Sneak Preview: Congress Hears Concerns About Spending Caps

Jerry Ashworth
March 1, 2019 at 07:25:41 ET
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(The following was excerpted from a recent article in the Federal Grants Management Handbook.) As Congress prepares to debate federal fiscal year (FY) 2020 appropriations, it must consider raising the caps imposed on nondefense discretionary (NDD) spending to set new top-line funding levels, Rep. John Yarmuth (D-Ky.), chairman of the House Budget Committee, and a panel of witnesses told a recent committee hearing.

“Simply put, if we do not act, programs that are vital to our economic and national security will face devastating cuts,” Yarmouth stated in his opening remarks.

When Congress passed the Budget Control Act of 2011 (Pub. L. 112-25), it aimed to address the federal budget deficit through automatic cuts across all federal agencies for each of nine federal fiscal years (FYs) from 2013-2021, totaling $1.2 trillion. The cuts were divided between the Department of Defense spending at about $500 billion and other discretionary programs across federal agencies at about $700 billion over the fiscal years. Federal agency budgets are further divided between nondiscretionary (or mandatory) and discretionary funding. The nondiscretionary funding includes required obligations like payroll taxes for federal employees. The discretionary funding includes program support, grants, contracts and other costs that some consider ancillary and others consider critical areas of national need.

“These caps were never supposed to take effect,” Yarmuth noted. “They were deliberately set at destructively low levels to force an agreement on a comprehensive deficit reduction plan.”

In the years since, Congress has issued the Bipartisan Budget Act of 2013 (Pub. L. 113-67), which established discretionary spending levels and enforcement provisions for FYs 2014-2015. Designed to mitigate the effects of the spending caps, it set overall discretionary spending at a combined $63 billion above the caps for these fiscal years. In 2015, Congress passed the Bipartisan Budget Act of 2015 (Pub. L. 114-74), which established discretionary spending levels for FYs 2016 and 2017. The act again revised the cap level and increased spending by a combined $80 billion over these years. Likewise, when Congress passed the Bipartisan Budget Act of 2018 (Pub. L. 115-123), it increased the defense and nondefense caps by $80 billion and $63 billion, respectively, for FY 2018, and $85 billion and $67 billion, respectively, for FY 2019.

Yarmuth warned that the FY 2020 budget also must address the spending caps to ensure they are at “realistic levels.” “Any [budget] agreement we reach must also provide for imperative and required expenditures in 2020, including the decennial census and veterans’ health care,” he added. “These programs together require billions of dollars more of discretionary resources, potentially crowding out other important programs.”

(The full version of this story has now been made available to all for a limited time here.)

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