Federal Relations

February 25, 2019

And here comes the NEXT Spending Battle

Although the FY2019 spending situation has finally been resolved, another potentially protracted spending fight is already underway.  Without an agreement to lift the statutory limits on how much the government can spend during FY2020, the federal government is looking at a very steep fiscal cliff and significant automatic cuts.

In 2011, House and Senate negotiators came up with, and the Obama Administration agreed to, a plan that was considered so potentially draconian that no one thought that parts of the plan would ever be allowed to come to fruition.  The overarching goal of the plan was to cut mandatory spending.  The intent was to force cuts in mandatory spending by imposing automatic cuts (or popularly called “sequesters”) to the discretionary part of the budget– both defense and non-defense– with statutory cuts placed on each part of the discretionary budget for 10 years.

The mandatory savings never materialized, and over the last eight years, sequesters have been avoided only as a result of two-year deals that raised the spending limits imposed on both defense and non-defense discretionary (“NDD”) programs.  The last deal that lifted the cap applied to FY2018 and FY2019.

All of this means that, for FY2020, without an agreement that lifts the statutory limit on discretionary programs, we are facing a mandatory cut of $126 billion below FY2019 levels.  As a result of the 2011 agreement, discretionary defense programs would be subject to a cut of $71 billion while the domestic agencies and programs funded through discretionary funds– such as NIH and NSF– would be forced to deal with a cut of $55 billion in FY2020.  An agreement must also be reached for FY2021 in order to prevent similar automatic cuts.

Advocacy groups have mobilized to draw Congressional attention to the serious problems surrounding maintaining current spending caps.  Congressional discussions have begun and the situation will take months to resolve.