Next Steps in Congressional Budget Process

The BCA, Sequester and More

CongressThe House is expected to continue its appropriations work upon its return this week from the Memorial Day recess. The House Appropriations Committee is expected to mark up its FY13 THUD bill in subcommittee early in the summer, but it is unclear if or when the House would move this bill or the FY13 Agriculture bill through committee and to the floor. The House is expected to consider three appropriations bills upon its return from recess.

The House and Senate are not expected to negotiate final spending bills prior to the start of the fiscal year on October 1, 2012. Instead, they are expected to pass a Continuing Resolution (CR) to fund the government at FY12 spending levels at least past the November 2012 election. Postponing the final stage of appropriations work would allow lawmakers to avoid a difficult partisan fight on cutting discretionary funding in FY13 and dealing with the sequester starting in 2013 prior to facing the voters.

The House’s 302(b) allocations to its appropriations subcommittees are much lower than the Senate’s allocations, which means the House and Senate would have to negotiate a compromise for their appropriations bills. President Obama has said he will not sign into law any appropriations bills that provide funding below the levels agreed to in the Budget Control Act of 2011 (BCA.)

Congress is expected to delay until after the election substantive discussion of the BCA-provided sequester, which takes effect in January 2013. It would make across-the-board cuts to all discretionary-funded programs, which are programs under the purview of the Appropriations Committees. Both Republicans and Democrats want to replace the sequester with some other means of deficit reduction.

But Republicans want to exempt defense spending from the cuts, while many Democrats want to prevent deep cuts to non-defense discretionary spending programs, including HUD’s programs. Exempting defense spending could result in even deeper cuts to non-defense domestic programs than would be the case under the sequester. Alternative proposals to sequestration are being developed, but any proposal will have to gain bipartisan support. The outcome of the election will influence all these decisions.