Congress to Address Spending, Extenders

December 2, 2015

pic-capitol-cloudsCongress returned from Thanksgiving recess facing immediate pressure to come to an agreement on a $1.1 trillion catchall spending measure to keep the federal government funded beyond its looming Dec. 11 deadline. The date is when an existing government-wide continuing resolution will expire and Congress must pass an omnibus spending measure crafted to raise spending limits in a budget deal already signed into law, or send President Barack Obama another short-term measure. The alternative could signal a government shutdown weeks before the Christmas holiday—something lawmakers are determined to prevent from happening.

Last month, President Obama and congressional leaders struck a budget deal that lifted existing government spending caps by $80 billion and suspended the debt limit until 2017. While the agreement set the top-line budget numbers and reduced the initial threat of a government shutdown, ironing out the details of how the money will be spent has proven to be slow-moving.

The Republican-led Appropriations Committees in both chambers made progress on spending bills prior to the recent budget agreement, but those were based on spending levels below even sequester caps and stood no chance of approval from Senate Democrats or the White House. The president and congressional Democrats have complained the Republican-backed funding bills would drastically shortchange federal agencies and prohibit them from properly carrying out their missions.

Democrats want a “clean” measure and are worried Republicans will use the must-pass legislation to include dozens of riders to, among other things, loosen overhauls of the U.S. financial system, such as the 2010 Dodd-Frank Wall Street Reform Act, chip away at the president’s health care law, and roll back a bevy of environmental regulations. Conservative lawmakers also want to see some kind of move to cut off federal funding to Planned Parenthood.

Some Republicans also want to add language to halt President Obama’s plan to resettle 10,000 refugees inside the U.S. The House overwhelmingly approved legislation to place new restrictions on the effort, essentially pausing it before the Thanksgiving holiday, and sent the measure to the Senate. The president has said he would veto the bill and Democratic leaders have already signaled they will filibuster it in the Senate, leaving the omnibus package as the next best option.

Another item on the must-do list involves extending or potentially making permanent the already expired tax breaks in time for the upcoming filing season. At the beginning of 2015, some 50 temporary tax breaks for businesses and individuals expired, requiring Congress to act before the end of the year to prevent significant tax hikes for some small businesses. In 2014, lawmakers waited until Dec. 16 to pass retroactively the extenders package for 2014, giving small businesses less than two weeks to make major spending decisions.

Earlier this year, the House voted to make several of the tax extenders permanent, including the research and experimentation tax credit, as well as legislation to extend permanently increased Section 179 expensing limits, certain S corporation provisions, certain charitable giving provisions and the federal deduction for state and local sales taxes, but the Senate Finance Committee has opted instead to revive the expired measures for 2015 and extend them through 2016.

Now that the extenders have been expired for 11 months, and the end of the year is fast approaching, Senate Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) have confirmed that the two parties have started discussing a path forward. Both Hatch and newly appointed House Ways and Means Committee Chairman Kevin Brady (R-Texas) have said they hope to permanently restore at least some of the extenders before Dec. 31.

If it looks like Congress can’t get its act together, it likely will quickly pass another short-term extension. The White House is signaling it would not block a short-term spending bill to avert a government shutdown should lawmakers need to keep working on a massive spending measure after the Dec. 11 deadline. Though if that happens, it is unlikely lawmakers will approve a long-term deal before the Christmas recess, punting the deadline into 2016.

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