Washington is facing the threat of three major fiscal disasters in the coming months — but a government shutdown after March 27 might be the least likely of them to occur.
House and Senate appropriators have been working quietly behind the scenes for months to craft 12 compromise annual spending bills to avoid a shutdown that is slated to occur when the current six-month stopgap spending bill expires.
By contrast, no work has been started to craft bills to avoid a debt default or sudden across-the-board sequester cut in government defense and non-defense spending looming at the end of February.
House Appropriations Committee Chairman Hal Rogers (R-Ky.) said Friday that appropriators are about three-quarters done and negotiations on differences continue.
“We are staying in touch with them,” he said.
“We’ve got most of it worked out,” said Rep. Mike Simpson (R-Idaho), the chairman of the Appropriations Interior and Environment subcommittee.
A Senate Democratic aide concurred that work is far along and will pick up again when the Senate returns Jan 22. Appropriators had been striving to attach an omnibus to the year-end "fiscal cliff" deal, and new Senate Appropriations Chairwoman Barbara Mikulski (D-Md.) is ready to continue the effort.
The negotiations mean that disputes over individual programs and policy riders — such as those on abortion and defunding Obama’s health reform — that have exacerbated government shutdown crises like that in April 2011 are being minimized.
Republicans, meanwhile, have made clear this week that they intend to use the need to raise the $16.4 trillion debt ceiling in the coming weeks to extract long-term spending cuts, such as on entitlements, from President Obama. This raises the prospect that the U.S. could default on its payment obligations, including its Treasury bond interest payments.
The New Year’s Eve fiscal-cliff deal did not fully turn off the $109 billion in automatic sequestration cuts to government agency budgets. A two-month delay was paid for by a combination of spending cuts and revenue increases.
Republicans have said they are done with tax increases, but Obama said the rest of the sequester must be replaced with a combination of cuts and taxes. This raises the possibility the sequester might still take effect.
Appropriators, at this point, are waiting to find out if leaders want to wrap their work into the two other fights, or if those fights involve further cuts to 2013 spending than the current top line.
“We have a lot of moving parts that need to be considered. This is one of the three big converging problems,” Rogers said. “Leadership is going to determine whether it's part of the larger game plan or not.”
The fiscal-cliff deal lowered the top-line spending number for 2013 by $4 billion and the top-line number for 2014 by $8 billion. These changes will somewhat complicate the remaining work appropriators face.
A sequester deal could involve further cuts to discretionary spending, but the GOP has been focusing much more on entitlements.
The House-passed budget for 2013 was another $15 billion lower in its top-line number.
The major battle is more likely to be over mandatory spending, a category that includes entitlements like Medicaid and food stamps and other authorized spending, such as on farm subsidies.
If that can be worked out, a giant bill wrapping up discretionary spending for 2013 can be put on the floor relatively quickly, appropriations aides say.