Appropriations and Budget News

Next War Supplemental May Include Infrastructure Stimulus Package

April 15, 2008 --On April 8, Senate Majority Leader Harry Reid (D-NV) revealed that he and Speaker of the House Nancy Pelosi (D-CA) have discussed plans to include a new economic stimulus package as part of the next war supplemental spending bill that is expected to move through Congress by the Memorial Day recess.

The supplemental is expected to include nearly $110 billion to fund continuing operations in Iraq and Afghanistan. Reid indicated that he and Pelosi would like the stimulus package to feature domestic spending initiatives.

President Bush has stated that he would oppose any war supplemental spending bill that contains domestic spending provisions. House Republicans have also indicated that they would oppose any supplemental that contained domestic spending.

Budget Committees Approve FY2009 Budget Resolutions

March 18, 2008 --On March 6, the House Budget Committee a approved $3 trillion FY2009 budget resolution (H Con Res 312). The Senate Budget Committee approved its own $3 trillion measure the same day (S Con Res 70). The non-binding resolutions, which do not require the President’s approval, provide Congress with a broad framework outlining spending and revenue priorities. It is anticipated that both chambers will pass their resolutions this week, but the two-week spring recess that began March 14 may delay work on a final product.

Leaders in the House and Senate are bringing their FY2009 budget resolutions to the floor under uncertain circumstances. In the last three election years, the House and Senate were unable to agree on a final budget resolution. This year, leaders in both chambers are hoping to break that pattern. In addition, any increases in discretionary spending provided in the final budget resolution may set-up an appropriations battle with the White House. From the outset, the President has said he will veto any appropriations bill that exceeds his limit on total discretionary spending.

For non-emergency discretionary spending in FY2009, the House bill sets a cap of $1.014 trillion, about $22 billion more than President Bush’s budget proposal. Meanwhile, the Senate measure caps non-emergency discretionary spending at $1.01 trillion, about $18 billion more than the administration’s request. Once a final agreement is reached, House and Senate Appropriations Committees will divide the discretionary spending total (also known as a 302 (a) allocation) among the 12 appropriations bills. The amount sub-allocated to each appropriations bill is referred to as the 302 (b) allocation.

For defense spending, both measures call for $537 billion in FY2009 (56 percent of total discretionary spending), level with the President’s request. In addition, both budget blueprints set aside $70 billion for military efforts in Iraq and Afghanistan in FY2009. However, these funds are considered emergency and do not count against the discretionary spending cap.

Neither resolution incorporates the cuts for domestic programs, such as the Community Development Block Grants, first responder grants and rural development as recommended by the President in his FY2009 budget request.

For programs within the community and regional development function (Function 450), which includes programs like the Economic Development Administration (EDA) and the Community Development Block Grant (CDBG) program and emergency management grants, the House resolution proposes $14.55 billion in budget authority, $5.5 billion less than current funding. The Senate measure includes $15.02 billion for Function 450 programs. Both bills assume increases in future years for this account, providing $15.7 billion by FY2013 in the House measure and $16 billion under the Senate measure.

Spending on mandatory programs in FY2009 is pegged at $1.9 billion under both measures, $67.6 million more than current spending.

The Senate resolution also allows for a $35 billion economic stimulus program that would be designated as emergency spending and would not have to be offset. Stimulus funding could be used for housing relief, extending unemployment insurance benefits, food stamps, helping with utility bills, state fiscal relief and support for “ready-to-go” infrastructure projects. While the House bill does not include stimulus funding, leaders have indicated their intention to pass a stimulus package under separate legislation.

Discretionary Spending Increases Slim Under Bush Budget

February 11, 2008 --On February 4, President Bush released a $3.1 trillion budget proposal, which echoes themes from past budget plans: significant increases for defense with minimal growth or cuts for domestic programs. The budget allows discretionary spending to grow 4.9 percent to $987.6 billion for FY2009. However, the bulk of the increase is reserved for defense programs with non-defense spending restricted to an increase of only 0.3 percent.

The budget proposal cuts discretionary funding for a number of agencies, including the Department of Health and Human Services (HHS) by two percent to $70.4 billion, Department of Justice (DOJ) by 10.7 percent to $20.3 billion, Department of Transportation (DOT) by 25.7 percent to $11.5 billion and the Department of Labor by 7.8 percent to $10.5 billion. In total, the budget terminates or cuts funding for 151 different federal programs, including many community and economic development accounts, to save $18 billion.

More than half of the discretionary spending proposed in the request, $515.4 billion, is reserved for the Department of Defense, an increase of 7.5 percent, excluding war funding, from the current allocation. According to the White House budget fact sheet, the base budget for defense is up nearly 74 percent since President George W. Bush took office in 2001.

The budget provides $549.6 billion in discretionary spending for all defense and national security programs, an increase of 8.2 percent. Meanwhile, the budget freezes non-defense programs at the FY2009 level of $393 billion through FY2013. According to the Center for Budget and Policy Priorities, when factoring inflationary effects, the President's request for non-defense programs is roughly 2.3 percent or $10 billion under current levels.

The budget seeks war funding of $70 billion for FY2009. This is considered a partial request and Congressional Democrats are pressuring the President to include a full year's funding for operations in Iraq and Afghanistan, saying the partial request obscures the true cost of the war from the public. During a hearing before the Senate and House Armed Services committees, defense Secretary Robert Gates conceded that the total cost for operations in Iraq and Afghanistan for fiscal 2009 would approach $170 billion, bringing the total cost for the wars to roughly $963.5 billion.

The budget also anticipates a significant jump in the annual deficit. The Office of Management and Budget (OMB) is projecting a deficit of $410 billion in FY2008 and $407 billion in FY2009, nearly $300 billion over the fiscal 2007 deficit of $162 billion. Since 2001, the national debt has jumped from $5.7 trillion to $9.7 trillion. It is estimated that interest payments on the debt will total $260 billion in FY2009 and rise to $302 billion FY2013. It is also now estimated that 80 cents out of every dollar of new public debt is owed to foreign entities and 44.5 percent of our nation's public debt, compared to only five percent in 1970 and 18.3 percent in 1990.

Under the President's budget, the government will run a $48 billion surplus by fiscal year 2012. The plan assumes $195.7 billion in cuts to Medicaid and Medicare over the next five years and that operations in Iraq and Afghanistan are not funded beyond 2009.

The budget is expected to face significant opposition from Democrats on Capitol Hill. However, during last year's budget debate, Democrats were forced to capitulate to the administration's overall spending caps. As a result, many assistance programs for state and local governments were level funded or event cut.

A similar predicament faces Democrats since they lack the votes necessary to overcome a Presidential veto. It is unclear if Democrats would be willing to extend current funding for programs until the next administration in hopes of dealing with a more sympathetic President.

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