With No Agreement on Allocation, Lawmakers Use Plan B to Start Work

By Nancy Ognanovich

Lawmakers are facing some tough decisions soon after they return to work June 5 on funding the government next year, and President Donald Trump’s recent budget submission was little help in developing their plans, strategists from both ends of the political spectrum said.

With only 30 working days before Congress leaves again, this time for the August recess, House Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) will have to decide soon whether they are going to work with appropriators to move some individual spending bills across the floors of the two chambers this summer or resort to packaging the measures together in order to have enough work done to avoid a crisis in the fall, they said.

Already lawmakers admit they have little chance of sending many—or any—of the individual bills to Trump’s desk before fiscal year 2017 funds run out Sept. 30. They are talking about everything from sending one massive omnibus to the House floor to resorting to another long-term continuing resolution (CR) that locks in many existing rules and policies. The legislators also are bracing for a showdown if government funds run out, particularly because Trump hasn’t backtracked from his earlier suggestion that a “good government shutdown” might be desirable next fall.

Appropriators admitted they were hurt by a delay while waiting for the Trump budget to land on Capitol Hill only a few days before the Memorial Day recess. Now they have a little more than 40 working days before federal funding is set to run out and FY 2018 starts Oct. 1.

William Hoagland, who advised former Senate Majority Leader Bill Frist (R-Tenn.) on budget and appropriations matters, said Trump’s budget gave appropriators little to work with because his plan to shift $54 billion from non-defense programs to the security side of the ledger would require changing the Budget Control Act (BCA), and McConnell can’t find the 60 votes necessary in the Senate to do that. He said he expects the House Budget Committee to move a similar blueprint later this month but said the plan may not be able to attract enough votes in the House to even be put to a Senate test.

Hoagland told Bloomberg BNA that the likely scenario is that a plan to raise the BCA’s caps and allow appropriators to develop an omnibus that can pass probably won’t be negotiated and agreed to until monies are set to run out in September and the vehicle for those budget negotiations will be legislation to raise the federal debt limit.

“We’re not going to default and if the negotiations to raise the caps are on the debt limit increase I can see a deal being struck where they can have some kind of adjustment,” said Hoagland, also former staff director of the Senate Budget Committee. He now is a senior vice president at the Bipartisan Policy Center.

Trump Cuts Rejected

Trump’s proposed budget for total discretionary spending programs stayed under the BCA’s cap but called for $54 billion in cuts to domestic programs to pay for a corresponding increase in defense spending.

The widespread cuts and “zeroing out” of favored programs—as well as double-digit cuts to federal agencies—were sharply criticized by Republicans and Democrats alike, particularly on the appropriations panels. Attacks were launched against everything from the elimination of funds for the Appalachian Regional Commission that McConnell and former House Appropriations Committee Chairman Hal Rogers (R-Ky.) strongly favor to the almost 30 percent cut in the State Department budget that Rogers and Sen. Lindsey Graham (R-S.C.) are determined to protect.

But while calling the cuts “draconian” and reminding the administration of Congress’s “power of the purse,” appropriators were unable to describe their own next moves. A series of Trump Cabinet officers are set to testify on the president’s request in the House and the Senate the week of June 5, while talks continue behind closed doors on the options open to lawmakers.

Stan Collender, a former congressional budget aide and executive vice president of Quorvis MSLGROUP, told Bloomberg BNA that the rollout of Trump’s budget also didn’t send encouraging signs to lawmakers. They saw Trump’s top economic advisers at odds as they took to different venues to discuss key elements of the plan. Collender said within a few days, the Trump budget blueprint fell far behind in the news cycle as other events—including developments in the multiple investigations into the administration’s contacts with the Russian government—attracted intensified coverage.

Budget work also could be overshadowed, he said, as the Senate awaits testimony from former FBI Director James Comey on June 8.

