The Backup Budget

A bizarre ritual is going on in Congress in advance of fiscal year (FY) 2012. Appropriators are doing their job, writing and passing bills setting the year’s discretionary spending levels, but their efforts might be wasted. With the budget becoming tightly entwined with the looming debt ceiling deadline, all of the recent appropriations activity is probably for naught.

The Republican-controlled House has so far passed or is debating nine out of the twelve yearly appropriations bills, a fast pace considering the relative inaction that has characterized recent appropriations cycles. What is stunning is how quickly dramatic cuts are speeding through the House. All but one of the nine appropriations bills are below the relevant FY 2011 levels, which were in turn a reduction from the FY 2010 budget numbers.

In formulating these bills, the House Appropriations subcommittees have largely stuck to the so-called "302(b)" allocations set forth earlier in 2011 in the House’s budget resolution, authored by House Budget Committee Chairman Paul Ryan (R-WI). The resolution, which creates budget caps for Congress, gained notoriety for its drastic cuts to Medicare, but it included spending cuts across the board.

For the appropriations bills, the Ryan budget essentially calls for a continuation of the previous year’s budget cuts. The FY 2011 budget agreement cut base discretionary funding by about $40 billion, from $1.089 trillion to $1.049 trillion (how much the agreement cut actual spending, or outlays, is a whole other discussion). The Ryan budget continues this trend, setting discretionary spending at $1.019 trillion, $30 billion below FY 2011 levels.

So far, the amount of spending approved by House appropriations subcommittees is a bit higher than the corresponding FY 2011 levels ($791.9 billion now versus $788.8 billion in FY 2011), but more cuts are coming. The House has already passed one bill with spending increases and has yet to consider three bills with massive cuts.

The only area to escape cuts is Defense. The Defense appropriations bill is by far the largest of the spending bills, representing about half of total discretionary spending. Despite the rhetoric about cuts being unavoidable, Defense appropriations have been increased by $17 billion – three times larger than FY 2011’s increase.

The House has yet to consider the three bills with the largest proposed cuts: State; Transportation and Housing and Urban Development; and Labor, Health and Human Services, and Education. These three bills account for $34.5 billion worth of cuts in the Ryan budget, with State being cut by 18 percent from last year, Labor 12 percent, and Health 14 percent.

The cuts to these bills more than offset the Defense bill increases. The bottom line: Ryan’s budget slashes health, labor, and State Department budgets while increasing defense spending.

On the other side of the Hill, the Senate is just beginning its appropriations process, despite not having a budget resolution to guide it (the House doesn’t have an actual budget resolution either, since both houses must pass it before the resolution is official; instead, the House just made up its own 302(b) allocations based on the budget resolution that only passed the House). Two weeks ago, the full Senate Appropriations Committee passed its first appropriations bill of the fiscal year, the Military Construction-Veterans Affairs bill. Commonly considered the least controversial of the appropriations bills, both the House and the Senate versions of the Military Construction bill agree on an overall spending level – $617 million below FY 2011 levels, a clear sign of the Senate’s endorsement of austerity rhetoric.

At its current rate, Congress could conceivably have two or three appropriations bills completed by the start of the new fiscal year on Oct. 1. While that may not sound impressive, Congress has not approved three appropriations bills on time for seven years.

But all this appropriations activity could be rendered moot by the debt ceiling negotiations. It looks like congressional Republicans have succeeded in forcing the president and Senate Democrats into agreeing to significant budget cuts as part of the debt ceiling negotiations, and any budget agreement that comes from these negotiations is likely to upset the appropriations being made in both houses.

Even the relatively modest budget negotiations led by Vice President Joe Biden had settled on about $1 trillion worth of discretionary cuts over a ten-year period. That would translate into cutting some $100 billion each year, more than three times the budget cuts the House is currently working on (the cuts will be even deeper if reductions in defense spending are not an integral part of the final agreement). Thus, a spending agreement that comes out of the debt negotiations will likely mean that the current appropriations battles in Congress are just the beginning of cutting back the federal budget.

FY 2012 Appropriations Status (in billions)
Subcommittee FY 2010 Enacted FY 2011 Enacted FY 2012 House
FY 2012 Senate
Agriculture $23.3 $19.9 $17.3 N/A
Commerce-Justice-Science $64.3 $53.3 $50.2 N/A
Defense $508.1 $513.0 $530.0 N/A
Energy & Water $33.5 $31.7 $30.6 N/A
Financial Services $24.2 $22.0 $19.9 N/A
Homeland Security $42.5 $41.7 $40.6 N/A
Interior & Environment $32.2 $29.6 $27.4 N/A
Labor-HHS-Education $163.6 $157.4 $139.2 N/A
Legislative Branch $4.7 $4.5 $4.3 N/A
Military Construction-VA $76.6 $73.2 $72.5 $72.5
State-Foreign Operations $48.8 $48.2 $39.6 N/A
Transportation-HUD $67.9 $55.4 $47.7 N/A
Total $1,089.7 $1,049.8 $1,019.4 N/A
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