Despite the work of House and Senate appropriators to approve most of the funding bills before them, it is not likely that any bills will get full Congressional approval by the September 30 deadline. Democrats and the White House have remained firmly opposed to maintaining the sequestration spending limits. Appropriations levels, as approved by the Republican majority, stay within these restrictive caps. There is one big exception: Congress approved additional uncapped defense spending through the Overseas Contingency Operations (OCO) account, which is meant for spending related to Iraq and Afghanistan operations. At least half of the $90 billion OCO funding is estimated to cover regular military expenditures unrelated to these war efforts, blowing a large hole in the supposed limits for the Pentagon.
The Obama Administration has said repeatedly that it will not sign any spending bills that do not exceed the sequester caps, and that it will not agree to different treatment for defense and non-defense programs. Senate Democrats were willing to block the defense appropriations bill from being considered. Knowing that the current spending bills are not going to progress further has opened the door to diversionary tactics. The House Interior/Environment bill got entangled in amendments to ban the Confederate flag from federal cemeteries (and then to reverse that ban); the controversy led to the bill being pulled from the floor, and then to stalling other bills gearing up for floor action. Appropriator Mike Simpson (R-ID) rued the “self-inflicted wound” of his party voting to defend the Confederate flag, according to CQ. “We’ve put our heads like a pumpkin on a stick and given them a baseball bat.” In other matters tangential to government spending decisions, the House Homeland Security appropriations bill was amended in committee on July 14 to prohibit “sanctuary cities” from receiving certain federal grants, including Federal Emergency Management Administration (FEMA) funding. Sanctuary cities are municipalities that have chosen to limit their participation in immigration enforcement activities. This is just one of many controversial policy riders that are being attached to appropriations bills, all adding to the difficulty of coming to final agreement on spending for FY 2016.

There is bipartisan interest in going back to the drawing board and negotiating spending levels that exceed the sequestration caps. While many Republicans are most interested in raising defense levels, leaders in both parties have voiced support for increasing domestic spending too.

So far, there is no sign that negotiations have begun to craft a new spending deal that would lift the caps. Senator McCain (R-AZ), Chair of the Senate Armed Services Committee, has been meeting for some time with a bipartisan group of senators to get beyond sequestration for defense programs. Nothing concrete is surfacing from this group. It appears even less is going on to work out higher levels for domestic spending.

No one expects that these issues will be resolved by September 30, the end of the fiscal year. Few expect that the logjam will result in a government shutdown either. Most likely, there will be a temporary extension of current spending levels – a Continuing Resolution (C.R.) – which will delay final deal-making until no earlier than November.

At that point, a number of other important items will be heading toward deadlines as well. The limit on federal borrowing will be reached towards the end of the calendar year. Federal highway fund spending will dry up at the end of July unless Congress acts. At this point, the House leadership prefers an extension till mid-December of highway funding, with the expectation of a longer-term deal to be achieved then. If the House gets its way, highway funding and a range of tax breaks and some increases may be considered at about the same time appropriations and debt limit decisions are being made.

Conservative legislators are starting to list their own demands to support a comprehensive end-of-year deal. They are calling for cuts in mandatory programs such as Medicaid, Medicare, SSI, SNAP/food stamps, or low-income tax credits in exchange for lifting sequestration caps and/or raising the debt limit. Advocates for low-income people have been fighting for increases in appropriated programs from housing to education to nutrition, but they are making the case that these increases must not come at the expense of vital safety net programs. With so many big issues in play, likely needing a comprehensive agreement to forestall government crisis, low-income advocates will have to work hard to ensure that programs serving the most vulnerable people do not lose ground.

Stay tuned to the Human Needs Report and CHN’s blog, Voices for Human Needs, for updated information.

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