Federal Government Open, Underlying Issues Unresolved

October 21, 2013

With the latest fiscal showdown over, the dust is beginning to settle in Washington and the federal government is returning to normal operations.  Very late last Wednesday night, lawmakers approved and the President signed a Senate-formulated deal to fund federal agencies and avoid default. On an 81-18 vote, the Senate passed the package that funds the government at Fiscal Year 2013 levels through January 15 and suspends the debt ceiling until February 7; the House followed suit, passing the measure 285-144. Unlike the Senate, where the deal had support from a majority of members from each party, approval in the House required significant support from Democrats, since a majority of congressional Republicans voted against.

Senate

 

Yeas

Nays

Did Not Vote

Democrats

52

 

 

Republicans

27

18

1

Independents

2

 

 

Total

81

18

 

 

House

 

Yeas

Nays

Did Not Vote

Democrats

198

 

2

Republicans

87

144

1

Total

285

144

 

With federal employees returning to work last Thursday, we expect science-sponsoring agencies will work to return to normal operations quickly and will formalize plans to address how they will make up for missed grant submission dates, missed review panels and other previously scheduled activities. The Office of Sponsored Programs maintains a blog with all of the latest shutdown-related guidance from relevant agencies, and will continue to update their site as information is made available.

Looking Ahead

While the agreement is good news in the near-term, the deal merely delays decisions on funding for the current fiscal year, and sets a new debt ceiling deadline early in the new year:

Funding at FY13 sequestration levelexpires:            January 15, 2014

Second year of sequestration cuts take effect:         January 15

Debt limit suspensionexpires:                                   February 7

While Treasury will have the ability to use extraordinary measures to delay a breach of the debt ceiling beyond February, the Congress will need to enact legislation to continue funding for the government beyond mid-January. In an attempt to avoid a repeat of the shutdown scenario, last week’s agreement creates a conference committee for Senate Democrats and House Republicans to reconcile their competing FY14 budgets, which are $91 billion apart in FY14 discretionary funding levels. That committee has a deadline of December 13 to come to agreement. Unlike the “Super Committee” established in 2011 to resolve structural budget disagreements or face sequestration, there is no penalty if the conference committee does not produce a compromise by that date. Given this dynamic, the short timeline in which to work, and still simmering fiscal and policy disagreements between the parties as well as within the House Republican caucus, many are pessimistic that this offers a recipe for success in forging any grand bargain involving significant changes to spending and revenues. However, there is some hope for common ground on more moderate goals such as modifying the sequester, which is scheduled to cut discretionary spending a further $20 billion in FY14 – mainly on the defense side of the federal ledger.

Even a small agreement around FY14 funding levels would offer the possibility of an improved outlook for agency funding. Year-after-year funding through continuing resolutions hamstrings agencies’ abilities to respond to today’s new challenges and priorities as well as their ability to respond to lower levels of funding caused both by changes in the overall funding picture and by sequester. A small agreement would also provide some opportunity to capitalize on the seeming growth in the political support for research funding. For example, Senate appropriators have advanced a bill that would provide NSF with a nearly 10 percent increase over last year’s estimated funding under the sequester, while the House’s committee-approved bill proposes increasing the NSF budget by over three percent. Without any agreement in the budget conference however, Congress would be likely to approve yet another year-long, flat-funded continuing resolution. 

Beyond budget policies, it is likely there will be continuing political fallout from this recent budget showdown. In a hopeful sign, a strong majority of the Senate seems to have a new commitment to consensus and finding middle of the road policies that both parties can support. The situation in the House seems more muddled, with a majority that remains deeply divided and a leadership that continues to struggle to manage the divisive view of its conference. Politics will also increasingly dominate next year as it is an election year for all members of the House and one-third of the Senate. 

Contact

Please do be in touch with Suzanne Day or Jon Groteboer in the Washington office with any questions or concerns: (202) 863-1292.