Sequestration – Where are We Now?

Quietly, earlier this month, while most of America was sitting by the pool or otherwise enjoying lemonade and barbeque, the Congressional Budget Office (CBO) issued a statutorily required report regarding the “caps on discretionary budget authority in effect for each fiscal year through 2021.”  Said in plain English:  CBO provided an update on federal sequestration.  Remember sequestration?  The Budget Control Act of 2011 (P.L. 112-25) imposed limits on discretionary (non-entitlement) spending through 2021 and included what was supposed to be a fail-safe trigger provision to force Members of Congress serving on the “Supercommittee” to identify an estimated $1.5 trillion in cuts over a ten year period.  The sequestration – automatic across-the-board cuts to discretionary defense and non-defense spending and also some entitlement programs – was to occur only if the Supercommittee failed.  Alas, as we know, the Supercommittee failed, and after a brief delay, sequestration became a budgetary reality in March 2013.  However, it is important to remember that enactment of the Bipartisan Budget Act in December 2013 reset the spending caps for both defense and non-defense discretionary spending and provided discretionary spending “sequester relief” for FY 2014 and FY 2015.  Sequestration remains in effect for some mandatory spending from FY 2014 through FY 2024.

CBO’s recent report – a brief four pages signed by CBO Director Douglas Elmendorf – provides a useful chart outlining the budget caps for FY 2015 (which begins October 1, 2014) through FY 2021.  The most important take-away from the report is that “a further sequestration (or cancellation of budgetary resources) will not be required as a result of appropriations actions this year.”  This basically means Congress has been appropriating funds within the preset limits so sequestration is not needed to bring spending in line with the statutory caps.  And, frankly we all knew this would be so – the Bipartisan Budget Act set forth the path to ensure that Congress lived within its means and would not trigger sequestration, and in turn, avoid the wrath of special interests, advocates, constituents, and others interested in protecting federal spending on their respective priority program, project, initiative, agency, or department.

Meanwhile, less than 35 days from the start of the next fiscal year, the FY 2015 appropriations “regular order” process limps along.  Each year, prior to October 1st, the House and Senate are supposed to pass twelve individual funding bills and then work to reconcile the differences to create 12 uniform measures to be sent to the President for enactment.  Taken together, the dozen funding bills support all the operations of the federal government.  If the Congress fails to pass these bills, the government shuts down (as it did last fall, remember that?).  To date, eight of the 12 bills have seen both House and Senate Appropriations Committee level action (five have had House floor Roll Call votes), three have been considered only by the House Appropriations Committee, and one – the always controversial Labor-Health and Human Services-Education bill – has been moved by the Senate Appropriations Committee.

There are very few legislative work days in September before Members of Congress head home to run for re-election.  As such, given election year politics coupled with the terrible taste left in the mouths of elected officials after last year’s government shutdown, it is increasingly likely the coming fiscal year will start off with a Continuing Resolution (CR), a stop-gap measure to keep the government operating.  However, in the event Congress passes and the President signs some but not all of the 12 spending bills before October 1st, there could be a partial shutdown, or a CR would need to be enacted for the remaining agencies and departments covered by the yet-to-be-finalized appropriations measures.  With CBO verifying that the budget caps are not being violated and the threat of sequestration at bay, there is no real imperative for Congress to tackle the pending appropriations bills or other fiscal policy until after the November election – or possibly not until the start of the 114th Congress.  Yet, with the advent of FY 2016 on October 1, 2015, the automatic reductions required by sequestration are scheduled to resume, unless Congress again takes action to kick the can down the road.  In recent years, major budgetary deals have been struck in non-election years – Budget Control Act of 2011 and the Bipartisan Budget Act of 2013.  What will 2015 bring?

Ilisa Halpern Paul, MPP, is President of the District Policy Group at Drinker Biddle, a bipartisan, boutique, full-service advocacy, public policy, and government relations group.

Morning Consult