Federal Relations

Congress to Focus on Budget Issues

After a weeklong break, both the House and Senate are back in session this week. They have a three-week work period before the next break at Memorial Day. During this time, the House is expected to make some progress on their FY14 spending bills.

Appropriations

Even though there has been no final resolution over the budget for FY14, House appropriators are set to begin writing their FY14 spending bills this month with the plan of having a few of those bills on the floor by June. In the next week, House Appropriations Chairman Harold Rogers (R-Ky) is expected to propose how to divide up $967 billion in discretionary funding for the 12 annual bills, known as the 302(b) allocations. Once the allocations are approved, House appropriators will begin moving their bills through subcommittees and then the full panel.

The Senate appropriations process is typically later than the House process, and will be further complicated this year as Democrats have sought to set the cap for FY14 discretionary spending at a higher level, $1.058 trillion. The difference – $91 billion – is already reflected in the budget resolutions adopted by each chamber and has thus far kept them from reaching a final budget accord for FY14.

Among the first FY14 bills expected to reach the House floor is the Defense measure, which accounts for roughly half of regular discretionary spending. Another likely candidate for early House floor action is the nonpartisan Military Construction-Veterans Affairs spending measure. The Labor-HHS-Education spending bill is usually the last bill written as it has some of the most controversial programs that tend to divide Democrats and Republicans.

Sequestration

After providing more flexibility from sequestration for the FAA last month, Congress will likely grapple with how to give other agencies similar flexibility – especially if there is another public outcry like there was for FAA (ie: long lines at TSA check points in the nation’s airports). The White House and Democrats appear to be sticking with a strategy of seeking a full repeal of the sequester, despite pressure from Republicans, federal agencies, and other interests to back the kind of special law that eased the impact of spending cuts on air traffic controllers. Many members of Congress and the White House continue to talk about a “budget deal” that will address the impacts of sequestration and possibly close tax loopholes for the wealthy. It is unclear how such a deal would come together at this point as Republicans have been adamant about not raising any additional taxes.

Debt Limit

Many had hoped to use the next debt ceiling debate as a way to force a broad budget deal, but those hopes are fading the default deadline has been moved back and lawmakers appear less worried about the consequences. The urgency to address the debt is diminishing with the annual deficit falling from $1.3 trillion two years ago to a projected $845 billion this year. And the Treasury may not exhaust the extraordinary measures it can use to avoid default until November – rather than this summer.  So pushing back the deadline also pushes off any need to compromise in the near term, one reason the House and Senate appear set to move forward with very different levels for FY14 discretionary spending. If a big deal is even remotely possible, it is likely to come with an overhaul of the tax code tied to modest cuts in entitlement spending and a debt ceiling increase.