Spending Bills Are on a Collision Course

Published Jul 11, 2013. By Kristina Peterson. In The Wall Street Journal.

WASHINGTON—House and Senate lawmakers are $91 billion apart as they draft spending bills for the next fiscal year, putting Congress once again on a collision course that raises the risk of a partial government shutdown this fall.

In the Democratic-controlled Senate, lawmakers are crafting bills that add up to $1.058 trillion for the roughly 40% of the budget that Congress sets each year for military, education, transportation and other discretionary programs. Bills being written in the Republican-led House add up to $967 billion for the fiscal year that begins Oct. 1. The rest of federal spending, on benefits such as Social Security and Medicare, doesn't require annual approval by Congress.

 

"When you have two dramatically different starting points, you're going to have a big division," Sen. Roy Blunt (R., Mo.), a member of the Appropriations Committee, said this week. "We're almost $100 billion apart, and that creates a big problem."

Discretionary spending peaked in 2010 and then began falling after GOP lawmakers and the White House locked horns in a series of budget showdowns. Total discretionary spending fell to $1.287 trillion last fiscal year from $1.347 trillion in 2010, according to White House figures. Across-the-board spending cuts authorized by a 2011 budget deal would cut discretionary spending even more if Congress doesn't intervene.

For the first time in four years, both the House and Senate approved a budget resolution, the outline that sets a total for appropriation bills. But they failed to complete the next step: coming to an agreement on a compromise framework. Republicans have declined to name negotiators, citing both procedural and political reasons. That has left the House and Senate using different budget targets.

The difference is driven by how each chamber views the sequester, the across-the-board budget cuts that took effect in March as part of the 2011 deal to raise the debt ceiling and reduce the budget deficit.

Senate Democrats decided against including next year's share of sequestration cuts, saying the cuts hurt the economy and should be replaced with a mix of tax increases and less harmful cuts. The House measure incorporates the next year's sequester cuts, but GOP leaders revised the formula, cutting deeper into discretionary spending and directing more money toward military programs.

 

Democrats say Republicans are flouting the law, while House Republicans say their spending figure only needs to match the budget outline that the chamber passed earlier this year.

"One thing both sides seem to agree on is the sequester isn't good policy, but they don't agree on how to change it," said Robert Bixby, executive director of the Concord Coalition, a nonprofit that advocates for eliminating budget deficits. With both chambers using different goals, "we're certain to end up with another shutdown crisis at the end of the fiscal year," he said.

If lawmakers fail again to reach an agreement over a total spending figure, Congress may have to pass short-term spending bills at a time when lawmakers could also be locked in tense negotiations over raising the debt ceiling.

The expected impasse comes as pressure on Congress to deal with the deficit is abating, in part because the deficit is shrinking rapidly. Tax revenues have surged, and the sequester and other measures have restrained spending.

 

The deficit was $509.83 billion in the first nine months of the current fiscal year, down about 44% from a year earlier, the Treasury said Thursday. Receipts jumped about 14%, thanks to higher payroll taxes, higher tax rates for households with incomes above $450,000, solid job growth and stronger incomes. Spending over that period fell 5%, in part because of mandatory spending cuts. Under current policies, the deficit is expected to fall to $642 billion for the fiscal year, down from $1.089 trillion a year earlier.

Even so, the re-emergence of a potential fiscal showdown surprises few lawmakers. "I've learned not to be hopeful," said Senate Appropriations Committee memberDianne Feinstein (D., Calif.). "The House having one number and the Senate having another number is a killer."

The House and Senate continued this week to churn through the laborious drafting and debating of the spending bills, despite widespread acknowledgment that the chambers are moving on diverging tracks. Late Wednesday, House lawmakers approved the Energy and Water appropriations bill.

The White House had already threatened to veto the House bill, saying in a statement that both chambers should first negotiate a budget framework before passing spending bills.

The House has passed three appropriations bills. The Senate has yet to vote on any, and the challenge of reaching 60 votes to overcome filibusters may make it difficult for the chamber to pass the more controversial spending bills, such as a health-spending bill that includes funding to implement the new health-care law.