Federal Relations

March 7, 2011

FY11 Debate Continues…

After approving another continuing resolution (CR) last week to run through March 18th, Congress must now get serious about how to fund the remaining six months of FY11, which has been operating roughly at FY10 levels since the start of the fiscal year on October 1, 2010.  The Republican controlled House and the Democratic controlled Senate must find some middle ground – and quickly – if they want to avoid new talks about a federal government shutdown.  And while both parties have agreed to make cuts to reduce federal spending, they are still some $51 billion apart in the amount of cuts that they are proposing for FY11. 

Two weeks ago, the House passed their FY11 measure that would cut $61.5 billion from the FY10 levels.  Conversely, the Senate has advanced a bill to only cut $6.5 billion from FY10 levels.  This is in addition to the $4 billion in cuts that were included in the CR that was signed by the President last week (and runs through March 18th).  This leaves a difference of some $51 billion between the two.  The Senate leadership will allow votes on both measures, which will likely fail, to demonstrate that the Congress as a whole needs to come toward the middle if they are to get an FY11 budget approved.

Most Congressional analysts and insiders have expressed doubts that an agreement can be negotiated by the time the current CR runs out, so further short-term CR extensions will be needed.  Republicans say these extensions would come with further spending cuts.  It’s also possible that further Senate test votes, like those occurring this week, will be needed to further persuade lawmakers to compromise as Democrats and Republicans try to narrow their differences.

The measure proposed by the Senate leadership would include a Defense spending bill for the current fiscal year as Pentagon officials have urged, but at a level $2 billion below that proposed by House Republicans.  Among other differences, Democrats would restore $5.5 billion in cuts that Republicans proposed for the State Department and foreign aid programs; provide a slight increase for Homeland Security rather than a cut; restore $25 billion in GOP-proposed cuts for education, health and job-training programs in the Labor-HHS-Education bill; and add back almost $12 billion for programs in the Transportation-HUD bill, particularly for housing.  

Meanwhile, a wide range of other budget-related action will be occurring in Congress this week.  House and Senate committees will continue dozens of hearings on budget and spending plans for FY12, including those by the House and Senate Budget panels as they prepare to assemble an annual budget resolution in coming weeks.  

On Tuesday, the Senate Budget Committee holds a hearing on the findings and recommendations of President Obama’s fiscal commission, receiving testimony from the commission’s two co-chairmen, Erskine Bowles and Alan Simpson.  The pair later that day will be launching “The Moment of Truth Project,” which will provide a platform for them to continue advancing debate on the need to change federal spending and tax policies in order to return the nation to a sustainable fiscal path.

Late last week, House Leadership announced that they will increasingly be considering bills to cut mandatory spending, with the House scheduled to take up two such bills this week. Those bills, which Republicans say would save taxpayers $9 billion, would terminate two of four foreclosure assistance programs that were established to help struggling homeowners following the onset of the financial crisis in 2008.  

And today the Senate votes on a cloture motion to end debate on patent system overhaul legislation.