Without a Budget Deal Lawmakers Would Face Tough Choices on Spending

Published Nov 11, 2013. By Tamar Hallerman. In Congressional Quarterly.

Most of the attention on the budget conference committee that resumes public sessions this week is focused on what kind of deal Republicans and Democrats can forge to set spending levels for the rest of the fiscal year. But the longer negotiations go on the more likely that conferees will have to consider how to shape a continuing resolution to avert another government shutdown.

Democrats hope to avoid a repeat of the stopgap plan that would leave federal agencies facing another year of tight funding and across-the-board spending cuts in January. But many Republicans say a CR may be the best way to maintain the $967 billion spending level set by the House, which aims to adhere to the spending caps set by the 2011 Budget Control Act (PL 112-25).

“Probably the best we could hope for right now is a continuing resolution,” said Sen. Mike Johanns, R-Neb., the top Republican on the Financial Services Appropriations Subcommittee.

If negotiators are unable to compromise, though, a year-long CR will be the likely path forward, observers say. But even enacting a continuing resolution would be no easy task.

A CR would in theory extend the current government funding level of about $986 billion through the end of fiscal 2014. However, the 2011 deficit agreement mandates that the second round of sequestration kick in Jan. 15, knocking down discretionary spending to $967 billion. Although that is the overall level of the House budget resolution (H Con Res 25), that plan breaks with the BCA level set for defense spending in fiscal 2014, and conferees would need to come up with some plan for resolving that or face another round of automatic, across-the-board cuts.

“A CR is not a good choice,” Sen. Mark Begich, D-Alaska, said. “We can’t do a CR long-term because it’s just damaging to the budget. It doesn’t really fund the needs we have.”

And writing yet another stop-gap funding measure for the remainder of fiscal 2014, as opposed to traditional appropriations bills or spending packages, would give federal agencies less programmatic flexibility and hamstring long-term planning.

“It would mean continued chaos,” said Bob Bixby, executive director of the nonpartisan Concord Coalition.

Defense programs would take nearly all of the hit under that second round of the sequester, with budgets slashed more than $20 billion to $498 billion. Meanwhile, non-defense accounts, which bore the brunt of the spending reductions last spring, would remain largely untouched from their current level of about $469 billion.

If there is no agreement on a topline spending level, appropriators could try to develop individual bills or smaller spending packages that reflect the $967 billion, post-sequester cap and also adhere to similar limits on defense and non-defense funding. Some of the traditionally less-divisive spending bills that have already been passed out of both the House and Senate appropriations committees such as Military Construction-VA, Defense and Commerce-Justice-Science could be candidates for such a package.

However, top appropriators have indicated in recent weeks that they are only willing to move forward on a 12-bill omnibus and that a piecemeal approach is unacceptable.

Amending the BCA

The biggest hurdle to crafting a CR is this: If lawmakers hope to avoid or delay the sequester cuts — or even just shift them to shield pet programs — they would need to pass a law delaying or undoing the Budget Control Act.

Although Democrats are nearly unanimous in their goal to replace the sequester with other offsets, it is unclear how many Republicans would support that, since many conservatives say they are pleased with funding levels set in the 2011 law.

“What the [Budget Control Act] showed is that Washington actually can cut spending,” Senate Minority Leader Mitch McConnell, R-Ky., said last month.

Some Republican defense hawks in the Senate, however, have indicated a willingness to amend the 2011 debt deal in order to save the Pentagon’s budget from the second round of sequester cuts.

G. William Hoagland, a senior vice president at the Bipartisan Policy Center and a veteran GOP budget aide, said securing the necessary votes in both chambers to cancel or alter the Budget Control Act would be “problematic” and that the cuts mandated by the 2011 agreement could be here to stay, at least for now.

“I want to be more optimistic that they will get a [budget] deal, but under the premise that there is no agreement, I think the sequester level is where we go,” he said.

The Concord Coalition’s Bixby noted conservative Republicans may have an easier time politically with this particular battle. “The caps are current law, so that certainly gives an advantage to those arguing to keep those caps in place,” he said.

If Democrats are unable to gain enough Republican support to amend the BCA, momentum could build within the party to allow for some sequester flexibility measures to lessen the impact of the Jan. 15 cuts on federal agencies, observers said.

Most Democrats have opposed GOP proposals in recent months on sequester flexibility, citing their desire to replace the 2011 debt deal entirely.

But in recent weeks, some Senate Democrats, including Joe Manchin III of West Virginia and budget conferee Chris Coons of Delaware, have indicated a willingness to consider such proposals.

Some observers believe more Democrats may come onboard if the sequester is not replaced.

“Democrats have taken a strong position on this because they want to get rid of the [sequester]; if they make it more reasonable, it would be a lot harder to get rid of,” said Ron Haskins a senior fellow at the Brookings Institution. “But I think Republicans are really determined to stick with it. They’re not going to give the Democrats any more victories, especially this one, because this one they can defend.”

If Democrats are unable to drum up enough support to amend the Budget Control Act, “I think Democrats, as well as Republicans, would want to provide whatever degree of flexibility they can” to federal agencies, Hoagland said.

Hurles to Anomalies

If there is a CR, lawmakers will once again scramble to enact any new changes to government-run programs through so-called budget “anomalies.”

Given that stop-gap measures are meant to lock in government spending levels at prior-year levels, the bar is often high for proposals aimed at making even modest adjustments to agency budgets.

Anomalies are supposed to be noncontroversial and used sparingly, according to appropriations committee aides. A proposed change “has to have a financial downside or side effect or lead to a degradation to the program” to be included as an anomaly in a CR, said one Republican appropriations aide.

Requests for anomalies, though, have increased in recent budget cycles as some government agencies have been operating under a CR for several years. Still, only a few dozen anomalies were approved under the fiscal 2013 CR.

Another scenario if Congress cannot move even a CR would be a repeat of the government shutdown.

However, given the political and economic fallout from last month’s 16-day government shutdown, leaders from both parties suggest that the option is all but entirely off the table.

“The Republicans have been spooked, if you’d like, after this last round, and therefore I do not think we’ll have another government shutdown,” Hoagland said.

“We do not want a government shutdown. Let’s just start with that,” Senate Appropriations Committee Chairwoman Barbara A. Mikulski, D-Md., said in an interview last week.