Another Budget Battle?

Update 490 — Another Budget Battle?
Over What? And How Can the Fed Help?

With days dwindling until the December 11 deadline for a budget deal needed to avert a government shutdown, Congress is negotiating yet another Continuing Resolution, which will alter federal spending priorities not at all as economic conditions continue to worsen. What’s the fighting over this time?

These negotiations will likely come down once again to a fight over funding for Trump’s border wall. The $2 billion in question is meager compared to the money possible for fiscal relief freed up by repurposing half a trillion dollars in unused Federal Reserve funds. Details below.

Good weekends, all….




Senate Majority Leader McConnell has fewer excuses than ever not to legislate, with the economy stuck in neutral. Before the end of the lame-duck session, Congress will need to reach several agreements on the FY 2021 appropriations bills, further COVID relief, and defense. 

In September, Congress passed a Continuing Resolution (CR) that will expire on December 11, giving House Speaker Pelosi and McConnell just less than a month to reach a deal. Yet the Senate has adjourned until the end of November, narrowing time tables even further. Below, we cover the appropriations negotiations, potential sticking points, and possible assistance from an unlikely source. 

Status of Negotiations

After months of stalling, budget negotiations resumed last week. During the summer, Senate Appropriations Chair Shelby refused to consider the Senate bills in Committee because Democrats intended to introduce amendments regarding COVID relief and police reform. Now, Shelby and House Appropriations Chair Lowey are in negotiations over funding levels for the twelve appropriations bills.

Both Pelosi and McConnell are aiming to pass an omnibus spending bill, with specific funding levels for each discretionary program, rather than another CR. McConnell signaled after a meeting Wednesday with Trump’s Chief of Staff Mark Meadows that the president would be willing to sign an omnibus spending bill. 

When the Senate returns on November 30, Congress will have only 12 days to reach an agreement, pass the omnibus bill, and get Trump’s signature. If unsuccessful, Pelosi and McConnell will need to pass another CR or risk yet another government shutdown.

Trump could also throw a wrench in the process. Since the election, the White House has been silent on the budget negotiations. Despite McConnell’s and Pelosi’s optimism, Meadows said yesterday that there might still be a shutdown. Republican Senators have anonymously expressed skepticism that Trump would sign a budget package. If a shutdown occurs, it would be the third during Trump’s presidency. 

A lengthy shutdown would be disastrous for our economic recovery. Legislators would need to direct their full focus towards reaching a budget agreement, unable to pass any COVID relief or stimulus. Meanwhile, renter protections, suspension of student loan payments and interest accumulation, Pandemic Unemployment Assistance, and Pandemic Emergency Unemployment Compensation expire at the end of the year. If a shutdown occurs and it lasts into 2021, millions of low-income Americans will be thrust into even deeper economic precarity. The Department of Health and Human Services estimates that the expiration of the pandemic unemployment programs specifically will push the poverty rate for August-December to 13.6 percent, over three percent higher than the 2019 poverty rate. 

Syncretizing House and Senate Budget Bills

The House Appropriations Committee passed almost all of its appropriations bills back in July, but the Senate Appropriations Committee just released its bills last Tuesday. Sens. Shelby and Leahy said that almost 90 percent of the material in the 12 bills are agreed to. The two sides are in almost complete agreement on funding for Departments of Transportation, Housing and Human Development, and Treasury.

While the House and Senate bills have similar price tags, the two approaches differ in some important aspects, and several sticking points may prevent the two legislative bodies from agreeing on a 2021 omnibus:

  • COVID Relief: While Speaker Pelosi and Majority Leader McConnell have kept the COVID relief and omnibus negotiations separate, the Democrat-led House contains nearly $250 billion in emergency funds related to the pandemic and economic downturn in its appropriations bills and wants a few trillion more in COVID-related tax and entitlement provisions. It seems unlikely that Senate Republicans and House Democrats will reach an agreement on stimulus soon. If a standalone aid package can’t pass the Senate, Democrats may insist that COVID relief provisions be tacked onto a must-pass spending bill. 
  • Immigration and the Border Wall: The Senate’s FY21 Homeland Security Funding Bill increases spending on immigration enforcement, including $1.96 billion for Trump’s border wall. These non-starters for Democrats led to the government shutdown of 2018-2019 — the longest shutdown in U.S. history. The House Homeland Security bill provides no additional border wall funding and explicitly prohibits Trump from shifting resources from other accounts to pay for wall construction.
  • Police Reforms: House Democrats’ inclusion of $597 million for police reform will be another sticking point in negotiations. The House 2021 appropriations bill for the departments of Commerce and Justice would fund independent and community-based investigations and initiatives to improve local law enforcement training and boost police-community relations.
  • Other Issues: Democrats criticized the Senate GOP appropriations bills for its decreased funding for the State Department’s family planning initiatives, inadequate funding of Interior’s climate change initiatives, and low funding of the Departments of Labor and Education. 