Collender said it wasn’t helpful that Trump had little to no involvement in the budget rollout, instead leaving on a multiday overseas trip and only issuing a written statement on the budget after it was sent to Capitol Hill. Past presidents and Cabinet officers usually travel across country to highlight key elements of the plan, he said.

“The president not only didn’t take it on the road but—other than a prerecorded statement with broad generalities—he didn’t say anything about it and he wasn’t even in a U.S. time zone,” said Collender, who estimated the odds of a government shutdown next September at 60 percent after the budget was widely panned.

Jim Dyer, a principal at Podesta Group and former Republican chief of staff for the House Appropriations Committee, told Bloomberg BNA that both Republicans and Democrats immediately rejected the cuts laid out by White House Office of Management and Budget Director Mick Mulvaney.

“These budgets are usually dead on arrival,” said Dyer, who also previously served in White House legislative affairs posts for Republican presidents. “But I don’t even think this budget meets that high standard.”

Dyer said Republicans are unified in their opposition to the cuts Trump proposed to State Department programs, the National Institutes of Health, and more. And while there is support for increasing Department of Defense programs, Trump’s budget doesn’t show a feasible way to achieve the increases, he said. The $54 billion shift violates the budget law and can’t be passed in the Senate, he said.

“It’s been poorly received and I think we have to acknowledge that,” Dyer said. “Republicans said they are not going to do it and Democrats said they are not going to do it.”

Omnibus Said Problematic

In the aftermath of Trump’s budget submission, some members of the House Appropriations Committee suggested they might go ahead and develop a FY 2018 omnibus package from the start rather than try to move individual bills during a short summer session. Among the subcommittee “cardinals” who advocated such a strategy was Rep. Tom Cole (R-Okla.), chairman of the Labor, Health, and Human Services Subcommittee.

But that proposal isn’t likely to gain any traction, both Dyer and Collender said. The caps set out for 2018 by the Budget Control Act actually represent a cut from current spending, they said.

Budget law requires the overall discretionary spending cap to decrease by almost $5 billion in 2018, and $2.8 billion of that reduction is in the non-defense category. The total would drop from $1.069 trillion to $1.065 trillion.

“The problem with the omnibus is basically that Republican Party orthodoxy, such as it is, is that they are opposed to an omnibus bill and I don’t know if you’ve got the votes for it,” Dyer said. “I don’t know if the Democrats are going to give the votes for it until they see what the non-discretionary cap is.”

“So you can talk all you want about putting an omnibus bill together, and you can talk about how the schedule is too tight, but the reality of life is, do you have 218 votes for an omnibus bill? I don’t think you do unless you know the parameters of the legislation you’re writing and I don’t believe if you are working a piece of legislation based on the FY ‘18 caps anyone would vote for it,” he said.

Collender said he also can’t see a path forward on an omnibus this early in the year.

“Even if the House could do it, the Senate wouldn’t, and plus you have to ask yourself what number would they use to mark up to because there are caps on spending the president ignored for defense,” Collender said.

"[O]ne of the things we know is appropriations is difficult and an omnibus or a continuing resolution usually doesn’t get considered unless there is a deadline,” Collender continued. “So you’ve got a statutory problem with the caps and you’ve got a logistical problem with not a lot of time and not a lot of consideration and no deadline yet.”

“The appropriators are in a tough bind,” Dyer said. “They can probably produce bills to the existing FY ’18 caps but the problem is that the caps are lower for ’18 than they were for ’17. So all the talk about defense increases and border security and veterans benefits and all of the things Republicans want are not going to be there so the appropriators’ best posture is to wait and see what happens with the budget resolution.”

But Hoagland said he believes both the House and Senate appropriations committees will go ahead and start writing next year’s bills to reflect the lower caps—$550 billion for defense and $515 billion for non-defense—provided for in the BCA even if they can’t be enacted.

