Appropriations

Zika Debate Provides An Opportunity to Discuss How Emergencies Are Funded

Currently, Congress is debating if and how to provide emergency funding to fight the Zika virus. While the President has requested $1.9 billion in emergency funding this February to fight the mosquito-borne illness, the Senate has offered $1.1 billion in emergency funding and the House would provide $622 million from already-existing funds.

Under current budget rules, the emergency designation exempting Zika from the budget caps is appropriate, though it is often abused – for example, to pay for the Census in 2000. The Zika outbreak has been sudden and unforeseen, and a funding response to mitigate its effects is both necessary and urgent but would not be permanent. 

Yet the fact that Congress continues to debate this is partially the result of a broken budget process that relies on an ad-hoc and somewhat inconsistent funding system for various emergencies. As Congress discusses ideas for improving the budget process, policymakers would be wise to develop a better system to budget for emergencies. 

One example comes from a paper by the Peterson-Pew Commission on Budget Reform, Budgeting for Emergencies, which proposes a fiscally responsible reserve fund that would require Congress to set aside money each year to be withdrawn in case of a emergency like the Zika outbreak. In the long term, a reform like this could prevent unnecessary debate over whether emergency spending should be offset by ensuring that it is offset well in advance of a crisis. 

Identifying the funds to pay for new Zika spending shouldn’t be that difficult – and all things being equal, doing so is almost always preferable, even if not required by budget rules. The House bill would offset its proposed Zika funds by reallocating unobligated funds from the 2014 Ebola outbreak and other unobligated funds from the Department of Health and Human Services. Even fully funding the President’s request would cost less than 0.2 percent of total discretionary spending for FY 2017. If paid for over ten years, costs could easily be covered through very small tax or spending changes, many of which have broad bipartisan support. 

Some examples of possible offsets include: 


Potential Offsets for Zika Funding
Policy Savings
Reduce FY 2017 budget caps by 0.17 percent $2.0 billion
Increase the Medicare sequester from 2.0 percent to 2.04 percent $2.0 billion
Eliminate enhanced Medicaid funding for prisoners  $2.0 billion
Reform inland waterway funding $1.3 billion
Increase customs and courier fees $1.2 billion
Reform oil and gas management and leasing as in the President’s Budget $1.2 billion
Rebase Medicaid DSH payments $700 million
Eliminate payments for abandoned mines $520 million
Require universities to report the amount that students must report to claim the American Opportunity Tax Credit $500 million
Properly account for lottery winnings and other lump-sum income when determining Medicaid eligibility $475 million
Increase agriculture user fees $472 million
Increase collection of non-tax debts owed to the federal government $400 million
Require businesses to withhold taxes on payments to certain contractors, similar to taxes withheld on wages $424 million
Use border-crossing data to prevent improper payments to those that have left the country $200 million
Reduce drug abuse in Medicare Part D $200 million
Strengthen state child support enforcement $174 million
Increase information sharing to administer excise taxes $151 million

House and Senate Move Forward on Appropriations

April 15 is the annual statutory deadline for passing a conferenced budget resolution though the House and Senate, which is intended to formally kick off the appropriations process. This year's deadline has already passed without a budget resolution coming from either chamber, but the appropriations season is still moving forward. How does the appropriations process move forward without a budget?

The budget resolution imposes discipline on the appropriations process by providing a topline number for discretionary appropriations known as a 302(a) allocation, which refers to that particular provision in the Congressional Budget Act of 1974 and is the total amount that the Appropriations Committees can spend. Once the 302(a) allocation is set through the budget resolution, the Appropriations Committees divide the topline amount among each of the twelve appropriations subcommittees using 302(b) allocations.

Without a budget resolution, there is no 302(a) allocation setting the total amount for the Appropriations Committees to spend, and in turn means the Appropriations Committees cannot establish 302(b) allocations to divide the topline spending among their twelve subcommittees. There is also no enforcement mechanism for violating these allocations, however there is a point of order against appropriations that exceed the statutory discretionary spending caps, applied to the appropriations bill that caused the excess (which is typically the last appropriations bill considered by the House).

Appropriations Watch: FY 2017

Last updated 5/27/16 to reflect the appropriations activity in Congress this week. 

