Category: Budget

Congress is back from a five-week summer break and faces a tough fall agenda and unclear pathway for must-do bills that would keep the government from shutting down and defaulting on its debts later this year.

The first test will come quickly with lawmakers needing to clear stopgap spending legislation (continuing resolution) to keep agencies open when the new fiscal year begins on October 1^st. Moving the temporary funding measure has become a annual fall event on Capitol Hill over the past decade and enacting these measures is only getting harder with conservatives seeking to add politically toxic policy riders. Many predict that Congress will pass a CR through December and avoid shutdown but it will be an ugly and difficult road to get there.

Even if Congress does approve a stopgap funding measure, lawmakers face an even heavier lift in moving a final FY2016 spending deal that is likely to be intertwined with the need to raise the nation’s debt ceiling and other must-do bills that members want to see enacted this year. One of those bills includes the highway and transit authorization. Congress approved a short-term measure in July but that authorization lapses in late October. Members will need to decide if they can come up with a long-term fix or if another short-term bill will be necessary.

The most widely anticipated event on Capitol Hill this fall is not a legislative one but rather the September 24 speech by Pope Francis to a joint session of Congress. There have been more requests for gallery tickets to see the first-ever appearance of a pontiff before lawmakers than anyone can recall for other heads of state. Some say strong remarks from the leader of the Roman Catholic Church calling for an immigration overhaul or rebuking US foreign policy might even spur lawmakers to action. Indeed, Francis’ appearance only adds to the uncertainty that will mark the final months of the first session of the 114th Congress.

Congress is beginning to wrap up their work in preparation for their August break. Later this week, House members are expected to leave until after Labor Day. The Senate is scheduled to be in session next week, but they could decide to wrap up sooner. Regardless, lawmakers will be leaving DC with no real movement toward resolving the bipartisan gulf over sequestration.

House and Senate appropriation committees have completed work on all 12 spending bills in their respective chambers. That is an accomplishment that has escaped Congress in recent years. But despite the committees’ efforts to advance appropriations bills through the committee process, House and Senate leaders have had a tough time bringing those bills to the floor for consideration due to partisan positions that collectively ended the process in mid-July.

When lawmakers return to the Capital after Labor Day, they will have only about three legislative weeks before the October 1^st start to the federal fiscal year to reach a funding agreement that would stave off a partial government shutdown. In other words, timing is tight, the stakes are high, and appropriators are frustrated. There is no doubt that a continuing resolution (CR) will be necessary but yet there is no agreement on how long a CR will run, or whether or not we will see the two sides come together to negotiate a budget deal like the one we saw in 2012 to stave off sequestration.

Both the House and Senate are out today, but return to the Capitol Tuesday with just two weeks left before the House is scheduled to take its summer recess. The Senate will follow suit in three weeks – unless they too decide to call it good and leave town with the House. In that meantime, leaders must reconcile the differing plans between the chambers for reauthorizing highway and transit funds. And both chambers have hearings slated around the review of the Iran nuclear deal.

But the issue we are watching most closely is the pending debt limit situation. The US Treasury estimates that extraordinary measures to stay financially viable will be exhausted in early December and there is a very good chance that November will be the month in which debt ceiling concerns start to escalate in the markets.

Republicans have begun drawing up their wish list in exchange for raising the debt limit this year. But if they decide to insist on conditions for raising the government’s nearly exhausted borrowing ceiling, they will face strong opposition from Democrats and the White House. And to further complicate the issue, the debt limit debate could get mixed up with whatever deal likely will still need to be reached on FY2016 spending.

The debt limit must be addressed or the government will default on its legal obligations, which the Treasury Department warns would result in a financial crisis.

The last time Republicans forced trade offs for their support to raise the debt ceiling was in 2011 when House Speaker John Boehner (R-OH) drove the successful demand to cut spending dollar-for-dollar for any debt limit increase. The result was the Budget Control Act (PL 112025), which ended up making $2.1 trillion in spending cuts in exchange for a $2.1 trillion debt limit increase. But since then, Congress has suspended the debt limit three times, effectively raising the borrowing ceiling, and the GOP has been unable to force spending cuts in exchange for those increases.

While December seems like a long way off, it will be here before you know it. Raising the debt limit is difficult enough in the current political climate, but having it wrapped around the FY2016 appropriations process and reauthorization of highway and transit programs makes a difficult situation even more challenging.

Congressional Republicans and Democrats are already are blaming each other for causing the next government shutdown, which won’t even happen for another 80 days (October 1^st). That may seem like plenty of time for lawmakers to work through their differences and approve appropriations bills to keep the federal government running, but the news from Capitol Hill today is not to expect any more appropriations bills to make it through the House chamber until Republicans and Democrats work out issues on the Confederate flag. That’s right. The Confederate flag.

Things aren’t much better in the Senate where Democrats have threatened to block all spending bills until Republicans agree to a deal to lift the spending caps and end the threat of sequestration (across-the-board cuts).

So far the House has approved six of their twelve annual spending bills, with the remaining six bills approved by committee and awaiting floor action. They were likely on track to approve all twelve bills before the end of September before the Confederate flag flap. The Senate has not been moving quite as quickly, and is now at a dead stop. They not approved any of their twelve bills, and have moved only five through committee. Proposed bills and report language can be accessed here.