Thursday, May 16, 2024: Budget Battles Update: Setting Aside Previous Side Deals, House Republicans Proposed Fiscal Year 2025 Budget Cuts
Oh my gosh: The 2023 budget packages the Congress and the President agreed to in 2023 as to “Topline spending” (meaning the maximum amount the federal Executive Branch agencies could spend) during FY 2023 (the so-called “discretionary spending bills the Congress passes each year) but also previously passed for FY 2024 (the current Fiscal Year) and for FY 2025 (the upcoming federal Fiscal Year) is already blowing apart. Rather than to have previously settled the FY 2025 federal “Topline” spending levels for the federal Executive Branch agencies, Republicans and Democrats last week “ripped the band-aids off” the still open wounds from their recent budget battles and agreements for FY 2023, FY 2024, and FY 2025 by now signaling their intent to ignore their previous agreements for FY 2025.
Rather, Republicans and Democrats are now signaling their intent to “start over” on budget discussions for FY 2025. So, buckle your seatbelts for continued budget turbulence the Congress had previously announced would not occur until after the FY 2026 budget. UGH!
Specifically, the warring parties took up their cudgels and again precipitated budget battles. First, REPUBLICANS: House Appropriations Committee Chair Tom Cole (R-OK) previewed proposed budget allocations for Fiscal Year [(“FY”)] 2025, which had been developed using the caps previously outlined in the Fiscal Responsibility Act of 2023 [(“FRA”)].” (See our stories on the FRA here and here). In a statement, Congressman Cole said, ‘[t]he bills written by this Committee will adhere to [the] law set by the Fiscal Responsibility Act—with no side deals . . .” This means that House Republicans want to set aside parts of the two-year budget deal President Biden struck with them last year in exchange for raising the debt ceiling.
Cole outlined the following key takeaways:
- Defense will receive an increase of nearly $9 billion (in FY 2025) in his view.
- Homeland Security will be funded above the President’s Budget Request.
- Veterans Affairs – including veterans’ medical care and benefits – will be fully funded.
- Non-defense programs will be cut effectively by 6%, and those cuts would not be evenly distributed.
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- Some subcommittees, such as Labor-Health and Human Services-Education, Financial Services-General Government, and State-Foreign Operations, will receive significant cuts of 10-11%.
- Other subcommittees will have smaller non-defense cuts, reflecting Republican priorities across the bills.
That same day, House Appropriations Committee Ranking Member Congresswoman Rosa DeLauro (D-CT) then issued a statement decrying the proposed Republican cuts. She called upon Republicans to rethink their proposal and “[i]ncrease nondefense and defense funding levels by at least one percent as agreed to almost a year ago today.” The next day (Friday), taking a cue from Taylor Swift’s latest album, “The Tortured Poets Department,” Representative DeLauro followed up with a “Fact Sheet” referring to herself as the “Chair of The Tortured Topline Department.”
What Did Last Year’s Debt Ceiling Deal Entail?
The nonpartisan Center on Budget and Policy Priorities (“CBPP”) explained last year’s debt ceiling deal in part as follows:
“Appropriations for 2024 and 2025 are governed by agreements reached in May 2023 in negotiations among congressional leaders and the Biden Administration to raise the debt ceiling. Many, but not all, of those agreements were codified in the Fiscal Responsibility Act of 2023. Among other things, the FRA set legally binding caps on both defense and non-defense appropriations, similar to the caps in effect from 2012 through 2021 under the Budget Control Act of 2011.
The negotiators announced that they had agreed to allow defense funding to increase by 3.3 percent in 2024 and then by 1 percent in 2025, but to hold non-defense funding in 2024 roughly level with 2023 and follow that with a 1 percent increase in 2025.
For defense, implementation of the agreement is straightforward, as the FRA caps were set to allow the intended increases. For non-defense, however, the agreement is more complex because the FRA non-defense caps for 2024 and 2025 were set substantially below the announced agreed-on funding levels. For example, the 2024 cap is about 9 percent below the enacted 2023 level (not adjusting for inflation).
To raise funding back up to the agreed-on levels for 2024 and 2025, the parties to the FRA negotiations relied on what became known as “side-deal” adjustments. These were agreements to include provisions in the appropriations bills that would create additional room under the cap, thus allowing the cap to remain at the lower level set by the law while providing higher funding. Some of these agreed-on adjustments had also been included in the 2023 appropriations bills (prior to the FRA), but the side agreements for 2024 and 2025 increased the funding that is freed up under the caps.” [citations omitted]
Senate Battle: Defense and Nondefense Parity
Second, DEMOCRATS: Meanwhile, in the Senate, Democrats are insisting that nondefense spending programs receive spending parity with defense programs. Predictably, Republicans have pushed back, asserting that defense programs take priority. (See here and here for more details.)
Additional Background
Currently, the federal budget is funded through the end of September 2024. See our story here on the final FY 2024 budget. Our story on President Biden’s FY budget request is here.
Note: Going forward, the WIR does not intend to report on what we expect will be frequent ongoing partisan back-and-forth budget proposals and counter-proposals in the next (perhaps) 12-months. Rather, we will report when Congress passes the 12 final discretionary budgets for the federal Executive Branch agencies for FY 2025. Depending on the November 4, 2024 Congressional and Presidential elections, the federal FY 2025 budget (which commences October 1, 2024) might not be passed until mid-2025…half-way or so through the coming Fiscal Year FY 2025.