Federal Relations

FY14 Appropriations Update

Appropriations:  This week, House appropriators are expected to approve a plan for writing FY14 spending bills that would make deep cuts in domestic programs in order to protect defense programs. The overall figure will adhere to the spending caps set by recent budget agreements and assumes the sequester will apply to FY14 without a larger agreement to cut the deficit. At question is how the overall amount will be divided between the 12 annual spending bills. The GOP approach makes it clear that they intend to preserve national security spending at the expense of domestic programs favored by Democrats.

The allocations provide a combined $625 billion in FY14 for the Defense, Military Construction-VA, and Homeland Security bills, which would be a cut of $4 billion, or less than one percent, from the current enacted level. Discretionary spending in the rest of the government — covered by the other nine spending bills, including the Labor-HHS-ED bill — would be cut by about $72 billion, or 17 percent, from current levels.

The Labor-HHS-ED bill would provide $121.8 billion, about $35 billion, or 22 percent, less than the current level. House Appropriations Committee Chairman, Hal Rogers (R-KY) has not ruled out increases in spending allocations if lawmakers can come to a broad budget accord to reduce the deficit and replace the sequester. But for now, House Republicans appear to have adopted a strategy of back-loading the cuts on bills, such as Labor-HHS-Education, to buy them some time for possible negotiations.

Debt Ceiling:  The debt ceiling increase debate is one issue that appears to be off table in budget negotiations. With the law suspending the ceiling on federal borrowing authority expiring over the weekend, on Friday Treasury Secretary Lew formally told lawmakers that Congress won’t need to raise the debt limit again until after Labor Day. When the legislation was approved earlier this year, it was assumed the debt limit would need to be increased by late spring or early summer. Lew reiterated the Administration’s pledge that it won’t negotiate with Congress over the debt ceiling, despite ongoing talks among Republican lawmakers aimed at a strategy of using the need to raise the debt limit as leverage in a broader debate over tax and spending policy.