Budget Update

There are only a couple legislative days until the House recesses. Given that, another CR is likely.  There doesn't seem to be much appetite for another shutdown, however. There does seem to be more movement toward an actual budget deal though, so it remains possible. Here is our latest update from our Hill colleague....

A possible fiscal deal is in the works that includes defense increases of $80 billion and [Non-Defense Discretionary] NDD increases of $63 billion for each of two years, FY 2018 and FY 2019. Of course, [Overseas Contingency Operations] OCO spending would continue free from any limits.

This amounts to about $300 billion in new spending and is far from parity.

The total cost of this proposal is more than all the previous [Budget Control Act] BCA fiscal agreements combined. Most previous BCA cap increases were offset with cuts elsewhere in the budget.

Proposed offsets for this new spending are very lame, including accounting gimmicks and actions to move some programs from discretionary to mandatory budget categories.

Fiscal hawks are very unhappy, but defense demands now outweigh all other concerns. Many Republicans are convinced they must deliver huge defense increases or risk losses in
primary and general elections.

Many Republicans are ready to cut a deal and end the long series of [continuing resolutions] CRs. Defense seems to be the overwhelming priority over all other Republican priorities. This deal is still being negotiated. Some Dems think $63 billion for NDD for each of two years is so much better than thought possible just weeks ago that Schumer should take it. There is concern that Dems could appear greedy if they hold out for parity when two years of $63 billion increases are on the table. My sources in Pelosi’s office indicate many Dems are convinced that parity is not possible.

Other Dems are not as enchanted with this possible mega-agreement. The deficits it will create will be used to justify huge cuts to NDD later on. The annual total for NDD in this deal could act as a cap for years to come.