as may be necessary.”
Budget: Authority provided by law to enter into obligations that will result in outlays of Federal funds.Read more
An End to the Partial Government
Shutdown: The Government Reopens until Feb. 15
On January 25th, the partial government shutdown came to an end following the passage of a stopgap funding bill in the Senate and House to fund the government through Feb. 15. The 35-day long partial government shutdown, the longest in history, ended after a deal reached between President Trump and Democratic leaders Nancy Pelosi (D-CA) and Chuck Schumer (D-NY). The deal includes funding for seven out of the twelve appropriations bill, specifically Agriculture-FDA, Commerce-Justice-Science, Financial Services-General Government, Homeland Security, Interior-Environment, State-Foreign Operations, and Transportation-HUD. The State Department, Homeland Security Department, Transportation Department, and NASA are just a few of the covered agencies the continuing resolution will reopen. FY19 appropriations bills have already been enacted for Defense and Labor-Health and Human Services-Education, as well as for Energy and Water, Legislative Branch, and Military Construction-Veterans Affairs.
One notable absence in the deal is funding for President Trump’s border wall. As part of the deal, however, lawmakers agreed to form a conference committee to negotiate appropriations for the Homeland Security Department. This could ultimately include funding for border security. Though the deal provides much needed relief, there is still a tough road ahead for Democrats, Republicans, and President Trump as they continue to negotiate on President Trump’s demand for $5.7 billion in border wall funding.
Are you ready for FY20?
Even though portions of the government have been waiting for Congress and President Trump to find agreement on FY19 funding, the FY20 budget reveal is immediately upon us. The annual budget is traditionally due to Congress the first Monday in February, in this case the 4th. The administration has signaled their FY20 submission will be late, but we don’t yet know how late. Surely the partial shutdown has impacted some agency’s ability to finalize their budget materials.
That said, companies with government customers should have a pretty good understanding of how they expect their programs to fare in the FY20 submission. If that’s not the case, you might re-assess how close you are to your customer.
As the FY20 submission comes forward, your opportunity to tell your story to Congress is also upon us. Remember, Congress reviews every line of the budget submission and puts its stamp on what eventually becomes the 12 appropriations bills that will fund the government. As such, every federal dollar that will be spent on your programs of interest will have passed through this Congressional review and approval process. Upon review of the public FY20 budget submission, if you find your program took an unexpected “hit” or somehow fell “below the line” this year, you have an opportunity to make sure Congress fully appreciates the impact of those decisions.Read more