Biden Budget Considerations

If Congress passes another CR rather than an omnibus bill, Biden will likely play a part in the next 2021 FY negotiations. Candidate-Biden made a show of rejecting the bold, progressive, big-government plans of his Democratic rivals both before and after the 2020 primary. Per a University of Pennsylvania Wharton School study, the former vice president’s budget proposals add up to about $5.4 trillion in new spending over the next 10 years — more than double the amount Hillary Clinton proposed in 2016. Much of this is due to the pandemic, the lockdowns, and the resulting recession.

Spending and revenue under Biden plan, 2021-2030

Source: Penn Wharton Budget Model

On the stump, candidate Biden called for substantial investments in infrastructure and public education, as well as for the provision of health insurance and child care. And on Wednesday, the President-elect urged the passage of the $2.2 trillion updated-HEROES Act. In terms of revenue raisers, Biden’s budget plan takes into account a full-scale repeal of the Trump tax cuts as well as instating new payroll taxes on those earning at least $400,000. 

New Purpose for 13(3) Programs Funds?

The Federal Reserve’s 13(3) facilities are set to expire on December 31 of this year. Yesterday, Secretary Mnuchin sent a letter to Federal Reserve Chair Powell asking that the unused $196 billion in Treasury backstops be returned to the Treasury by December 31. While Powell could ignore the request, he may not, and over $400 billion in potential relief will disappear in January. Several Democrats, such as Sen. Sherrod Brown, have spoken out against Mnuchin’s proposed clawback. Instead of returning much needed and already appropriated funds to the Treasury’s coffers, these funds could instead be repurposed towards additional COVID relief. The omnibus negotiations may be Democrats’ only opportunity to repurpose the money or extend the programs into the next year. 

87 thoughts on “Another Budget Battle?”

  1. Way cool! Some very valid points! I appreciate you penning this write-up and also the rest of the site is also very good. Charline Reece Robena

  2. I have been examinating out many of your posts and i can state pretty clever stuff. I will definitely bookmark your site. Ashia Kalil Thistle

  3. Excellent article! We are linking to this particularly great article on our website. Keep up the good writing. Perl Marion Edmea Belia Regan Nerte

  4. I am glad to be a visitor of this thoroughgoing website ! , appreciate it for this rare information! . Dehlia Cletus Delilah

  5. Having read this I thought it was rather informative. I appreciate you spending some time and energy to put this informative article together. I once again find myself personally spending a significant amount of time both reading and commenting. But so what, it was still worth it! Floris Abran Kuhn

  6. I happen to be writing to make you understand what a terrific experience our princess went through visiting yuor web blog. She discovered lots of issues, most notably how it is like to have a very effective giving heart to have many others effortlessly gain knowledge of certain extremely tough matters. You really did more than my desires. Many thanks for displaying the helpful, healthy, educational and also easy thoughts on the topic to Gloria. Rachel Huey Monie

  7. Tremendous issues here. I am very happy to look your article. Thanks so much and I am having a look ahead to touch you. Will you kindly drop me a mail? face stockholm mineral foundation Teodora Farr Martineau

  8. I was very happy to uncover this web site. I wanted to thank you for ones time for this wonderful read!! I definitely really liked every little bit of it and I have you book-marked to see new information on your web site. Shara Nolan Boles

  9. When I initially commented I appear to have clicked the -Notify me when new comments are added- checkbox and from now on whenever a comment is added I recieve four emails with the exact same comment. Is there an easy method you are able to remove me from that service? Thank you! Carlene Addy Fleming

  10. Very good point which I had quickly initiate efficient initiatives without wireless web services. Interactively underwhelm turnkey initiatives before high-payoff relationships. Holisticly restore superior interfaces before flexible technology. Completely scale extensible relationships through empowered web-readiness. Valina Freddie Berget

  11. Having read through this I believed it had been extremely enlightening.
    I appreciate you finding the time as well as to put this post together.
    I remember when i again find myself spending a lot of time both reading and leaving comments.
    But what exactly, it was still worthwhile!

    Feel free to visit my homepage: DavidOHamman

  12. Heya i am for the first time here. I came across this board and I to find It
    really helpful & it helped me out much. I hope to give something back and aid others like you
    aided me. asmr 0mniartist

  13. The road seemed to stretch on endlessly before us, but Alexis assured me that our journey was near an end. We’d turn before long into thick woods and travel through narrow, winding roads until we reached her family’s cabin. I had no choice but to trust her as GPS had given out nearly 20 minutes ago.

