Messy Appropriations Process Goes Forward

Update: The Senate Appropriations Committee has released its companion CR/appropriations bill package with total funding at the same level as the House bill. In addition to defense, military construction, and veterans' affairs, the Commerce-Justice-Science, Agriculture, and Homeland Security will also get appropriations bills in the Senate package.

The twin deadlines of the March 1 sequester and March 27 expiration of the continuing resolution (CR) have created a lot of uncertainty about how the discretionary budget could end up. There are a number of possibilities: Congress could undo the sequester on its own and pass new funding bills separately, it could undo the sequester in the CR, or it could keep the sequester and move around funding in the new appropriations bills/CR.

It appears for now that Congress will choose option three. The House yesterday passed a hybrid bill funding the government past 2013 by a mostly party line vote, 267-151. The bill keeps the sequester in place but includes regular appropriations bills for defense, military construction, and veterans' affairs to give greater flexibility with regards to the cuts in these areas (for example, $10.4 billion was shifted within defense to operations and maintenance accounts). The CBO estimated earlier this week that the bill would provide $984 billion of base discretionary budget authority, down from $1.043 trillion pre-sequester. Adding in war spending (overseas contingency operations), disaster relief, and supplemental emergency spending (mostly Sandy relief) brings total discretionary budget authority to $1.127 trillion.

^{Source: CBO}

Meanwhile, the Senate seems to be doing something similar, moving forward with a hybrid funding bill that keeps the sequester. Senate Appropriations Committee Chair Barbara Mikulski (D-MD) is in talks with Ranking Member Richard Shelby (R-AL) to move forward with a bill that moves around funding for more agencies than does the House bill. According to David Rogers of POLITICO, the Departments of Commerce, Justice, Homeland Security, and Transportation as well as major science agencies may see appropriations bills in addition to the departments given one by the House, while the rest of the funding would be done through a CR. Previously, there was talk of doing an omnibus appropriations bill so that each individual appropriations bill could get funding re-allocated.

Even once Congress gets past this CR, the sequester remains a factor in future appropriations unless it is addressed before that. The sequester does not cut across the board in future years, but it does lower the original discretionary spending caps set in the Budget Control Act through 2021. Thus, replacing the sequester is not just an issue now but for a number of years into the future. Hopefully, it will be replaced by a smarter deficit reduction plan that address all parts of the budget.