Congress Eyes Federal Funding Bill, Debt CeilingSeptember 11, 2013
With the federal fiscal end of the year rapidly approaching (Sept. 30), Congress in in the midst of crafting yet another continuing resolution (CR) as the likelihood of passing any regular appropriations bills is nil. The House version of the CR, introduced Sept. 10 by House Appropriations Chair Harold Rodgers (R-Ky.), will only keep the government funded through Dec. 15, 2013—the target adjournment date for Congress.
The CR would basically extend the current funding level for federal agencies for 75 days, but reduces the current level slightly from $988 billion to $986.3 billion. However, another automatic cut due to sequestration is likely to kick-in by the end of 2013. This would reduce discretionary spending from the current $988 billion down to approximately $967 billion.
Adding to the economic pressure facing Congress, the U.S. is expected to yet again reach its debt limit sometime this October, and, while the rhetoric isn’t shaping up to be as vitriolic as the 2011 debt ceiling debate, could lead to yet another partisan showdown. Republican and Democratic leaders have been working together to try and avoid a shut-down—in the form of a near-term, non-controversial CR which would keep the government running while they tackle the debt ceiling—which would enable lawmakers to then come back to spending measures once that particular obstacle has been dealt with.
To date, the Senate has not approved a single appropriations measure while the House has passed just four, the Military/Veterans, Homeland Security, Energy & Water and Defense bills. Further complicating matters is the fact that a notable number of Republicans in both the House and Senate are urging their colleagues not to vote for any CR which includes funding or further enforcement of the Patient Protection and Affordable Care Act (PPACA), thus the threat of a government-wide shut-down. Chair Rodger’s bill does not include defunding language, however GOP leadership has outlined a legislative maneuver to allow their more conservative cohorts defunding language as an addendum to the CR without ultimately defunding PPACA.
This in-fighting over the budget comes at a time when the U.S. financial house is actually looking slightly better than it has in previous years. According to the Congressional Budget Office, the federal deficit should come in below $750 billion this year—the smallest it’s been in five years. Nevertheless, the deficit remains very high by historical standards and the national debt continues to grow as a percentage of GDP.
With regards to the debt ceiling, on Aug. 26, 2013 Treasury Secretary Jack Lew informed Congressional leaders that by mid-October the Treasury Department will exhaust the “extraordinary measures” that have been used to finance the federal government since May 17, when the current $16.7 trillion debt limit was reached. In his letter to House and Senate leaders, Secretary Lew said that Congress should act as soon as possible to meet its responsibility to the nation and remove the threat of default
This debate could bring a more headed confrontation between Democrats and Republicans, as House Speaker John Boehner (R-Ohio) has said that House Republicans will insist on cuts and reforms that are greater than the increase in the debt limit. Secretary Lew has reaffirmed President Obama’s refusal to negotiate over a debt limit increase, as well as any move to defund or delay implementation of PPACA.
Although the House is likely to begin work on the CR later this week, with the Beltway’s attention firmly on Syria and potential U.S. intervention, it is possible that the CR will be ultimately last-minute vote. A vote that is just a minor piece of a larger debate on spending that must take place in coming weeks.