“The [House] Appropriations Committee will begin in earnest in June and July and won’t wait for a budget resolution, and I assume the same thing will happen in the Senate,” Hoagland said. “Then after the August recess we’ll be up against the statutory debt limit and that’s where I think the negotiation takes place on whether to adjust those caps and add more at that point. I think appropriators will work within those current numbers to at least be able to say they’re not the ones responsible if there is a government shutdown. They did what they had to do.”

Defense Spending Battle

Dyer and Hoagland said a lot of attention this month will be on the House and Senate Budget committees as they work to develop a budget resolution that, among other things, sets the overall discretionary spending cap—or 302 (a) allocation—for appropriators to follow. But that process is expected to be slow as the panels have many other issues to settle, such as tax revenue estimates and how to handle the cost of Trump’s yet-to-be-seen infrastructure program.

On spending, one of the biggest issues will be the size of the increase proposed for defense spending and how it will affect domestic programs.

“I think that falls on Speaker Ryan,” Dyer said. “He has to make the final call on whether a $54 billion increase is enough or if he’s going to side with the Armed Services Committee, which is pushing for $84 billion.”

But increases of that size won’t be feasible if they come at the expense of domestic programs, Dyer said. An overall allocation that translates into a set of 302(b) allocations that set up non-defense bills for sharp cuts could doom the process, he said.

“The question is, working off of the existing caps, what is that number? That is my judgment is going to be a very intense debate. And it’s going to be intense because the Democrats are not going to let this process go forward in terms of appropriations if that number is a bad number.”

A similar debate will play out on the Senate side, where Armed Services Committee Chairman John McCain (R-Ariz.) also wants a budget that permits $84 billion in Defense spending.

Ultimately, however, Collender said he didn’t believe Congress will back any $84 billion increase or even the $54 billion hike Trump wants for the Pentagon. Hoagland also said a fall negotiation is likely to produce much smaller increases.

“Maybe $25 billion/$25 billion for defense and non-defense—that’s possible,” Hoagland said. “But I’m convinced you’re not going to see a $54 billion increase in Defense and a $54 billion increase in non-defense.”

Debt Limit Also Drives Outcome

Hoagland suggested that appropriators shouldn’t wait for the House budget resolution as it is likely to follow Trump’s plans and call for the deep cuts lawmakers on both sides of the aisle criticized. He said he’s been told the budget won’t be marked up in committee until mid-June and won’t land on the House floor until right before the July 4 recess. After that, the prospects for the measure are unclear, he said.

“The speaker is going to have a problem just getting the votes for a budget resolution and it’s going nowhere—even if they could get it out—because it would face a 60-vote point of order in the Senate,” Hoagland said.

Like Hoagland, Dyer said he envisions a resolution on 2018 spending months from now. Debt limit and federal spending might end up being dealt with together next fall, he said, while the fate of health care and a tax overhaul remains unclear.

“The debt ceiling is a huge driver, the need to keep the government going is another driver,” Dyer said. “You’ve got two ‘must do’ items here and you have a lot of ‘nice to dos'—but the framework for the ‘nice to do’ items is the budget resolution.”

Dyer said it is unlikely that Congress will simply raise the debt limit but instead lawmakers will insist on “sweeteners” that may include extra defense or border security funds. Tax cuts also could be included, he said, if a tax revamp falters.

“This goes to the heart of what does this leadership have to do to get to 218 votes, now that it has no earmarks? I think the daily challenge for the House and Senate leadership is how to get anything done. The easy is hard in the environment we are now living in,” Dyer said.

In the meantime, Collender is sticking with his estimation that a shutdown is more likely than not after current government funding expires. He said he also doesn’t expect Congress to find a way to boost spending to accommodate Trump’s plans.

“I haven’t had anyone say, ‘Are you out of your mind?’” Collender said when asked about the reaction to his view that a shutdown is 60 percent likely. “What’s interesting [is] I’m expecting the House and the Senate to end up with a budget and appropriations very similar to what they did for 2017, basically rejecting everything the president wanted.”

To contact the reporter on this story: Nancy Ognanovich in Washington at nognanov@bna.com

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

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