Understanding All the Talk Around the Federal Budget
If it's fall, then chances are that most of the talk in Washington is connected to the discussions around the federal budget. But this is no ordinary year. Discussions around the raising of the debt ceiling this summer led to the passage of the Budget Control Act which created the Deficit Reduction Commission. This group of 12 Members of Congress is charged with identifying approximately $1.5 trillion in cuts from the federal budget over the next decade. They have until the end of November to produce their recommendations. At the same time, Congress is working on putting together and passing the 12 appropriations bills that fund all discretionary programs (not mandatory programs such as Social Security, Medicare and Medicaid). Although these are two separate discussions, they are connected and make for a complicated budget process this year. Every policy decision made on Capitol Hill this fall will be driven by this deficit reduction climate. It's clear that dollars will be cut, the question remains from where?
FY 2012 and the role of the Budget Control Act
The Budget Control Act is relevant to the FY 2012 budget process for a variety of reasons. First, the legislation sets a cap on total discretionary spending for FY 2012 that translates into a 1.4% cut relative to current spending levels this year. It is also higher than the spending caps proposed under the Budget Resolution that passed by the House in April. The higher level of the cap passed as part of the Budget Control Act may help to reduce the size of cuts to the Labor-HHS-Education appropriations bill this year relative to what had been expected if the cap proposed in the House Budget Resolution was enforced.
Second, the House will have to reconcile the difference between the lower spending cap included in the Budget Resolution and the higher cap in the Budget Control Act. While this could present another opening for conservative House members to oppose the higher cap, key Republican leaders in the House have endorsed the higher in an effort to move the appropriations process forward to avoid another risky government shutdown fight.
Budget outlook and next steps
In the meantime, the House has started crafting an Omnibus funding bill that combines all their 12 annual appropriations bills in one single omnibus package. This strategy has been utilized in the past when Congress anticipates challenges in passing each appropriations bill individually. The Omnibus package will be designed to meet the original spending goals that were set in the Budget Control Act. The House and Senate will look to craft, debate and possibly vote on the bill before November 18, when the CR expires.
What all of this means for our community is that while we are aware that every policy decision made this fall, whether through the Joint Committee or FY 2012 spending bills, will be driven by concern for the federal deficit, the exact outcomes are unclear at this time as we are unsure of the total dollar amounts available to fund (or not fund) programs that are of importance to us. What is apparent is that everything is up for discussion and large cuts will inevitably be made.