April 24, 2015
The House and Senate passed their respective versions of the annual budget resolution at the end of March, leading to expectations that a final version might be hashed out by close to the statutory target date of April 15. Though missing that deadline, the negotiations between House and Senate Budget Committee GOP leadership are now said to be in the final stages, with at least the possibility of a final product to vote on in early May.
Four Major Issues Under Review
Among the items holding up a final version of the budget resolution for 2016 are conversations around (1) paying for an expensive bill for doctors and hospitals that already became law, (2) how far to let appropriators, who control annual discretionary funding, to dip into mandatory funding for cuts to make up for tight budget caps on discretionary funding, (3) whether to use a budget gimmick to blast through the existing budget caps on defense spending, and (4) whether or not to include budget reconciliation procedures to force additional cuts to mandatory funding, and if so, in what areas of the budget.
Based on stories emerging from the Hill, the final budget resolution will not include any specific offsets to pay for the $141 billion 10-year cost of legislation recently passed to restore Medicare reimbursement rates for doctors and hospitals. Evidently there will be loose language included that purports to pay for this new deficit-increasing cost down the road sometime, but with no direct specific offset and no budget reconciliation instruction (see beow). Bottom line — the Medicare “doc fix” bill as it is known will be a new $141 billion cost to the taxpayer with no corresponding offsets from elsewhere in the federal budget.
Another topic generating heat is the issue of using “changes to mandatory program spending” (or CHIMPs in Hill-speak) as an acceptable way for annual appropriations bill to exceed the tight caps on discretionary spending dictated by the Budget Control Act of 2011. CHIMPs act as a way for appropriators to spend more than the budget caps otherwise allow. The current year appropriations bill approved last year has nearly $20 billion in CHIMPs that allowed appropriators to bust through its spending limits.
The Senate-passed version of the budget resolution would limit CHIMPs for next year at this years level and then reduce the amount by 20 percent each year until they were no longer allowed in 2021 and beyond. The House-passed version has no limits on CHIMPs at all. President Obama’s budget proposal for 2016, meanwhile, includes over $20 billion in CHIMPs. This issue is still apparently under review and may be among the last issues resolved.
Both the House and Senate passed budget resolutions offload some $38 billion in defense spending to an emergency account that is off budget. In that way, they circumvent the Budget Control Act caps for military spending to which the budget otherwise pretends to be adhering. One pitfall to this gimmick is that by placing the funds in the emergency account, it would require President Obama’s approval to actually be spent, and the President is unlikely to agree unless a similar deal is struck for domestic social spending. But all indications are the final budget bill will proceed with this approach nonetheless, perhaps with the assumption that some grand bargain might be struck this fall.
Finally, on the big issue of whether and where the final deal will include budget reconciliation instructions directing authorizing committees to cut mandatory spending, it appears that the many small reconciliation instructions (including re-opening the farm bill to obtain $1 billion in new savings) in the House-passed version will be dropped, but instructions to once again pass a bill to undo Obamacare will be included, despite the impossibility of such a bill ever becoming law given the President would never sign it.
The big budget resolution issues for agriculture are CHIMPs and budget reconciliation. It appears all but certain the final budget resolution will allow at least the same amount of CHIMPs gimmickry next year as this year. That will almost certainly result in a re-opening of the 2014 Farm Bill and cuts to at least the farm bill’s conservation title.
The FY 2015 Appropriations Act already cut the 2014 Farm Bill’s funding for conservation by nearly $600 million, and the FY 2016 proposal from President Obama would cut it even further, by $860 million. At this pace, without a reduction or elimination of the use of CHIMPs as part of the final budget deal, the conservation title of the farm bill could well implode. NSAC strongly opposes the cuts to the conservation title.
On the budget reconciliation front, it now appears that the attempt by the House majority leadership to re-open the farm bill directly, above and beyond the CHIMPs process, will fall by the wayside, in line with the recommendation by NSAC and nearly 400 other groups in a letter to the Budget Committees earlier this year.
Appropriations Allocations Allow Subcommittees to Write and Move Bills
This week, even without a final budget deal, the House Appropriations Committee approved on a party-line vote funding allocations to each of its appropriations subcommittees, allowing each of those 12 spending bills to start moving through the legislative process.
In fact, the House Committee has already starting moving on the appropriations bills for military construction and veterans, energy and water, and funding for Capitol Hill. Each of the first two bills received increases in their allocations relative to last year; and increased allocations are also included for the bills for Commerce-Justice-Science and Transportation-HUD.
On the other side of the coin, the allocations approved by the Committee would cut Labor and Health and Human Services by nearly $4 billion from this year’s levels and by nearly $15 billion from Obama’s requested level. The bill for the Environmental Protection Agency (EPA) and Department of Interior would be nearly $2 billion below the President’s request and slightly below current funding. Financial regulators and the Internal Revenue Service (IRS) would also see significant cuts to current funding.
The allocation for the annual agriculture bill is level with current funding, though, as noted above, current funding relies heavily on making cuts the farm bill conservation funding. Hence, the allocated level assumes either major cuts to USDA and FDA programs, or continued reliance on cutting conservation funding for farmers. Not accounted for are proposals for increased funding by the Obama Administration for agricultural research, food safety, and emergency watershed programming.
Another big issue that will impact almost all the appropriations bills this year, as they did last year, are policy riders, especially those being inserted by GOP legislators to derail the health, safety, and environmental regulatory process. A rider to prevent EPA from finalizing its clean water rule to bring clarity to stream and wetland issues left in disarray by conflicting court cases has already been included in a bill approved by the House Committee this week, with many more expected before the markup season is finished. This use of spending bills to short circuit the normal legislative process has grown by leaps and bounds, and threatens to lead to stalemates over final spending bills this fall.
We expect the House and Senate Agriculture Appropriations Subcommittees to mark up their bills in May and we will, of course, report on the full details of those bills at that time.