SBLC Looks At What’s Ahead For Federal Budget Negotiations

The latest SBLC Alert from the Small Business Legislative Council (SBLC) gives an update on where things stand ahead of this month’s federal budget deal.

Federal Budget Deadline Fast Approaching

Both chambers of Congress have adjourned for a two-week recess. When they return on April 25 they will have just four working days to strike a deal to keep the government open past April 28.

So how did we get here? Over the past decade, Congress has routinely struggled to reach agreements on budget issues. In 2015, Congress passed the Bipartisan Budget Act of 2015, which set top-line spending numbers for federal fiscal years 2016 and 2017. However, although federal fiscal year 2017 began on October 1, 2016, Congress still hasn’t passed an omnibus appropriations bill to allocate funding to the various federal agencies and programs. Instead, Congress has been keeping the government open through a series of stopgap funding measures (also known as continuing resolutions or CRs). The last CR was passed in December 2016 and funds the government through April 28, 2017.

Bipartisan negotiations are currently underway on another continuing resolution to keep the government running on existing funding levels. Despite their political differences, it is abundantly clear that neither party’s leadership has any interest in seeing (or even threatening) a government shutdown. However, there are a few factors in the mix that could make striking and passing this necessary deal more easily said than done.

First, in March, President Trump requested that Congress pass a supplemental spending bill to increase defense spending by $30 billion and provide an additional $3 billion in funding to start building the southern border wall that the President promised during his campaign. Under the President’s proposal, these increases would be partially offset by $18 billion in cuts to non-defense spending. The proposal has drawn concerns from many sides with Republican deficit hawks disturbed by the spending increases, Republican moderates concerned about the cost of a border wall and cuts in medical research and in other areas of domestic spending that they believe could come back to haunt them at the next election, and Democrats vehemently opposed to the border wall as well as the cuts in domestic spending. At this point, it looks like Republican leaders will attempt to deal with the President’s request separate and apart from the primary spending deal, in large part because they know that they need the support of at least eight Democrats to pass the bill out of the Senate and they may even need the help of the Democrats in the House. The President has not said whether he will sign a bill that does not include his supplemental funding requests. However, if Congress passes a stop-gap bill, vetoing it and potentially shouldering the full blame for a government shutdown would be an exceptionally risky and unlikely move for the President.

Adding to the complications, multiple members of the House Freedom Caucus, which played a significant role in derailing the House Republican leadership’s recent attempt at healthcare reform, have stated that they will not support a spending bill simply to avoid a shutdown but will instead be looking at the contents of the bill itself. The caucus has previously opposed current spending levels as being too high and demanded that any spending bill either cut funding to Planned Parenthood or, at very least, include a provision to give states the authority to cut Planned Parenthood’s funding. For Democrats, and a handful of Republicans, cuts to Planned Parenthood are a non-starter and, despite pressure from the Freedom Caucus during negotiations surrounding the last two continuing resolutions, such provisions have been virtually dead on arrival.

What remains to be seen is if the Republicans can strike a deal that will get them enough Democratic votes to avoid a filibuster in the Senate and make up for any far right defections in the House. In order to achieve this, it appears that the Republican leadership will have to set aside the President’s supplemental request, at least for now, potentially increasing the already tense relationship between Congress and the White House.

While we certainly don’t have a crystal ball—our bet is that the Republicans and Democrats will strike a deal to continue existing funding levels and the President will sign it. Whether that deal will extend through the end of FY2017 or come up short, requiring Congress to once again revisit the issue before October, is anyone’s guess.

It is important to remember that, while the two are related, the federal budget is distinct from the federal debt ceiling. The budget is the allocation of federal money whereas the debt ceiling is the limit on how much the federal government can borrow. After a temporary suspension, the federal debt ceiling was reinstated on March 16. The Treasury is currently using “extraordinary measures” to defer the issue and keep the country from hitting the ceiling until sometime this fall.

The mission of the SBLC, of which PPAI is a member and for which PPAI President and CEO Paul Bellantone, CAE, serves as a board director, is twofold: to make improvements in public policy for small business and to help member associations in their communications with business members. Note that this report is for the sole personal, informational use of PPAI members and should not be posted to any website.

filed under april-2017 | industry-news
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