Update 658 — 117th Congress Wraps:
$1.7 T Budget Deal Caps Prolific Year
Congress heard last night from Ukrainian President Volodymyr Zelensky, who reminded democracies around the world that we are all In this — defense of self-government against state terrorism — together. Congress concurred and will provide $45 billion in assistance to Ukraine to repel the Russian invasion. Here at home, Democrats are doing their part. The aid is part of an omnibus spending deal for Fiscal Year 2023, which also includes the Electoral Count Act, designed to prevent another January 6th. The eponymous Select Committee is set to release its final report today.
Leaders agreed on a bipartisan omnibus framework last week that increases both defense and non-defense discretionary funding. This compromise leaves much to be desired, but getting a new funding bill through, rather than a continuing resolution extending last year’s, is a big win.
Today, we detail the content and import of the omnibus. The Senate is set to vote on final passage today; the House could take it up as soon as tonight, in time to avert a government shutdown. With that, the 117th Congress will close, with a prolific legislative session that enacted landmark measures addressing long-standing domestic economic priorities.
Happy holidays, and signing off until the new year,
After months of negotiations, Congress is poised to pass a Fiscal Year 2023 omnibus before the Friday deadline. Despite calls from conservatives in both the House and the Senate to delay an omnibus until Republicans take control of the House, it appears that Congress will pass the 4,155 page bill after all, securing a number of progressive victories. Numerous domestic tax and spending priorities either did not receive hoped-for funding increases or were left out entirely.
The Omnibus: Defense Beats Inflation
The $1.7 trillion bill, which was released early Tuesday morning, includes $858 billion in defense funding —an increase over last year’s levels that exceeds the rate of inflation. $772.5 billion is allocated for non-defense discretionary (NDD) programs, including $118.7 billion for VA medical care. Democratic domestic priorities receiving the most new or additional funding included aid for highways, Pell and Title 1-A Grants, child nutrition, NIH, mental health, the EPA, and National Parks. Specifically, among the numerous other provisions, the bill includes:
- $58.7 billion for programs authorized by the Infrastructure Investment and Jobs Act
- $44.9 billion in emergency assistance to Ukraine and NATO allies
- $40.6 billion for communities affected by natural disasters
- $14.1 billion for the Social Security Administration’s administrative expenses, a six percent increase
- Investments in child care, including $7.67 billion for the Child Care and Development Block Grant and nearly $12 billion for Head Start
- A $500 increase to the maximum Pell grant for the 2023-2024 school year
- $4 billion for Low Income Home Energy Assistance Program (LIHEAP)
- $1.8 billion in new funding to implement the bipartisan CHIPS and Science Act of 2022
The bill also includes Secure 2.0, a bipartisan package of retirement savings incentives, as well as bipartisan legislation to reform the Electoral Count Act.
Republicans and Democrats have both claimed victories in the bill, including over the top line numbers. Democrats touted a 9.3 percent increase in nondefense funding including VA medical care, while Republicans have claimed victory over securing a bill that “equips our armed forces with the resources they need while cutting nondefense, non veteran spending in real dollars.” Advocates for childcare, affordable housing, and education, among others, scored victories with increases to some of the programs targeting their issues. The relatively small increase in NDD excluding VA medical care does mean that a number of agencies and programs did not see the increases they were hoping for.
Congressional Republicans did get a 2 percent cut to IRS funding. Republicans angry about the $80 billion dollars in IRS funding that was included in the Inflation Reduction Act (IRA) have been calling for reductions in the agency’s funding through regular appropriations. While the $275 million cut in funding compared to FY22 is relatively small next to the money from the IRA, the chronically underfunded agency will need substantial funding increases in the coming years in order to rebuild its staff and modernize its systems.
Discretionary Funding Provided in Omnibus Bill, FY23
Source: Senate Committee on Appropriations, House Committee on Appropriations
The Defense/Non-defense Balance
Passing an omnibus at all is an achievement in this partisan environment, particularly with a number of Republicans calling to delay passage of government funding bills until they take control of the House. A full-year continuing resolution, however, would have kept government funding flat for the year, resulting in real budget cuts for critical government agencies. Avoiding this enables more assistance. But it’s hard to not be conscious of the fact that non-defense discretionary spending increases were lower than Democrats would have hoped, while the defense budget keeps increasing $45 billion more than was requested by the President.
In many ways, this omnibus truly is the best we could hope for but not quite what we needed. The 25 million dollar budget increase offered to the National Labor Relations Board, for example, will help the under-staffed agency avoid further disaster stemming from nearly a decade of real budget cuts combined with expanding responsibilities – union petitions were up 53 percent in FY22 compared to FY21.
While labor advocates can breathe a sigh of relief that the NLRB received its first budget increase since 2014, the $299 million the agency received falls well short of the $319 million included in the President’s Budget, which would have allowed the struggling agency to rebuild more of its staffing capacity. The situation at the NLRB is emblematic of many aspects of the omnibus– the end result could have been a lot worse, but there is work left to be done next year.
Defense/Non-Defense Funding, FY22-23
Source: Senate Committee on Appropriations
While the omnibus is widely expected to pass the Senate later today, there are a number of high-priority items Congress did not get to during the lame-duck, including the debt limit and the Child Tax Credit, among others.
Democrats did not take up legislation to lift or suspend the debt limit this year as many hoped they would. Instead, the debt limit will need to be addressed next Congress when Republicans, who plan to hold the debt limit hostage in exchange for broad spending cuts to programs including Social Security and Medicare, will have control of the House. Inaction on the debt limit this Congress could have disastrous consequences for the social safety net, or even the United States’ credit if the standoff results in default or the imminent threat of default. With the trifecta ending, Democrats also seem to have missed their chance to pass long-term debt limit reform and avert future standoffs.
Although improvements to the Child Tax Credit were not included in the FY23 omnibus, neither were corporate tax breaks, like the Research & Experimentation Tax Credit. This is good news for progressive lawmakers and advocates, who will have the chance to fight for much-needed improvements to the Child Tax Credit next Congress. While any future expansion to the CTC would need to make it through a Republican-controlled House, the absence of corporate tax breaks in the omnibus this year offers an opportunity to negotiate a compromise in the coming year.
Although the final weeks of the 117th Congress did not produce all of Democrats’ remaining priorities, 2022 did offer a number of significant achievements, including the impending omnibus, the Chips and Science Act, and the Inflation Reduction Act. The issues that didn’t make it to the floor this Congress will largely live to fight again in the next, offering hope for the year to come.