Budget Challenges Front And Center For New Administration

Feruary 24, 2017

With the new administration now in place at one end of Pennsylvania Avenue and a new Congress in place at the other end, the top questions on most lawmaker's minds are what will the Trump administration's 2018 budget proposal look like, and what is the way ahead?

These questions comes in a political environment that has one party firmly in control of two of the three branches of government-and, given the pending Supreme Court nomination of Judge Neil Gorsuch, the potential for a political stand-off as to the status of the third.

The new administration has said little after the recent swearing in of the new Office of Management and Budget Director, former South Carolina Rep. Mick Mulvaney, other than the forthcoming budget proposal could contain major cuts for federal agencies. President Trump himself has stated he is committed to boost spending for the Defense Department, but that would disproportionately shift cuts onto non-defense discretionary spending under current law. 

The Trump administration this week announced plans to release a proposed budget outline sometime in mid-March for 2018; there is still no approved budget for FY 2017.

Several key pieces of legislation and critical dates directly affecting future budget and spending decisions, creating uncertainty. The government is currently operating under a continuing resolution, passed in December 2016, that will expire April 28th. The decision on the debt limit will have to be debated and voted on by Congress around the same time period, and the threat of the return in 2018 of the mandatory budget cuts under sequestration looms large. 

The Bipartisan Budget Acts of 2013 and 2015 mitigated the automatic spending caps for FY 2015 and FY 2016-however, the original sequestration cuts established by the Budget Control Act of 2011 will continue through 2021, continuing to place defense and national security spending at risk unless something changes.

Given this political and fiscal environment, going forward, Congress is faced with a few options concerning the Budget Control Act of 2011:

  • Congress can vote to repeal sequestration, lifting budget caps and returning to regular order in terms of budget and fiscal considerations;
  • members can come up with another budget deal and find a way to raise the caps; or
  • they can leave the caps in place.

Any option outlined includes the need to fund the government beyond April.

Which will come first? Solving for the remainder of this fiscal year? Or a peek at FY 2018 via a sequence of a partial budget and whatever might follow? We watch the newswires every day to try and answer those very questions, and the questions to follow concerning support to those who serve, have served, and their families.

 

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