Your Need-to-Know on the Budget (September 27)

Update 301:  Your Need-to-Know on the Budget
GOP Takes What Could be Final Fiscal Bites

In what could be its fiscal swan song, the GOP congressional majority has, as of this writing, approved about 75 percent of discretionary spending for FY 19, which starts on October 1.  

Will the bill(s) be enacted and a shutdown averted with nary a whimpering about a wall?  Or will that wait until December 7, when the agreements all but struck this week expire? See below.  

Best,

Dana

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The GOP has been busy trying to keep the governent funded by combining separate spending bills into the following “minibus” packages:

• Minibus I — $147 billion

On September 21, President Trump signed into law the first FY19 spending package (H.R. 5895) covering military construction and veterans affairs, the legislative branch, and energy and water. The funding bill passed the Senate 92-5 and the House 377-20.

• Minibus II — $854 billion

On September 24, the Senate approved a comprehensive spending bill 93-7 funding the departments of Defense, Health and Human Services, and Labor and Education. The House version (H.R.6157) passed yesterday 361-61 and it will now make its way to the President’s desk. Importantly, it includes a Continuing Resolution (CR) to fund all other agencies through December 7. Assuming the legislation is signed by the President, this takes the heat off the more contentious negotiations currently under way on the third minibus package containing Financial Services and General Government (FSGG).

• Minibus III — $58.7 billion

The third package of bills (H.R.6147) includes funding for Interior, Environment & Agriculture, Rural Development, FDA, Transportation-HUD, and FSGG, and is currently in conference between the House and the Senate. The House version passed narrowly 217-199 and along mostly party lines. The House Republicans have placed dangerous policy riders in their version of the package while the Senate has a clean version, evident by their much less partisan 92-6 vote. There has also been disagreement over a Republican-introduced $585 million savings account within the House bill that is only to be accessible when the federal deficit is eliminated— ironic given the GOP’s recent deficit-busting tax cuts.

The latest out of the conference committee suggests that House Republicans have been pushing hard on a number of the policy riders so a deal is unlikely. If the conferees cannot reach a deal this week, then the CR passed in Minibus II will fund operations until December 7. There is a small possibility that the President decides to refuse to sign the bill, so as always, watch this space… a press conference President Trump is delivering at 5PM today might offer insight into his decision one way or the other.

FSGG Spending Toplines

Here are the most recent topline appropriations levels in the House and Senate bills for the relevant agencies, which have generally been noncontroversial and subjected to limited partisan debate:

Internal Revenue Service

• House: $11.3 billion
• Senate: $11.3 billion

This topline figure is over $100 million less than FY 2018 and much lower than the $12.1 billion budget approved before the GOP took back control of the House in 2011.

Securities and Exchanges Commission

• House: $1.7 billion
• Senate: $1.7 billion

This is actually over the 3.5 percent increase requested by the agency and the additional money will go toward 100 new jobs, including 13 in investment-adviser and investment-company examinations.

Small Business Administration

• House: $730.6 million
• Senate: $699.3 million

The House version of the bill includes a $31.3 million “Disaster Loans Program Account”. Much of the SBA volatility comes as a result of this disaster assistance, which varies year to year. For example, fiscal years following disasters like Hurricanes Katrina, Sandy, and Irma all had increased funding to the SBA.

Commodity Futures Trading Commission

• House: $281.5 million
• Senate: $281.5 million

This is equal to their budget request for FY19. For years, the CFTC has argued its budget is not enough for it to fulfil its mission as the derivatives market regulator, so this funding match would be good news for the agency.

Pernicious Policy Riders

Unlike these appropriations, there are a number of contentious policy riders in the House bill, including unnecessary changes to capital markets and provisions that increase systemic risk. The eight FSGG policy riders are bills included in the S.488 JOBS 3.0 package, which incidentally now looks stalled in the Senate. These riders absolutely need to be stripped from the final bill. Rep. Lowey insisted during the September 13 conference deliberations that if these riders are not removed, Dems would “keep these bills in a holding pattern.”

December Shutdown?

For the first time in 10 years, an interior appropriations bill and a financial services appropriations bill were debated on the Senate floor. Despite that, Minibus III will likely be passed as a CR that will expire on December 7, with most of the riders stripped out. Because funding for President Trump’s wall has been left out of legislation and December 7 is after the midterms, a government shutdown then is much more likely. Republicans are already facing a potentially huge loss of seats in the House, so shutting down the government before the election would be reckless at best and destructive at worst.