A government shutdown was averted when the House and Senate agreed to a continuing resolution (CR) providing short-term funding for annually-appropriated programs in the new fiscal year (FY) 2016, which began October 1^st. At the heart of the current standoff over funding are the spending caps (aka “sequestration”) for domestic, international and Pentagon discretionary programs. Defense hawks want more funding for the Pentagon and Democrats and some Republicans would like relief on the domestic side. The ‘clean’ CR runs through December 11 and freezes funding just below FY 2015 levels (to stay under the sequester caps, the CR had to reduce domestic and Pentagon spending ban across-the-board two-tenths of one percent). A small number of programs are allowed to spend more than the capped level. These “anomalies” include extra funding to reduce the backlog of veterans’ disability claims and enough to cover rural housing rental assistance contracts. The bill (H.R. 719) passed overwhelmingly 78-20 in the Senate and 91 Republicans joined all Democrats to pass it the House by a vote of 277-151.
If funding at these levels were to continue for the rest of the fiscal year, many human needs programs would be seriously squeezed. Inflation is eroding the value of flat funding, leaving FY 2016 domestic discretionary programs about $9 billion behind FY 2015 levels. In addition, some programs like veterans’ health care must rise – and other domestic programs will have to be cut more deeply to make up the difference. According to the Center on Budget and Policy Priorities, slightly less than frozen funding will leave domestic programs at their lowest level in about fifty years as a share of the economy. (For how the failure to stop the sequestration cuts will undermine effective anti-poverty programs, see CHN’s report, Economic Growth Leaves the Poorest Americans Behind.)

Passage of the CR postpones other fights ahead in addition to overall funding levels. Some conservatives in the House and Senate were prepared to let funding expire, shutting down the government, in an attempt to remove funding from Planned Parenthood. That issue has become a flashpoint and will resurface along with other potential contentious policy ‘riders’ as longer-term funding for FY 2016 is debated. Environmental Protection Agency regulations, Dodd-Frank banking rules, and many more policies are likely to be targets for riders. There will also be tough negotiations around the offsets which some will demand to pay for added funding. Advocates are strongly opposing offsets coming from cuts to critical benefits provided by the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), Medicaid, Medicare and other programs. The Administration’s position is that it would not require offsets.

In a positive sign, Senate Majority Leader Mitch McConnell (R-KY) and outgoing Speaker of the House John Boehner (R-OH) have signaled to the White House that they would like to begin talks on a longer-term deal very soon. The Administration wants House and Senate Minority Leaders Nancy Pelosi (D-CA) and Harry Reid (D-NV) to participate in the talks. The hope is that an agreement could be reached that provides sequester relief for discretionary programs prior to Speaker Boehner leaving the House on October 30^th. Failure to reach an agreement on FY 2016 funding by then would cast newly-elected House leaders into the role of hammering out a deal with Senate Republican leaders, Democratic leaders and the Administration. The House leadership would likely face pressure at least as unyielding from their most conservative members as Speaker Boehner endured.

Other End-of-the-Year Issues
Besides resolving FY 2016 funding, Congress must tackle reauthorizing the highway trust fund set to expire on October 30^th, deal with what has become an annual process of extending a package of approximately 50 mostly corporate tax breaks (see related article in this Human Needs Report for more information), and raise the debt ceiling to avoid the government defaulting on its obligations. On October 1^st, Treasury Secretary Jacob Lew sent a letter to congressional leaders telling them that all measures aimed at delaying reaching the current debt limit would exhausted around November 5^th. It is possible that some of these issues could be included in a larger budget deal.

Senator McConnell and Vice President Biden were the key players in the 2012 budget agreement which layered sequester cuts on top of the spending caps adopted earlier in the 2011 Budget Control Act, raised the debt ceiling and made permanent some of President Bush’s tax cuts. Partial relief from the sequester cuts in FY 2014 and 2015 was achieved in the Ryan/Murray budget deal. Years of capped funding have had a significant detrimental impact on low-income programs. (See the Coalition on Human Needs’ chart showing the cuts that have occurred in many low-income programs since 2010.)

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