Federal Relations

April 4, 2011

FY11 Showdown and FY12 Startup

The FY11 budget predicament reaches its climax this week as tea party conservatives and Democratic leaders clash over how much, or how little, to slash from this year’s budget, and whether to include conservative policy riders that limit the federal government’s ability to spend money on things like Planned Parenthood, environmental regulations, and other liberal priorities.  If the two sides don’t come to agreement, the government will shut down on Saturday.

Everyone agrees that the outcome of the FY11 budget that comes to a head this week will affect the budget battles ahead, so both sides are strategizing what to fight for in the current budget and how much to hold off the bigger battles for the FY12 budget debate.

Negotiations began last week on a possible FY11 package that would cut $33 billion for the year ($73 billion from President Obama’s request for fiscal 2011), although House leadership has repeatedly said no agreement had been made on a specific level of cuts.  Supported by tea party activists, GOP freshmen, and other conservatives have argued for the full $61.5 billion in cuts that was included in HR 1 as passed by the House in February, $10 billion of which has already been enacted as part of GOP short-term stopgap funding extensions.  

When the overall budget number and cuts are agreed to, it’ll be a race against the clock to keep the government running. Earlier this year, Republicans instituted a three-day vetting period for most pieces of legislation and they are unlikely to waive that requirement for the FY11 bill.  This essentially makes Wednesday the final day a compromise could hit the floor and gain approval before the end of the current continuing resolution (CR) on Friday at midnight.  They can also choose to pass a short-term CR to fund the government for a few days but increasing numbers of both Democrats and Republicans believe it is time to either reach a final agreement or have the showdown over spending that many have expected could eventually occur.  Two continuing resolution (CR) extensions have been enacted in the past month, with the latest extension of government spending authority expiring Friday night.

And, sadly, this is not the last budget battle Democrats and Republicans will fight this year.  The FY12 budget battle will begin Tuesday when House Budget Chairman Paul Ryan (R-WI) unveils his proposal that promises to cut more than $4 trillion from federal spending over the next decade.  The annual budget resolution is a non-binding blueprint that simply outlines Congress’ goals for spending, taxes and deficits in future years.  It is usually more important as a one-year document that sets a limit on discretionary appropriations for the coming fiscal year, and for providing procedural protections against Senate filibuster for bills moving through a special “reconciliation” process.  House floor consideration of the GOP budget is expected next week.

This action will almost certainly set off a broader public debate concerning the need to reduce future debts and deficit.  Lawmakers and others who have been told about the budget resolution say it will aim to scale back some domestic programs to FY06 spending levels, include some cuts to Defense spending and call for cost savings in mandatory spending programs including Medicaid and Medicare.  The budget resolution is expected to reflect plans to replace the current formula-based Medicaid program, which provides health care to the poor, with a block grant system in which the states receive a set amount of funding from Washington and have greater latitude to design their own programs and determine who is eligible for Medicaid.

The budget resolution will kick off the next round of rhetorical battles over the more than $1 trillion deficit and growing $14 trillion national debt.

The Office of Federal Relations is continuing to monitor developments on both FY11 and FY12 budgets and will report new information as it becomes available.