The current Continuing Resolution (PL 118-158) expires at midnight on March 14. Since the 119th Congress began seven weeks ago, only one bill has become public law (unrelated to funding the government) and there has been no progress on bipartisan/ bicameral negotiations on a spending topline for the FY25 appropriations bills.
Republican and Democratic Leadership have already gone into blame-game mode for the lack of progress and the rising potential for a partial government shutdown on March 15.
[Democrats] laid out the foundation for a government shutdown. That’s their plan to stop President Trump…. By laying the foundation for a shutdown in the way they are, the Democrats are changing their tune on government shutdowns.
House Speaker Johnson (R-LA),
February 5
In order to negotiate an FY25 Omnibus spending bill, there must be agreement on a spending topline. The Fiscal Responsibility Act (PL 118-5) set a statutory topline ($1.675 trillion) for FY25 that provided for a 1% increase above FY24 for defense and non-defense programs. Last year, neither the Senate nor House abided by that law in drafting their FY 2025 bills, leaving an $88 billion gap. The House bills are $54 billion below the topline for nondefense programs and the Senate bills are $21 billion over for defense programs and $13 billion over for non-defense programs.
The House returns from recess on February 24th. In the absence of a topline agreement, options include:
- Passing a third short-term continuing resolution until April This would give Congress more time to reach agreement on a topline, negotiate the details of the twelve bills, and consider them in the House and Senate (currently both the House and Senate are scheduled to be in recess from April 11-28).
- Negotiating a full-year continuing resolution for all twelve bills. This would be the first time DOD has operated for a full year under a continuing resolution.
- Negotiating a regular Defense bill and perhaps a regular Military Construction/VA bill and a full-year continuing resolution for all the other bills (in FY11, there was a DOD bill and a full-year CR—with exceptions—for the rest of government).
Democrats are, as always, committed to responsibly funding the government, but it is extremely difficult to reach an agreement on toplines—much less full-year spending bills—when the president is illegally blocking vast chunks of approved funding, when he is trying to unilaterally shutter critical agencies, and when an unelected billionaire is empowered to force his way into our government’s central, highly-sensitive payments system at the Treasury Department.
Senate Appropriations Vice Chair Murray (D-WA),
February 3
If there is no agreement, there could be a government shutdown on March 15. During a government shutdown, OMB determines what activities meet the “life and property” exception under the Anti-Deficiency Act (which among other elements prohibits incurring obligations before funds have been appropriated), and, therefore can continue to operate during the funding hiatus. But even federal employees conducting those activities are not paid until the Government is funded, nor are any contractors.
Which option is selected could be impacted by decisions related to the reconciliation process. The House and Senate are on two different tracks (see Smythe on page 2) for reconciliation. The Senate Budget Committee budget resolution assumes two reconciliation bills, one with increased defense and border security funding and offsetting cuts in mandatory spending and a second for the Trump tax cut extensions. The House Budget Committee budget resolution assumes a single reconciliation bill.
How and when the House and Senate Republican leaders and President Trump resolve this disconnect affects when and how FY25 appropriations will be completed. The longer this impasse continues, the more likely Congress chooses a long-term CR that is the easiest for option for Congress and the hardest for agency managers to implement.
Regardless of which option is selected, major issues need to be resolved, such as:
- Topline – Even if a CR option is selected, there still needs to be agreement on a topline for defense and nondefense spending. Traditionally, CRs are written with spending frozen at the prior year level (i.e., 1% below the Fiscal Responsibility Act levels) but there is also precedent for setting levels below the prior year level.
- Sequester – Under current law, if any program is funded under a short-term CR after April 30, defense programs will be cut, across-the-board by $38 billion. Will Congress repeal the sequester?
- Debt limit – The US Government reached the debt limit on January 2, The Treasury is using so-called extraordinary measures, such as using balances in the military and civilian retirement accounts to finance debt. Extraordinary measures are expected to be exhausted this summer so a decision will need to be made on whether to include a debt limit increase in appropriations or reconciliation.
- California fires – Will supplemental funding for FEMA Disaster Relief, SBA loans, and/or Community Development Disaster grants be included and will there be conditions on such assistance?
- VA Medical Care – Will the Congress provide funds to cover the estimated $6 billion shortfall and if not, what impact will that have on implementation of the PACT Act (toxic exposure)?
- New Starts – Traditionally, agencies are not allowed to start new activities or contracts while under a CR. Will exceptions be provided under a short-term or full-year CR?
- Limits on Presidential Authority – Will provisions be included to reassert Congress’ power of the purse, clarifying that the President does not have the authority to unilaterally impound funds?
The clock is ticking.