Federal Update: Temporary CR Expected as Speaker’s Resignation Dampens Shutdown Threat

September 29, 2015

As the end of the fiscal year approaches, Congress is moving forward on a short-term measure to continue government operations into December.  Congress has not enacted any of its 12 annual funding bills due to year-long disagreements over the total level of spending and myriad policy issues. Last week Senate Majority Leader Mitch McConnell began to pave the way for a short-term Continuing Resolution (CR) funding the government at current year levels until December 11th.  The legislation avoids a potential shutdown and provides leaders with additional time to negotiate some path forward on FY16 funding as well as potentially other issues, including the fate of sequester caps and the debt limit.  Although the prospects appeared dim for this legislation in the House, the surprise announcement from Speaker John Boehner (R-OH) that he will leave Congress at the end of October has cleared the way for this legislation. 

Agreement on the CR had proven difficult prior to Boehner’s announcement because as many as 50 House Republicans demanded a provision to defund Planned Parenthood be paired with the FY16 bill. The White House and congressional Democrats, on the other hand, made clear they would only accept a CR that did not contain controversial policy riders. Boehner’s announcement frees him to take the clean CR to the House floor and depend on Democratic votes for passage, if need be, without fear of a subsequent challenge to his speakership from conservatives in his own conference. It is expected the Senate will complete action late Tuesday and the House before October 1st.

Once the CR is signed into law, as expected, lawmakers will still face a daunting to-do list for the rest of the year. For the next several weeks, it is likely that the House will be consumed in the fall-out from Boehner’s resignation, including the election of a new Speaker and leadership team (which is expected within two weeks), as well as further efforts to define the direction of the Republican caucus in the House. Beyond the CR, Speaker Boehner may also bring forward other critical legislation through the House before his departure. His intentions and authority remain somewhat unclear at this point, but some suggest he may attempt to push through the long-stalled highway bill, the reauthorization of the Export-Import Bank and potentially an increase in the federal debt limit. These moves could also influence the tenor of the Republican caucus as new leadership takes the reins.  

Likely left to the next leader will be possible negotiations on a FY16 budget agreement to raise the sequester-level caps on non-defense discretionary spending, which return in full force in FY16 with the expiration of the two year Ryan-Murray deal. Since sequester was first imposed in FY13, limits on spending have generally been equally divided between defense and non-defense. However, the Republican budget adopted earlier this year provided about $89 billion in off-budget funds above the Pentagon’s sequester level base without any increases for non-defense accounts. The White House and Senate Democrats have since insisted that increases are needed on both sides of the ledger, and that any spending above the sequester caps needs to be equally divided between defense and non-defense.

NIH has emerged as a key FY16 priority for members on both sides of the aisle. Even within the tight sequester caps, House and Senate appropriators have provided increases of about $1 billion and $2 billion, respectively, for the NIH. Unfortunately, because those appropriations bills were written within the flat congressional budget that maintains the sequester, those increases come at the expense of other important line items, like K-12, international education and foreign language programs at the Department of Education, and the Agency for Healthcare Research and Quality at HHS. Raising the caps on non-defense could allow for greater resources at agencies like NIH and NSF without requiring cuts to other critical programs. That said, this week’s House developments are shifting the landscape and may upend earlier progress building toward an upward adjustment in the caps. 

In addition to working toward some kind of endgame for FY16 by December 11th, other items of importance to the university yet to be addressed include tax bills extending charitable giving and R&D incentives, as well as legislation extending certain Higher Education Act programs. The broader legislative to-do list includes the federal debt limit, the highway bill, reauthorization measures on defense, the Export-Import Bank, the FAA, and more. As the Congress often does, it may be that many of these items, including FY16 funding, could be rolled up into one large end-of-the-year bills.

No doubt the new Speaker will face daunting challenges, including navigating a restive Republican conference, and may determine that budget negotiations with a goal of providing relief from sequester are not politically feasible and may look for other options. That could lead to a year-long CR, which would not just lock in sequester, but actually cut non-defense programs slightly due to programs with advanced appropriations, like veteran’s medical care, that would push spending above the caps and require across-the-board offsets from others accounts. And even a year-long CR may not be free of the Planned Parenthood debate. In addition, many of the other issues confronting Congress have fiscal implications and are likely to raise the ire of Tea Party conservatives, leaving little room for negotiations.  So while in the immediate term funding for the government should continue uninterrupted, a federal shutdown remains a possibility with the expiration of the CR on December 11th.

Contact

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