Federal Relations

October 27, 2011

FY12 Appropriations and Super Committee Work

The Office of Federal Relations Team is not making any holiday plans – for now – as it now looks like Congress won’t wrap up annual appropriations work nor consider recommendations for long-term deficit until just before Christmas.

House appropriators may try to expedite completion of overdue FY12 appropriations bills by adding one or two additional measures to what is now a three-bill Senate “minibus” package.  The Senate is expected to pass the first of several minibus bills soon after it returns from a weeklong recess next week.  Once the Senate takes this action, House Leaderships has indicated that they expect conference negotiations on the minibus to begin immediately, and that those talks would be completed quickly.

The Senate version of the minibus (HR 2112) contains three of the 12 regular appropriations bills for the fiscal year that began October 1st – Agriculture, Commerce-Justice-Science (S 1572) and Transportation-HUD (S 1596).  The House might add continuing resolution (CR) language to that legislative vehicle that would keep the government operating past the November 18th expiration of the current stopgap bill (PL 112-36).  A new CR might last until late December, when Congress is expected to be considering a broad deficit reduction package aimed at saving at least $1.2 trillion or more over the next decade.

The Senate has passed only one regular spending measure, the Military Construction-VA bill (HR 2055).  The House has passed six of the 12, but did so under an overall discretionary spending target of $1.019 trillion that is lower than the limit now in effect.  The House stopped considering individual appropriations bills after Congress set the current target of $1.043 trillion in the Budget Control Act enacted in August (PL 112-25).  Wrapping up FY12 appropriations will involve negotiating compromises on dollar amounts for programs and on efforts to change federal policy through limitations on spending or policy riders.  House appropriators, for example, have proposed using a draft Labor-HHS-Education spending bill to cut off money to enforce the 2010 health care overhaul (PL 111-148, PL 111-152).  House Republicans also have sought to weaken environmental regulation by adding amendments to the Interior-Environment appropriations bill (HR 2584).

Not to be overshadowed by appropriations efforts, Republicans and Democrats on the Joint Deficit Reduction Committee are laying out budget proposals this week that could serve as a starting point for intense negotiations over a final plan to save at least $1.2 trillion over the next decade. 

Republicans outlined their plan behind closed doors yesterday one day after details of a $3 trillion Democratic proposal was released.  Details of the GOP plan are minimal, but it would rely largely on spending cuts and other non-tax revenue to exceed the savings mandate.  In part, the GOP plan is aimed at drawing contrasts with the Democratic plan, which would seek an equal mix of tax increases and spending cuts — including $500 million in Medicare and Medicaid reductions — to meet its mark.  

Neither plan stands a chance of being enacted in whole, but there are some signs in each plan that progress is being made among the committee’s 12 members on tough issues.  Both proposals take a “go big” approach and target savings upward of $2 trillion, Democrats are at least willing to consider cuts to entitlements, and the GOP does not appear to have completely ruled out a corporate tax overhaul.  

During a public hearing with the committee yesterday, CBO Director Elmendorf warned that caps on discretionary spending in the August debt deal (PL 112-25) could make it challenging for lawmakers to find more savings through cuts.  He added that the impact of the caps will be felt most heavily by programs rising at a rate faster than inflation, such as Pell grants for higher education, defense, and veterans’ health care.

Stay tuned for more political maneuvering as congressional leaders try to figure out how best to resolve both FY12 appropriations and long-term debt reduction.