November 20, 2023
Speaker Johnson’s Groundhog Day Plan
Continuing Resolutions (CRs) are the norm. Over the past 48 years, Congress only has managed to enact all the appropriations bills and avoid a shutdown or a CR twice. Despite adoption of the Fiscal Responsibility Act (FRA), a bipartisan debt limit extension with two-year spending caps adopted earlier this year, House Republicans continue to dispute a topline appropriations level holding up final action on all 12 annual FY24 Appropriations bills.
However, this week’s action reduces prospects that the 118th Congress will break records on the number of CRs needed (21 in FY01) or the number of days some agencies had to operate under a CR (365 days in FY79 and FY13, where certain agencies and programs were eventually funded with full-year CRs, with some exceptions to the overarching formulae). The norm is for Congress to use CRs as stop-gap funding until full-year appropriations bills are adopted.
On Saturday, Speaker Johnson (R-LA) released HR 6363. This dual-tracked, staggered CR would avoid a partial government shutdown at midnight on Friday, November 17 by extending operations for all federal agencies in two groups. Operations for departments and agencies funded in four of the annual Appropriations bills (MilCon-VA, Agriculture-FDA, Energy-Water, and Transportation-HUD) would be extended through January 19, 2024. Funding for the remaining agencies under the jurisdiction of eight different subcommittees would run through February 2, 2024. Each group contains one of the agencies with the broadest bipartisan political support – VA is in the group with the first deadline, and DOD in the second group.
On November 14, the House Freedom Caucus issued a statement opposing “the proposed ‘clean’ Continuing Resolution as it contains no spending reductions, no border security, and not a single meaningful reform for the American People.” House Speaker Johnson (R-LA) countered, “We’re not surrendering. We’re fighting, but you have to be wise about the fights you go into.”
The House voted 336-95 to pass HR 6363 with the support of a majority of Republicans and Democrats.
The House-passed bill enjoyed bipartisan support in the Senate. Senate Majority Leader Schumer (D-NY) applauded the House vote to pass a CR “that excludes hard-right partisan cuts and poison pills with a strong bipartisan vote.” Senate Republican Leader McConnell (R-KY) called the House-passed bill “a responsible measure that will keep the lights on, avoid a harmful lapse in federal spending.” The Senate passed the measure 87-11 and the President is expected to sign it before the current midnight Friday CR deadline.
Despite all the drama in the run-up to these votes, let’s be clear. All this bill does is keep the lights on through the holidays. Adoption of the bill would also trigger a retroactive 1% sequester to October 1 that would take effect April 30 unless Congress passes a law changing that requirement.
That provision and a continued budget impasse would potentially cost the Department of Defense $82 billion over the next 2 years. While unlikely, that prospect will push Senator McConnell, House and Senate Armed Services Committee members and most Congressional Republicans toward compromise.
Johnson, unlike former Speaker McCarthy (R-CA), has been smart to schedule test votes on spending. Several attempts like this week’s effort to pass a rule advancing a FY24 House Commerce- Justice-Science Appropriations bill that faced a veto threat from the Administration failed (in this case on a 198-225 vote). We view these test votes as progress. The results should demonstrate to Freedom Caucus members arguing for “a return to regular order” and rolling back spending to FY22 levels that they lack the votes needed to achieve several of their policy and funding objectives. The results also strengthen the negotiating positions of Senate Majority Leader Schumer and Senate Appropriations Committee Chair Murray (D-WA) who pushed bills through Committee based on the FRA caps (and some side agreements made between OMB Director Young and McCarthy) with bipartisan support. These House votes also increase pressure on Senate Republican Leader McConnell (whose prospects for regaining control of the Senate in the 2024 elections were boosted by this week’s retirement announcement by Senator Manchin (D-WV)) to cut a deal that avoids a government shutdown. The bottom line—House Republicans lack the votes needed to cut non-defense spending well below FRA-approved levels.
Taken together these actions narrow the trading range on a FY24 spending deal that, as FBIQ has reported since June, should largely track Fiscal Responsibility Act levels with one significant change: we expect any FY24 funding deal to include a multi- billion-dollar border security spending boost.
HIGHER FLOOR, LOWER CEILING
So, what’s the trading range? First, the vast majority of House Appropriations Committee-approved non-defense spending cuts below FRA levels will vanish. That raises the floor on FY24 spending by roughly $100 billion. Second, fewer of the side- deals intended to boost non-defense spending accounts that were not written into the FRA will be adopted. That lowers the FY24 ceiling on non-defense spending below levels supported by Democrats and the Senate Appropriations Committee by
$25 billion or more. With inflation likely to remain above the Federal Reserve’s 2% target, we also expect Congress to approve a smaller emergency supplemental than the $105 billion request President Biden proposed. As deliberations continue, two elements of Biden’s plan may grow—aid for Israel and funding for border security.
It is ironic that in his last negotiation as Speaker, McCarthy urged President Biden to consider a border security supplemental. That was a smart political move by a man who understands politics but apparently forgot a basic legislative truth—leaders that can’t count votes, won’t be leaders for long.
Adoption of the two-track staggered CR signals that Speaker Johnson, a man with limited legislative accomplishments before becoming Speaker, has figured that out.