Compromise to Control the Chaos

This 2nd Session of the 115th Congress continues the slow roll that began on October 1, 2017 restraining Federal agency operations for fiscal year 2018 (FY18) under the very limited prescription of a continuing resolution (CR), with nothing but uncertainty in the forecast.  

The first CR, in which current rate funding authority was extended through December 8, 2017, was assumed to provide Congress sufficient time to produce a bi-partisan, bi-cameral budget agreement that would afford Federal agencies the needed budget certainty for FY18. But, as we approached the end of CR #1, the political landscape ignited and leaving fiscal chaos in its wake. And, rather than faithfully and dutifully dispense with FY18, an astonishing 5th continuing resolution is nearly underway.

Last November, we detailed the self-imposed, statutory barriers obstructing Congress from any meaningful progress toward a full-year budget agreement, barriers imposed by the 2011 Budget Control Act (BCA). Yet Congress left this simmering, untouched, almost willfully resigned to governing through a chain of CRs where only precious few programs and national emergent needs can [necessarily] be addressed. Despite near unanimous agreement and desire to relax the offending provisions of the BCA, attention has been fully directed elsewhere.

Until recently, the inflamed rhetoric from both sides of the political divide ignored the finer discussion required to appropriately fund the government. Thankfully, it now appears that House and Senate leadership may be on the cusp of an agreement to finally dispense with the BCA spending limitations. What is most regrettable is that the BCA has been the one legislative impediment where the solution, whatever it may be, has always enjoyed a small degree of political harmony.

Unfortunately, Federal agencies are set, once again, to begin their controlled stumble over the starting line of another CR. For the extended term of this 5th CR, some 40+ days, the Nation may well enjoy an encore of the acrimony that consumed the public discourse, deepened the partisan divide in Congress, and resulted in the recent 72-hour government shutdown. Entrenched positions on defense vs. domestic spending, the border wall, and other elements of immigration policy, just to name a few, have hijacked the appropriations process. It’s not that these matters don’t warrant passionate debate and deliberation. It’s really a question of when and how to deal with them. The last 5 months have demonstrated that finding any sort of amicable solution, even if temporary, requires a seemingly impossible level of accommodation within Congress. An attempt to mollify these issues in any meaningful way within the parameters of a catch-all omnibus appropriations measure cannot and should not happen.

Legislating, fundamentally, is the art of “give and take”, of “receive and recede”. These unresolved matters that led to the government shutdown are indeed civic imperatives that impact our national security, and perhaps even social and economic stability. But, they remain unresolved entirely due to the complete lack of concession from either side. This stalemate has eroded Congress’ fiscal responsibility. The one compromise that must now occur is that which will release fiscal year 2018 from the stranglehold these macro-level policies currently have on the daily functioning of our Federal government.

Neither the game nor the players have changed since FY18 began over five months ago. As this fourth overtime expires, Congressional leaders must now agree that the timing and need for a final omnibus is too urgent and too great. Employ the “germaneness test” and consider an omnibus that includes only that which is necessary for the proper and efficient functioning of the Federal government. This will produce the needed, if barely digestible, compromise to dispense with FY18, and then move to consider the macro-policy issues under regular order. After all, there is a movement afoot that will soon blind-side the Congress irrespective of current events. In just days, the President’s FY19 budget will be delivered to Capitol Hill, further compounding the fiscal responsibilities that lay before Congress. Compromise has been a lost art this year, but it’s now more than necessary to control this continued chaos.

A Year-Long 11th Hour

“On or before April 15 of each year, the Congress shall complete action on a concurrent resolution on the budget for the fiscal year beginning on October 1 of such year. The concurrent resolution shall set forth appropriate levels for the fiscal year beginning on October 1 of such year…”

April 15. As set forth by the Congressional Budget Act of 1974 (CBA), on or before this date each year, the U.S. House of Representatives and the Senate shall jointly approve a budget resolution that governs all legislation related to Federal spending and receipts for the coming fiscal year.

A full 195 days elapsed before Congress passed its fiscal year 2018 budget resolution on October 26th. This has the unsettling effect of both chambers’ budget, authorizing, and appropriations committees advancing distinctly separate legislative agendas with no common agreement to either start from or arrive at.

Compromise is fundamental to the legislative process. Final agreement and passage of this budget blueprint 25 days into the start of this fiscal year only now starts the effort at compromise amidst a challenging docket of legislative priorities and challenges, chief among them is the litigation of the annual authorization and appropriations measures. The following table reflects funding levels for each major budget function as set forth in the budget resolution for fiscal year 2018:

The concurrent agreement on funding for the above budget functions, if passed on time, would provide the expressed shotgun start and a firm, yet attainable objective necessary for both the House and Senate to begin in earnest their annual, constitutionally mandated obligations.

So, April 15th does indeed represent an inviolable “agreement” within the congressional budgeting process. Falling short of this agreement enables each chamber to set its own, somewhat arbitrary, spending targets which may be difficult to not just defend within its own body, but to later find compromise with the other side of the Capitol at the end of an inherently complicated appropriations process.

