GOVERNMENT RELATIONS REPORT: OCTOBER

CONGRESSIONAL BUDGET RESOLUTION

There has been a significant amount of activity in Washington this month, culminating in the adoption of concurrent budget resolutions in the House and Senate 

A budget resolution is a nonbinding blueprint, and while it establishes topline funding levels, the appropriations committee decides funding levels per agency and program. However, the Budget Control Act of 2011 set binding spending caps for this year. Congress must increase those caps in order to fund all of the priorities outlined in the individual funding bills the House and Senate marked up over the summer.  

In general, the main significance of the Congressional budget resolutions is that they are expressions of the authors' political vision. The House and Senate budget resolutions express their authors' view of the role of the Federal government, the significance of discretionary spending, and the importance of entitlement programs that essentially benefit low-income people.

The House adopted its budget resolution earlier this month. The House would increase defense spending by $72 billion, and cut nondefense spending by $5 billion. According to The Hill newspaper, "It also includes plans for trillions of dollars in spending cuts over a decade, including from programs such as Medicare and Medicaid, but does include enforcement mechanisms to enact those plans. The budget outline, for example, assumes the adoption of a House-passed ObamaCare repeal bill that has not advanced. The House budget leaves no room for tax reform to add to the deficit. Instead, it provides instructions for $203 billion in spending cuts from welfare programs in areas such as nutritional assistance and education."

The Senate resolution proposes to balance the Federal budget by the end of the decade. It calls for a $5.8 trillion decrease in funding, including $1.3 trillion in Medicaid and Affordable Care Act cuts, $473 billion in Medicare cuts, and so-called "income security" programs like TANF, SSI, SNAP, and others by $653 billion. It also proposes cuts to non-defense discretionary programs of $660 billion. It would allow defense levels to rise reaching $684 billion at the end of a decade. The cuts are intended to win over House members who may be uncomfortable voting for a resolution that increases the deficit.

As the Center on Budget and Policy Priorities states, if these policies are enacted funding for domestic programs that are funded by annual appropriations would fall 29 percent below 2010 levels, counting inflation. 

The FY 2018 budget resolutions are also significant because their adoption will allow efforts to pass a tax reform bill to continue under rules that require only a 51-vote majority. The Senate budget resolution provides for a tax cut of $1.5 trillion without accompanying offsets and proposed discretionary and entitlement cuts.

Expectations are that this week the House will adopt the Senate resolution to expedite consideration of tax reform. The move would mean that Republicans would forgo plans to make $203 billion in mandatory cuts through reconciliation, a process that would have effectively shielded them from Democratic opposition in the Senate. The House budget resolution had called for the House Education and the Workforce Committee to come up with $20 billion of those cuts, a proposal that would have put student aid programs like subsidized student loans and mandatory funding for Pell Grants into play.

Senator John McCain (R-AZ) explained his support of the budget by saying: "At the end of the day, we all know that the Senate budget resolution will not impact final appropriations."

The compromise budget resolution, if it passes Congress this week, essentially admits that the tax cuts will not pay for themselves through increased economic growth. Rather, the outcome is likely to be larger federal deficits. The danger is that as the deficits rise in the future, those who supported the tax cuts will blame growing deficits on increased spending and call for the kind cuts that were included in the Administration budget for FY 2018.

The House, Senate, and Administration budget plans would deeply cut non-defense discretionary (NDD) funding, the budget area that includes a broad range of investments and public services, from housing assistance to education to scientific research and transportation. These cuts would come on top of cuts imposed since 2010. By 2027, under the Senate plan, overall NDD funding would be 18 percent below its 2017 level and 29 percent below its 2010 level, after adjusting for inflation. The cuts under the Trump and House plans are even deeper. Under all three plans, by 2027 NDD spending would fall as a share of the economy to levels likely not seen since the Hoover Administration.

While the House and Senate plans don't say where these cuts would come from the Administration budget proposed deep cuts in WIOA Title I as well as many other programs.

To date, appropriators in both the House and Senate have rejected this approach and have struggled to minimize cuts to important programs. Indeed, they continue to search for a budget deal that would raise the caps on domestic discretionary and defense programs.

It is possible, but not likely, that such a deal could be struck before the continuing resolution (CR) now in place expires on December 8. It is more likely that there will need to be another CR enacted to take the issue up to Christmas, when the desire to get out of Washington for the holidays usually forces some action.

The final discretionary spending levels that will fund the government in 2018 will have to be negotiated between Congressional Republicans, Democrats, and the White House ahead of a December 8 deadline. Failure to reach an agreement or pass another CR by then would lead to a government shutdown.

There has been some other significant activity on other fronts this month. President Trump nominated Michigan State Representative Tim Kelly to become Assistant Secretary for Career, Technical, and Adult Education if the U.S. Senate approves his nomination. Kelly, R-Saginaw Twp., currently chairs the House Education Reform Committee and the House appropriations subcommittee on school aid and is serving his third term in office. Prior to his career in the Michigan Legislature, Kelly served in former Governor John Engler's administration as an education policy adviser and as a special adviser to the director of the Michigan Department of Career Development.

Michael Wooten will be deputy assistant secretary and acting assistant secretary for the department's Office of Career, Technical, and Adult Education. Leonard Haynes will be a senior adviser. Wooten most recently was deputy chief procurement officer for the District of Columbia. He previously chaired the governing board of Northern Virginia Community College and was deputy department chair and professor of contract management at Defense Acquisition University. Wooten is a veteran of the U.S. Marine Corps.