July 20, 2017

House GOP Budget Committee leaders released earlier this week a $1.132 trillion fiscal year 2018 budget resolution.  The document sets the topline discretionary spending level for the upcoming fiscal year and potentially paves the way for a decade’s worth of cuts in taxes and entitlement spending via the budget reconciliation process.

As anticipated, the Republican budget blueprint would exceed the defense spending caps established under the 2011 Budget Control Act (BCA).  Specifically, the resolution would authorize $621.5 billion for defense programs in fiscal year 2018, or $72.5 billion more than the $549 billion limit established by the BCA.  At the same time, the budget resolution would provide for a $5 billion cut in non-defense spending (when compared to the BCA cap).

It should be noted that in order to advance fiscal year 2018 appropriations measures that conform to the spending levels in the budget blueprint, lawmakers would have to either permanently repeal the BCA or temporarily adjust the caps for fiscal year 2018.  While there appears to be bipartisan agreement that the caps should be modified to accommodate higher defense spending, Democrats have indicated that any such increase must be met with a boost in spending for non-defense discretionary programs.  Republicans would need 60 votes to in the Senate to consider a BCA-modification bill, potentially raising the prospects for a bipartisan budget agreement later this fall.

With regard to mandatory spending programs (entitlements), the budget resolution calls for a total of $203 billion in cuts over 10 years.  Included in the resolution are “reconciliation instructions” that direct 11 committees to reduce the federal budget deficit by making changes to programs under their jurisdiction.  For example, the Ways and Means Committee would be charged with finding at least $52 billion in cuts while the Energy and Commerce Committee would be responsible for identifying a minimum of $20 billion in deficit savings.  The Ways and Means Committee has jurisdiction over a number of entitlement programs, including the Temporary Assistance for Needy Families (TANF) program and child support enforcement; the Energy and Commerce Committee has jurisdiction over the Medicaid program.

Under the terms of the House budget resolution, the 11 authorizing committees would have until October 6 to send proposed spending cuts back to the Budget panel.

Looking ahead, it remains to be seen if Republicans will have the votes to approve the budget resolution on the floor.  While the proposal is not expected to receive any Democrat support, there also is some level of displeasure with the package from both the conservative and moderate corners of the GOP.

In related developments, House appropriators have continued to make progress on the annual funding bills for fiscal year 2018.  To date, all 12 spending measures have been approved at the full committee level.  Although House Republican leaders were exploring the possibility of bundling the bills into a massive omnibus appropriations package, a recent whip count revealed a lack of support for such a move.  In the meantime, plans have been made to combine four bills – the fiscal year 2018 Defense, Military Construction-Veterans Affairs, Legislative Branch, and Energy & Water spending legislation – into a single “minibus.”

Across Capitol Hill, only the Military Construction-Veterans Affairs bill and Energy & Water spending measure are active.  Both bills were scheduled to go before the full Senate Appropriations Committee on Thursday, July 20.