Continuing Resolution Expires December 8. Then What?

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On December 8th, the current Continuing Resolution (CR) funding the federal government for Fiscal Year (FY) 2018 expires and the temporary debt limit suspension in place will be lifted.  To date, none of the FY 2018 appropriations bills have been enacted and there remains no agreement on the so-called spending caps (sequestration).

As the end of the 2017 calendar year approaches, Congress has a long list of items it wants to pass, including tax reform, a third hurricane disaster relief supplemental appropriations bill, the annual defense policy bill (National Defense Authorization Act), an increase to the nation’s debt limit, and a government spending bill for the remainder of FY 2018.  On December 8th, funding for federal agencies expires and the temporary debt limit suspension will be lifted.  Congress must vote before then to pass a CR, an omnibus appropriations bill, or some combination thereof to keep the government open.

In September, the House passed an FY 2018 Omnibus Appropriations measure
(H.R. 3354) by a vote of 211-198.  The $1.23 trillion appropriations measure combined all individual appropriations bills.  The Senate Appropriations Committee has approved eight of the 12 spending bills, so far.  However, none have been considered by the full Senate.  It is unclear when or if the Senate Appropriations Committee will consider the remaining bills given the limited amount of time remaining and the ongoing discussions about an end-of-year spending deal.

Complicating matters is the impact of sequestration on government funding.  The 2011 Budget Control Act (BCA) (P.L. 112-25) established a sequester (so-called spending caps for each FY) to reduce discretionary and mandatory spending, equally divided between defense and non-defense programs, after an earlier Joint Select Committee on Deficit Reduction was unable to reach a new budget agreement governing the coming decade.  The law also provides for a separate, enforcement sequester to make across-the-board cuts in spending if Congress were to exceed the statutory caps.

The two-year budget and debt limit agreement (PL 114-74) signed into law in November 2015 temporarily raised discretionary spending limits by $50 billion for FY 2016 and $30 billion for FY 2017.  It also extended across-the-board mandatory spending reductions into fiscal 2025.  However, the two-year deal did not extend to FY 2018, meaning that lawmakers will need to negotiate another agreement or face a return to lower, statutory sequestration spending levels on October 1, 2017. 

The recent budget resolution passed by Congress did not set actual spending levels, and is largely viewed as a legislative vehicle to enable the Senate to vote on tax reform with only a majority vote (51 votes instead of the typically-needed 60 vote threshold).  The statutory discretionary spending limits for FY 2018 are $549 billion for defense and $516 billion for non-defense. 

The President called on Congress to raise defense discretionary spending for FY 2018, and to offset (pay for) this increase by reducing other non-defense discretionary spending (this would require a change in law, and require cuts to other to-be-identified federal programs).  Currently, the level of spending in both the House and Senate FY 18 appropriations bills is higher than what is allowed under current law for FY 2018’s overall spending caps.  Absent Congress taking action to alter these caps, if Congress enacts the higher appropriation amounts, then the enforcement sequester (requiring across-the-board spending cuts) would be triggered. 

Additionally, under the current CR, lawmakers staved off a potential U.S. debt default by temporarily suspending the debt ceiling until December 8th.  The debt ceiling, or debt limit, is a statutory limit on the amount of national debt that can be issued by the U.S. Treasury, thus limiting how much money the federal government may borrow.  U.S. Treasury Secretary Mnuchin recently said that he is “comfortable” the government can be funded through January before exhaustion of the federal borrowing capacity.  However, outside budget experts at the Bipartisan Policy Center expect that Treasury may not reach its current borrowing limit until March 2018.  At the moment, there is no set date for when the nation’s ability to borrow will cease, though ultimately this determination will be made by Treasury, requiring Congress to then act.

Treasury has never reached the point of exhausting extraordinary measures, resulting in default, although on several recent occasions, Congress appeared like it would allow a default to take place.  If this situation were to occur, the government would have to default on payments that it is legally obligated to make, and which Congress has already promised that we will make. Such a situation would create significant disruption in markets and ultimately to the world economy. 

The window for congressional action on all of these items is narrowing, particularly with   the passage of tax reform by the end of the calendar year — a priority for congressional Republican leadership, which may open the door to funding discussions possibly being pushed into early next year with a short-term CR.  Further complicating matters is the anticipated third emergency funding bill for disaster assistance.  The Office of Management and Budget has reportedly requested that Congress identify and provide offsets (sources of revenue) for these emergency funds.  In addition, disagreements over overall spending priorities, and sharp immigration and health care policy differences, remain a significant obstacle for FY 2018 agency funding agreements, which could trigger a government shutdown on December 8th. 

As Congress begins to work in earnest on FY 2018 funding agreements, NTEU will continue to fight against proposals to cut federal employee pay and benefits, including as a way to fund other unrelated programs, while pushing for higher agency funding levels and a fair pay increase in January.