The appropriations process has begun in earnest on Capitol Hill and even though Congress has not yet passed a budget, both chambers are moving forward with appropriations bills. The Senate has laid out its topline spending targets known as 302(b) allocations for the twelve Appropriations subcommittees to direct the appropriations process as provided in the Bipartisan Budget Act of 2015 (BBA). The House is pushing ahead without an official 302(b), though the House Appropriations Committee has said it will move forward with informal allocations based on the top line limit set in the BBA last year. As we did last year, we'll be tracking the bills as they move from committee to the House and Senate floor, and onto the President's desk.

The table below shows the status of each appropriations bill. To learn more about the appropriations process, read our report: Appropriations 101, and read here for more detail about how the House and Senate are moving forward without a Budget Resolution.

Item House Senate
Budget Resolution Approved by full committee 3/16 (20-16) Not yet introduced
302(b) Allocations  Not yet released  Approved by full committee 4/18 (29-1)
Agriculture Approved by full committee 4/19 (voice vote) Approved by full committee 5/19 (30-0)
Commerce, Justice, Science Approved by full committee 5/24 (voice vote) Approved by full committee 4/21 (30-0)
Defense Approved by full committee 5/17 (voice vote) Approved by full committee 5/26 (30-0)
Energy and Water Development Failed the House 5/26 (112-305) Passed the Senate 5/12  (90-8)
Financial Services and General Government Approved by subcommittee 5/25 (voice vote) Hearings held
Homeland Security Hearings held Approved by full committee 5/26 (30-0)
Interior, Environment Approved by subcommittee 5/25 (voice vote) Hearings held
Labor, HHS, Education Hearings held Scheduled for full committee markup on 6/9
Legislative Branch Floor vote expected (week of 6/6) Approved by full committee 5/19 (30-0)
Military Construction, VA Passed the House 5/19 (295-129-9) Passed the Senate 5/19 (89-8)
State, Foreign Operations Hearings held Hearings held
Transportation, HUD Approved by subcommittee 5/18 (voice vote) Passed the Senate 5/19 (89-8)

Sources: House Appropriations Committee, Senate Appropriations Committee, CQ, Congress.gov

As we explained in Appropriations 101, the House and Senate Appropriations Committees approve 302(b) spending levels for each subcommittee after the topline 302(a) levels are determined by the Budget Committees. Below is an excerpt (click here to read the full report).

Policymakers Dig Hole $1.2 Trillion Deeper in 2015

With debt already around its highest level as a share of Gross Domestic Product (GDP) other than around World War II and estimated to grow with no end in sight, the least one could have hoped for from lawmakers would be to stop digging the hole deeper. But 2015 proved even that low bar to be too lofty a goal.

Update: What Will Happen If the Government Shuts Down?

Here we go again, again. With government funding set to expire at the end of the week and no deal on the table, it is possible that the government will shut down for the second time in three years or at least require another Continuing Resolution. While the Bipartisan Budget Act of 2015 set topline spending levels above the previous sequester caps, there is no set agreement on exactly how that money should be spent and which policies ought to accompany it in an omnibus appropriations bill. To help prepare for a possible shutdown, CRFB has released an updated primer on what happens in and the the consequences of a government shutdown.

The primer, Q&A: Everything You Should Know About Government Shutdowns, goes through the funding process and the budgetary, economic, and administrative consequences of a shutdown.

A New War Spending Gimmick In The Budget Deal

The Bipartisan Budget Act of 2015 is now the law of the land. While the law does not necessarily prevent a government shutdown, it does raise the sequester-level discretionary spending caps to provide for eventual full funding of the government. In addition, it utilizes (and possibly expands) the war spending gimmick.

The novelty of Overseas Contingency Operations (OCO) funding in the budget deal is that it allows OCO to be used as a slush fund for nondefense discretionary spending via the State and Foreign Operations appropriations bill. When appropriators write up an omnibus appropriations package, they could conceivably shortchange the State and Foreign Operations bill, subject to budget caps, by about $8 billion while increasing the unoffset and uncapped OCO funding to the full level provided in the budget deal – about $15 billion – thus backfilling State and Foreign Operations. By doing this, it frees up room under the nondefense discretionary spending caps for other nondefense spending. Appropriators would be able to spread about $8 billion over the other subcommittee allocations. For the first time, OCO could seemingly become a slush fund for both the Department of Defense and the rest of the nondefense budget. For more on the FY 2016 appropriations process, see our appropriations watch.

