The End-of-Year Appropriations Crunch
Katina Slavkova | December 2, 2021
Congress is back from its Thanksgiving recess only to face another round of demanding deadlines, the most pressing of which is averting a government shutdown once the current short-term continuing resolution (CR) expires on December 3. All this within the whirlwind of other activities: the just-passed infrastructure bill, the ongoing Build Back Better reconciliation negotiations, the National Defense Authorization Act, and avoiding default on the debt ceiling. 2021 is a heavy lift, and a look at appropriations alone confirms this to be true for “even” this annual responsibility.
Where is Congress on appropriations right now?
By all accounts, Congress will need, at a minimum, another spending patch to tide them over until a final agreement is reached. At this point, the primary outstanding question is the actual duration of the CR, though policy disputes are also prompting last-minute uncertainty. It’s possible that Congress might even need a few short stopgap measures before Democrats and Republicans can finally sign off on a mutually agreeable spending plan. As this process unfolds, however, the hope is that Congress will manage to avoid the least desirable outcome of extending the CR for the entire fiscal year.
How’d they get here?
While the breathless pace of legislative activity in November delivered on some of the major priorities for the Biden Administration and Democrats in Congress, the highly involved and time-consuming negotiations left almost no room for other issues, including work on funding the federal government.
In fact, the appropriations process had pretty much stalled since late July when the House passed a seven-bill “minibus” funding measure along with a couple of other individual spending bills. But even that flurry of activity left out two significant slices of the federal spending pie- Defense and Homeland Security– which together account for approximately $760 billion of the FY22 proposed discretionary spending by the House Appropriations Committee.
In characteristically late fashion, the Senate Appropriations Committee began marking up its version of the first three spending bills only in early August and didn’t finalize its work until mid-October when Chair Patrick Leahy released the remaining nine bills. While the House has already considered and passed 9 of the 12 annual appropriations bills, none of the Senate bills have seen floor action. Chances are they’ll have to wait some more and compete fiercely for precious floor time with other must-pass priorities, including the National Defense Authorization Act. Yes, the Senate is really, really behind schedule!
This does not bode well for a timely and satisfactory resolution of the FY22 funding of the federal government.
What do the parties disagree on?
As has been often the case with prior congressional negotiations during the annual appropriations process, the thorniest impediment to reaching a final deal has almost always come down to dollar allocations between defense and nondefense domestic accounts. This year is no different. It is now Republicans’ turn to request parity between defense and nondefense spending. For years, it was the Democrats who insisted that nondefense discretionary programs were chronically underfunded and therefore would benefit from comparable spending increases as other national security and military priorities.
This dynamic will almost certainly complicate talks between the two parties in Congress. There are already some public signs that Republicans might be willing to forgo any minor increases the Democrats have proposed for FY22 defense spending and rather settle for a yearlong CR across the board. From the GOP’s perspective, the boost that Democrats have proposed for defense accounts in their spending plan (2% in the House and 5% in the Senate) won’t be that different from FY21 levels but will pale in comparison to the cash infusion envisioned for domestic nondefense programs, which would see a 16% increase in the House and a slightly lower 13% boost in the Senate.
Potential divisions in the Democratic caucus?
In addition, putting aside Republicans’ objections to current topline amounts, it is not even clear that moderate Democrats will go for the current FY22 federal funding plan. These Democrats are not necessarily eager to vote for more spending on the heels of the $1 trillion infrastructure law and the recently passed House version of the $1.7 trillion Build Back Better plan. Given the political headwinds, it may be too much to ask of some moderates in the Democratic caucus before the 2022 midterm elections.
The costs of not reaching a new spending agreement?
Sensing stormy weather ahead the Office of Management and Budget (OMB) has already weighed in on the critical need to pass full year 2022 appropriations for the executive branch. The Biden Administration would certainly want to avoid a scenario in which, despite unified Democratic control, the FY22 federal funding morphs into a simple continuation of some of former President Trump’s last budget priorities.
Republicans have indicated that they’ll be ok with that plan even if it means flat defense spending for the current fiscal year. Democrats almost certainly won’t be ok with such a development if only because of the optics of not being able to secure funding increases for their favored domestic programs. There is clearly a sense right now that congressional Democrats appear to be in a tougher negotiating position.
At this point, there is only a slim hope December will bring a bipartisan compromise on the FY22 appropriations bills. Although, a last-minute mad dash to the finish is not entirely out of the question. If past years are any indication, Congress seems to have gotten quite adept in navigating tight deadlines, especially when the Christmas holiday is on the line.
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