Federal Budget Talks Intensify as Parties Diverge on Spending Priorities

Congress faces pressure to reach a budget deal before Christmas
December 13, 2017 Updated: December 16, 2017    

WASHINGTON—With only a couple of weeks left before the end of the year, pressure is mounting for lawmakers to strike a budget deal. After passing a two-week spending patch on Dec. 8, Congress has little time to come up with a permanent solution to keep the government running.

The last budget deal, signed two years ago by President Barack Obama, ended in September, paving the way for automatic spending caps to take effect. In order to increase spending, congressional leaders need to reach a deal to raise budget caps and avoid a government shutdown.

President Donald Trump signed a two-week funding bill on Dec. 8. The short-term measure, known as a continuing resolution (CR), maintains current funding for federal operations and keeps the government open through Dec. 22. The CR has allowed extra time for House and Senate leaders to continue negotiating on defense and non-defense discretionary spending levels for the 2018 fiscal year.

“There are a lot of little disagreements,” said Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget (CRFB), a bipartisan organization.

“These include ‘minor’ issues, like funding Obamacare cost-sharing subsidies and a solution for the ‘Dreamers.’

“But the main disagreement is over the budget numbers. Both parties agree that they want to spend more than what the current law allows. So they need to negotiate how to do that.”

Now Congress must finish the job by eliminating the defense sequester and passing a clean appropriations bill.
— President Donald Trump

Republicans want to boost military spending, while providing a lower increase in non-defense accounts. Democrats, by contrast, demand parity between defense and nondefense discretionary spending.

According to CRFB, federal debt relative to gross domestic product (GDP) has grown dramatically and is now higher than at any other time apart from 1946, just after World War II.

According to Goldwein, the tax reform bill and spending increases will raise the debt further, and hence, “any increases in discretionary spending should be fully paid for.”

Defense Spending

Trump signed a $700 billion defense bill, the National Defense Authorization Act (NDAA) for fiscal 2018 on Dec. 12. Both houses of Congress passed the bill with strong bipartisan support in November.

The 2018 NDAA would authorize a nearly $626 billion base budget, which exceeds the $549 billion spending cap that’s currently in place under the 2011 Budget Control Act.

“The NDAA increases the size of the American Armed Forces for the first time in seven years,” Trump said at the signing ceremony at the White House on Dec. 12.

“It provides our military service members with their largest pay increase in eight years,” he added.

In addition to the base budget, the defense bill authorizes roughly $66 billion for special war funding, also known as Overseas Contingency Operations (OCO) funding. The OCO fund is used in military operations against the ISIS terrorist group.

“It authorizes funding for our continued campaign to obliterate ISIS,” Trump said.  “We’ve won in Syria, we’ve won in Iraq. But they spread to other areas, and we’re getting them as fast as they spread.”

To meet the defense-spending target, Congress needs a budget deal to lift the statutory cap.

“Now Congress must finish the job by eliminating the defense sequester and passing a clean appropriations bill,” Trump said. “We need our military. It’s got to be perfecto.”

Defense has suffered a disproportionate share of spending cuts in previous years, as a result of automatic cuts to federal government spending, known as sequestration. About half of these cuts hit the defense budget, according to experts.

House Minority Leader Rep. Nancy Pelosi (D-CA) and House Speaker Paul Ryan (R-WI) attend a meeting with U.S. President Donald Trump and other congressional leadership in the Oval Office of the White House in Washington, DC. on Dec. 7, 2017 (Olivier Douliery – Pool/Getty Images)

Democrats Push for Parity

Trump urged Democrats in Congress to drop their government shutdown threats.

According to Democratic House Minority Leader Nancy Pelosi, a deal can be reached if the budget protects the principle of parity and increases defense and nondefense funding by equal amounts.

“We need resources for a strong national defense, but we also need a strong domestic budget,” Pelosi said during a press conference on Capitol Hill on Dec 7.

Pelosi said the domestic budget included spending for Homeland Security, anti-terrorism activities of the Justice Department, Veterans Affairs, and the State Department. “That’s a third of the domestic budget, but is a security function,” she said.

According to the Heritage Foundation, a conservative think tank, there is a legitimate need to prioritize military spending, but it should not come in exchange for more deficit spending.

“The need for parity is a myth created to justify greater spending,” wrote Justin Bogie, a senior policy analyst at The Heritage Foundation, in a report.

“It wrongly assumes that there is a parity of importance between government programs.”

Demand for parity is one of the sticking points in negotiations, since Trump wants to offset the increase in defense spending by cuts to domestic programs.

Solution for ‘Dreamers’

Democrats are pushing for a legislative solution to the Deferred Action for Childhood Arrivals (DACA) program before the end of the year, which is another hurdle in the budget talks.

After Congress failed to pass the DREAM Act in 2010, Obama introduced DACA through an executive order in 2012 as a temporary measure to give people renewable, two-year work authorization and deportation immunity. It involved nearly 800,000 individuals—referred to as Dreamers—who had entered the United States illegally as children.

Democrats are demanding a solution for Dreamers as a precondition for supporting a budget deal.

“We will not leave here without a DACA fix,” Pelosi said.

The White House, however, wants to keep DACA and immigration talks out of the budget deal.

In return for granting some legal status to the DACA recipients, Trump earlier outlined his priorities for border security and immigration reform.

The president “wants to make sure that we have responsible immigration reform, including a border wall and other things that we’ve laid out in those priorities and those principles,” said White House press secretary Sarah Sanders on Dec. 7.

Reaching a Deal

Congress has a very tight window, with only a week left to resolve the issues and reach a deal before the Dec. 22 deadline.

Meanwhile, Republicans are grappling with reconciling differences between the House and Senate tax plans. They want to send a tax reform bill to the president’s desk by Christmas.

Despite mounting pressure, Goldwein is confident that Congress will eventually come up with a solution.

“I don’t think they are going to shut down the government,” he said.

The spending bill will need 60 votes to pass the Senate, and Republicans will soon hold only 51 seats, after Democrat Doug Jones, who just won the special election in Alabama for the seat formerly held by Jeff Sessions, is seated after the first of the year.

If Congress fails to meet the deadline, lawmakers can avoid a shutdown with another short-term spending bill.

“They can keep kicking the can down the road as much as they want,” Goldwein said.