Today, that process is even further hampered by an emotionally charged political landscape. Every year somehow offers a new course laden with seemingly unsurmountable hurdles. Evidence of these annual challenges facing the Appropriations Committees is that in all but 4 of the last 40 years the Federal government has begun the year under some form of a continuing resolution (CR). The current CR, H.R. 601, runs through December 8, 2017. More specifically, that means Federal agencies are functioning at last year’s rate for operations, preventing budget stability, promoting fiscal uncertainty and prohibiting the inventiveness of private sector involvement.

However, despite the absence of top-line spending limits affirmed by a budget resolution, the House and Senate Appropriations Committees nevertheless began their “budget season” disseminating spending allocations to each of their 12 subcommittees. Under these prescribed guidelines, the House ultimately passed four appropriations bills, together, in a so-called “Security Omnibus” just before the August recess (H.R. 3219). Subsequently, on September 14, 2017, the House concluded work on its annual appropriations bills upon the passage of H.R. 3354, a catch-all, omnibus spending package.

The Senate similarly rendered its own guidance on subcommittee allocations and moved eight of its 12 bills through the Committee process. However, none of those bills were brought before the full Senate for consideration.

The following table reflects the discretionary allocations (known as 302(b) allocations, after the section of the CBA detailing the sub-allocation process) as set forth by House and Senate Appropriations Committee guidance for fiscal year 2018, enabling each subcommittee to begin drafting its own spending legislation:

The current state of appropriations now requires the Congress to establish bicameral agreement on 302(b)s that support the terms of the budget resolution. As of early November, senior-level appropriations sources have told McKeon Group that these conference allocations have not yet been communicated to Subcommittee leadership. The absence of conference allocations alone would pose little challenge in meeting the expiration of the CR. However, there is a much larger political and legislative obstacle in play that suggests final passage of fiscal year 2018 funding will be an “11th hour” exercise, at best, or worse an extension of the CR deeper into fiscal year 2018.

In addition to the above process “foul” of the severely delayed adoption of a budget resolution, the proverbial “elephant in the room” looming over the entire appropriations process is the potential impact of the Budget Control Act of 2011 (BCA). The BCA was enacted to control the Nation’s debt ceiling crisis and induce deficit reduction and balanced budget mechanisms.  

The BCA originally sought to reduce the deficit by $2.1 trillion while incurring savings of $1 trillion over the ten-year period of 2012 – 2021. The $1 trillion in savings would be accomplished through “budget sequestration”, which obligates the White House’s Office of Management and Budget to implement across-the-board, indiscriminate reductions through the cancellation of spending authorities for all executive agencies, their programs and their activities if/when appropriations legislation exceed the spending caps.

The caps established by the BCA for fiscal year 2018 are estimated to be $603 billion for defense activities (budget function 050) and $553 billion for nondefense activities. According to a May 2017 Congressional Budget Office report, the estimated effect of sequestration would revise those caps downward to $549 billion for defense (-$54 billion) and $516 billion for non-defense (-$37 billion).

The fiscal year 2018 congressional budget resolution provides for approximately $634 billion in total defense-related spending. Yet, the BCA remains current law, and congressionally-proposed spending levels sit in direct contravention of the statutorily-imposed spending caps. So, the Congress faces four likely options: 1) pass appropriations bills that comport with the BCA caps, 2) ignore the BCA and subject the entirety of fiscal year 2018 funding to draconian sequestration reductions, 3) increase the spending caps through some other legislative maneuver, or lastly, 4) extend the CR, perhaps for the entire year. The only absolute is that any one of these options will be met with vigorous opposition, meaning that it could be a very long “11th hour” for fiscal year 2018.  

Another Shutdown Showdown

Congress works best on what is often referred to as “regular order.” Regular order would dictate prompt action on the Nation’s annual obligations to fund the basic operations of the Federal government with the provision of new funding and authorities as of October 1, the start of the next fiscal year.

Doing so affords the Congress its constitutional oversight responsibilities over the Executive Branch. However, when it comes to the annual appropriations process, what should be regular has become predictably irregular.

The first year of a new administration does pose many challenges to the Congress’ legislative agenda and the appropriations process. And in its efforts within a very compressed timeframe to return to regular order, the House was able to pass four appropriations bills in a so-called “Security Omnibus” just before the August recess.

The remaining eight bills are expected to be considered as one “omnibus” during the week of September 4. However, the Senate remains embattled with its own budget debate, rendering passage of any of its own appropriations bills nearly impossible. So, as Congress reconvenes this week with so few legislative days left ahead of the new fiscal year, the Nation once again must endure the rhetoric, and possibility, of a government shut-down. This is where the process continues to fail.

This has unfortunately become regular order. There is no appetite to shut down the government in any year, and this year is no different. But, the border wall, immigration, tax reform, and the debt limit will surely consume headlines and command much of the attention in Congress in this final month of fiscal year 2017. As such, the President has proactively presented the Congress with his own proposal to keep government funding flowing through mid-December. But, it is the Congress who will determine the terms and conditions of government funding moving forward.

The new regular order has seen Congress functioning in this manner each and every year. Make no mistake, this has a cascading and detrimental effect on private industry, starting from the largest of firms all the way down to small business enterprise. It also impacts local economies, communities and American families. All would agree that this method of governing inhibits and constrains the industrious and inspirational drive of innovators as well as the hard working people in cities and towns across the U.S. who want to go to work, send their children to school and know that Congress is meeting their most basic obligation.