April 30, 2015
On Wednesday, April 29, House and Senate negotiators released a compromise budget resolution, known as a “conference report,” which sets out spending levels and policy goals for 2016 and beyond. The House and Senate passed their respective versions of the annual budget resolution at the end of March.
The House is expected to vote on the conference report on Friday, and the Senate will likely vote next week.
We are pleased that the final conference report does not include “budget reconciliation instructions” to the House or Senate Agriculture Committees to cut mandatory farm bill spending in 2016. Heading into Conference Committee negotiations, it was unclear whether or not the final deal would require such cuts. The House budget resolution instructed the Agriculture Committee to cut $1 billion over ten years, while the Senate budget resolution contained no such instructions.
The conference report does include reconciliation instructions for the Finance Committee and the Health, Education, Labor and Pensions Committee in the Senate as well as the Education and Workforce Committee, Energy and Commerce Committee, and Ways and Means Committee in the House. The reconciliation instructions for these committees will allow congressional Republicans to score political points by passing legislation repealing the Affordable Care Act, despite a recognition that such legislation will be vetoed by the President.
Defense Spending Cap Exceeded
As expected, the conference report busts the strict cap that Congress set in 2011 for future defense spending by adding $38 billion to an emergency defense spending account known as the Oversees Contingency Operations (OCO) account. The increase in defense spending has a direct impact on the deficit because it comes without any parallel spending reduction or “offset.” Because the OCO is treated as emergency spending, however, it falls outside of the budget caps.
Some Democrats and Republicans have opposed using the OCO account to make an end run around the defense spending cap. This came into play again just yesterday when House leadership delayed consideration of the Military Construction and Veteran Affairs appropriations bill due to bi-partisan objections over the use of the OCO account to provide an additional $532 million for the Defense Department.
Limiting Future Budget Gimmicks
The conference report includes new limits on a budget gimmick called Changes in Mandatory Program Spending (CHIMPS), which act as a way for appropriators to spend more than 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 CHIMPS language in the final conference report is not nearly as stringent as the language included in the Senate-passed version of the budget resolution. That version of the language would have limited 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. Instead, the final conference report freezes CHIMPS at $19 billion in 2016 and 2017 before reducing them over time.
Unfortunately, this means that appropriators are likely to use the CHIMPS process again in next year’s agriculture appropriations bill to reopen the 2014 Farm Bill and cut mandatory spending for conservation programs. 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. These cuts have direct impacts on farmers, ranchers, and foresters across the country. They mean more water pollution, less wildlife habitat, and more expensive environmental mitigation in the future. NSAC strongly opposes the cuts to the conservation title.
The final conference report provides no relief from the budget caps and automatic annual spending cuts, known as “sequestration,” which Congress established in the Budget Control Act of 2011. Senator Tim Kaine (D-VA) successfully added an amendment to the Senate Budget Resolution that would replace the fiscal year 2016 caps on discretionary programs with future-year spending cuts; however, that language was not included in the final bill. This means that, in addition to automatic cuts for non-exempt mandatory spending, the unrealistically low spending caps for discretionary programs will return in 2016.
Like the overall limit on non-defense spending provided in the final conference report, the spending cap for the annual agriculture appropriations bill is level with current funding, though, as noted above, current funding relies heavily on making cuts (CHIMPS) to farm bill mandatory conservation spending. Hence, the allocated level for agriculture assumes either major cuts to U.S. Department of Agriculture and Food and Drug Administration programs, or continued reliance on cutting conservation funding for farmers.
Because of the strict spending caps applied through sequestration, House and Senate Democrats are threatening to oppose each appropriations bill for fiscal year 2016. Combined with a veto threat from the President, this represents a significant challenge for the House and Senate Majority.
The House and Senate Agriculture Appropriations Subcommittees are expected to debate and pass their respective agriculture appropriations bills in May. We will analyze and report on the two bills when they are released.
Categories: Budget and Appropriations