So how did we get here? The section of the budget deal on OCO sets amounts of it for both defense and international nondefense spending for both Fiscal Years (FY) 2016 and 2017 at $58.8 billion for defense and $14.9 billion for international nondefense. Last year’s $74 billion in OCO was divided roughly by $65 billion for defense and $9 billion for international nondefense. Relative to the baseline, which assumes FY 2015 levels adjusted for inflation, the $58.8 billion for defense, if appropriated, wouldn't increase spending, but the $14.8 billion for international nondefense would do so by roughly $5 billion in one year.

Two Months, Four Fiscal Speed Bumps to Deal With

We are coming down the home stretch of calendar year 2015, with only a little more than two months left. Lawmakers will have to get to work as they have four "Fiscal Speed Bumps" – mandatory budget deadlines – to deal with. The first comes just next week as the authorization for highway spending will be expired by October 30, or federal highway spending will cease. The Treasury Department has also told Congress that the debt ceiling will need to be raised by November 3, or they will run dangerously low on cash on hand and risk default.

In December, lawmakers will need to agree on FY 2016 spending levels and fund the government before December 12 either with full appropriations bills or another continuing resolution. Without a funding deal, the government would shut down. And by the end of the year, lawmakers face a soft deadline for retroactively reviving the 50+ tax breaks, called the extenders, which expired at the end of 2014.

Congress Might Gladly Pay You in 2022 for Sequester Relief Today

A recent press report (paywall) indicates that Republicans may be looking to pay for increased defense spending next year by promising defense cuts starting in 2022. This type of approach to sequester-level cap replacement is at best disingenuous and at worst a blatant gimmick.

The report suggests the possibility of sequester relief in Fiscal Years 2016 and 2017 paid for with extended and lowered caps from 2022 to 2025. Although the press report didn’t specify how this sort of trade off would work, there are three basic possibilities:

The first would be to offset cap increases in 2016 and 2017 by extending the spending caps beyond 2021 below the level the Congressional Budget Office (CBO) assumes (the 2021 cap adjusted for inflation). While this could be technically argued as a legitimate offset, there is little reason to believe that Congress would reduce discretionary spending below an extension of the sequester-level caps in future years when they want to raise those sequester-level caps today. This would be the budgetary version of Wimpy's “I’ll gladly pay you Tuesday for a hamburger today.”

The other two possibilities would rely on an even more blatant gimmick by claiming savings relative to an artificially-inflated baseline. One of these approaches would involve using the President’s budget assumption that discretionary spending bounces back to pre-sequester levels after 2021 and claim savings relative to that baseline.

Appropriations Watch: FY 2016

Note: Last updated 12/9/15. For the status of FY2017 appropriations see Appropriations Watch: FY 2017. Lawmakers passed a continuing resolution funding the government through December 11, 2015 at Fiscal Year 2015 levels. They went on to pass the Bipartisan Budget Act of 2015 that raised the statutory spending caps for FY2016 and 2017. Congress is expected to pass a short-term continuing resolution soon to keep the government open through December 16, 2015. This will give lawmakers time to reach an agreement on an omnibus appropriations bill providing funding for the remainder of FY2016. If Congress does not pass a short-term CR or an omnibus spending bill, the government will shut down.

The appropriations process is in full swing on Capitol Hill. The budget conference agreement laying out the topline spending levels, known as 302(a) allocations, passed the House by a vote of 226-197, and passed the Senate by a vote of 51-48. As we noted, the House has already moved to floor consideration of some bills, while the Senate is holding hearings and markups. As we did last year, we'll be tracking the bills as they move from committee to the House and Senate floor, and on to the President's desk.

The table below shows the status of each appropriations bill. To learn more about the appropriations process, read our report: Appropriations 101.

CBO Forecasts Costs of Climate Change

The Congressional Budget Office (CBO) has released new estimates of the cost of climate change, specifically as it relates to hurricanes. The report forecasts hurricane damage in 2075 to cost an expected $156 billion in today's dollars, more than five times larger than costs under current climate conditions. Hurricane damage in 2075 is forecasted to cost between $104 billion and $226 billion annually, four to eight times larger than under current conditions.

The increased costs that CBO projects reflect two factors, which are captured in two different scenarios:

  • Rising sea levels and increased hurricane frequency and intensity as a result of climate change.
  • Greater coastal development, which increases the value of property at risk from hurricanes.
Expected Annual Cost of Hurricane Damage (Billions, 2015 Dollars)
  2025 2075
Under current conditions (baseline) $29 $29
Scenario with climate change only $32 $60
Scenario with climate change and increased coastal development $37 $156

Source: CBO

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