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Federal Government

Posted on: June 28, 2019

Summer 2019 Federal Policy Update

Congress has a lot to do before the next Federal Fiscal Year begins on October 1. If you remember January 2013’s ‘fiscal cliff’ crisis, this should sound familiar.

The debt ceiling will need to be raised. Defense and domestic discretionary spending caps will, also, need to be lifted. Twelve appropriations bill, needed to keep government operations active, will need to be passed and signed by the chief executive. And Congress traditionally goes on recess during July and August.

Fiscal Year Appropriations. Beginning the appropriations process, the House plans to pass all 12 bills by the end of this month. This process began with debates last week on proposed amendments to a five-bill package that includes about $990 billion in discretionary spending for fiscal 2020. This package includes two of the biggest spending bills, Defense and Labor-HHS-Education, as well as operational funding for Energy-Water programs, the Department of State-Foreign Operations, and the Legislative Branch. The remaining seven bills will be similarly combined into two or three other packages to expedite and improve the likelihood of passage.

Leadership knows that the Senate will not pass the bills, in the form they are approved by the House. But, the passage of the 12 appropriations bills by the House would allow leadership and appropriators to begin negotiations with their counterparts in the Senate on compromise spending plans.

Discretionary Spending Caps. Action on the appropriations bills assumes that agreement will be reached on raising discretionary spending caps. Failure to do so would result in automatic cuts in federal spending, due to sequestration mandates. According to the Budget Control Act of 2011, the discretionary spending cap for the Federal government’s upcoming fiscal year is $1.120 trillion. Actual caps have been modified since 2013, and the current fiscal year caps are $1.244 trillion. Without an agreement to raise the caps, defense and domestic programs would be cut, automatically, by almost $125 billion, across the board.

Debt Ceiling. By October or early November, fiscal analysts predict that the Treasury will have exhausted its authority to borrow in order to keep the federal government operating, potentially forcing the federal government to default on its debt. The Treasury has been using so-called “extraordinary measures” to extend the federal government’s borrowing authority since it hit the debt limit in early March. U.S. Treasury Secretary Steven Mnuchin predicted that Congress might have to act by “late summer.” Congressional Leadership and White House officials are considering combining the debt ceiling issue with a potential budget caps agreement so that Congress could approve both simultaneously.

We will keep you posted.

Contact: Jon Moran, Senior Legislative Analyst, jmoran@njlm.org, 609-695-3481, x121.