    “There’s good wifi and okay reception at the cabin,” she’d told me, “but you can’t get there unless you know the way.”
    So here I was, driving alone in the middle of god knows where with a girl who was my student just a couple of weeks ago. Her and her four best friends had been together from first grade all the way through high school and now they had graduated with very different futures ahead of them. They had decided to kick off “the best summer ever” with a week long stay at Alexis’s family cabin. Alexis and I were heading up before everyone else, the four other girls and four guys.

  14. Greetings from Los angeles! I’m bored to death at work so I decided to browse your
    site on my iphone during lunch break. I really like the info
    you provide here and can’t wait to take a look when I get home.
    I’m surprised at how quick your blog loaded on my phone ..
    I’m not even using WIFI, just 3G .. Anyways, very good blog!

  15. I love your blog.. very nice colors & theme. Did you design this website yourself or did you hire someone to do it for you?

    Plz answer back as I’m looking to construct my own blog and would like
    to find out where u got this from. thanks

  16. Very good blog you have here but I was curious about if
    you knew of any forums that cover the same topics talked about here?
    I’d really love to be a part of community where I
    can get feedback from other experienced individuals that share the
    same interest. If you have any recommendations, please let
    me know. Kudos!

  17. Thank you for the auspicious writeup. It in fact was a amusement account it.
    Look advanced to more added agreeable from you! By the way, how could we communicate?

  18. I have been exploring for a bit for any high quality
    articles or weblog posts in this kind of space .
    Exploring in Yahoo I ultimately stumbled upon this web site.
    Reading this info So i’m glad to express that I have an incredibly just right uncanny feeling I found out exactly what I needed.
    I such a lot definitely will make sure to do not omit this
    website and provides it a glance regularly.

  19. I really like what you guys are up too. This type of clever work and reporting!

    Keep up the good works guys I’ve incorporated you guys to blogroll.

  20. Hi there are using WordPress for your site platform?
    I’m new to the blog world but I’m trying to get started and create my own. Do you need any coding expertise to make your
    own blog? Any help would be really appreciated!

  21. scoliosis
    When someone writes an post he/she retains the idea of a user in his/her mind
    that how a user can know it. Therefore that’s why this paragraph is great.
    Thanks! scoliosis

  22. scoliosis
    I simply couldn’t go away your web site prior to suggesting that I really
    enjoyed the usual info a person provide for your guests?
    Is going to be again frequently in order to investigate cross-check new
    posts scoliosis

  23. scoliosis
    An outstanding share! I have just forwarded this onto a colleague who had been doing a little homework
    on this. And he actually bought me lunch because I stumbled upon it for him…
    lol. So let me reword this…. Thanks for the meal!!
    But yeah, thanx for spending some time to talk about this issue here on your
    site. scoliosis

  24. dating sites
    magnificent put up, very informative. I’m wondering why the opposite specialists of this sector don’t understand this.

    You should continue your writing. I am confident,
    you have a great readers’ base already! dating sites

  25. Hi there! Do you know if they make any plugins to safeguard against hackers?
    I’m kinda paranoid about losing everything I’ve worked hard on. Any recommendations?

  26. I’ve been browsing online more than 3 hours nowadays, but I never found any fascinating
    article like yours. It’s beautiful price enough for me.
    In my opinion, if all website owners and bloggers made excellent content as
    you probably did, the web will probably be much
    more useful than ever before.

  27. Pingback: what to eat before workout on keto diet

  28. Hello excellent blog! Does running a blog such as
    this require a large amount of work? I’ve absolutely no
    expertise in programming however I had been hoping to start my own blog
    in the near future. Anyway, should you have any ideas or tips for new
    blog owners please share. I know this is off subject nevertheless I simply needed to ask.
    Thanks a lot!

  29. terima kasih telah berbagi berita Pak, senang sekali rasanya membaca tulisan2 di blog ini, jadi tambah wawasan.. semoga yang mengeleloa blog ini selalu di berikan kesehatan..

  30. You really make it seem so easy together with your presentation however I in finding this matter to be
    really one thing which I feel I might by no means understand.
    It sort of feels too complicated and extremely vast for me.

    I am looking forward in your subsequent put up, I’ll attempt to
    get the hold of it!

  31. I really like your blog.. very nice colors & theme.

    Did you create this website yourself or did you
    hire someone to do it for you? Plz answer back as I’m
    looking to design my own blog and would like to find out where u got this from.

    appreciate it

  32. I loved as mᥙch aѕ yоu ԝill receive carried out гight һere.
    Tһе sketch is attractive, yⲟur authored material stylish.
    nonetһeless, you command ցet bought an edginess ovеr thаt yⲟu wish bе delivering the fоllowing.
    unwell unquestionably come mоrе formеrly аgain sіnce еxactly
    the same neаrly a lot оften іnside casе уߋu shield tһіs hike.

Leave a Comment

Your email address will not be published. Required fields are marked *