GOP faces critical month for budget

When the Republican-controlled Congress returns to Washington this week, it will face a political and procedural gordian knot to advance its agenda, the heart of which centers around the budget.

Congress has just three legislative weeks before the August recess and one month after that before an impending government shutdown and debt ceiling breach — not to mention the small matters of healthcare and tax reform, which are all tied in some way to the budget.

“There are a lot of moving parts,” said Brookings Institution budget expert Molly Reynolds. 

{mosads}To begin with, neither the House nor the Senate’s budget committees have unveiled their budgets, which set the spending levels for the next fiscal year.

The problem is division within the Republican caucus, which is being pulled in opposing directions by defense hawks, deficit hawks and moderates. 

The House Budget Committee, which has twice delayed marking up its resolution, had agreed on spending $621 billion on defense and $511 billion on other areas. Both totals were higher than Trump’s proposed caps of $603 billion for defense and $462 billion for nondefense.

To pay for some of those higher spending levels, the committee would cut $150 billion in mandatory spending over the next decade. But even as moderate Republicans balk at those cuts, the conservative House Freedom Caucus says they don’t go far enough. The Freedom Caucus wants $200 billion in cuts — mostly from welfare and anti-poverty programs.

“The Republicans just don’t quite agree on what they want to do,” said Reynolds. “They don’t agree on how much they want to spend, and they don’t agree on what they want the reconciliation instructions to look like, so until they resolves some of those issues they won’t get to the part where they start negotiating with the Democrats.”

Republicans don’t need Democratic support to pass a budget resolution, which can be approved on a majority vote and cannot be filibustered.

But they will need eight Democratic senators to overcome a filibuster when it comes to passing spending bills or a continuing resolution necessary to keep the government from shutting down in October. 

Because appropriators don’t have a budget, the best they can do right now is to guess at what the spending authority will be for government agencies.

The situation is further complicated by GOP plans to repeal and replace ObamaCare and pass tax reform through special budget reconciliation rules that would allow major legislation to avoid a Senate filibuster.

Republicans are using the 2017 budget reconciliation for ObamaCare repeal, and plan on using the 2018 reconciliation to pass tax reform.

That means that the healthcare debate has to end before the House and Senate finalize their coordinated budget resolutions, which has to happen before the tax reform process can kick off. 

“I think from the beginning it seemed optimistic that we were going to see regular order pursued this year given the tight schedule and how much of the legislative schedule is being consumed by healthcare and tax reform,” said Romina Boccia, a budget expert at the Heritage Foundation.

The Senate’s continuing struggle to complete work on healthcare threatens to push everything back.

“The calendar is the most precious resource Congress has,” said Reynolds.  “The longer they continue to work on healthcare reform, the less time they have to spend on those other things.”

If GOP lawmakers fail to pass a healthcare bill and the tax cuts associated with it, they may want to try to pass some of those cuts in tax reform. That would require them to rewrite the reconciliation instructions for 2018. 

Adding pressure to the situation are two big, looming deadlines: the potential government shutdown when spending authority runs out at the end of September, and the debt ceiling.

Though the debt ceiling is not technically part of the budget process — it is simply a legal limit on how much Congress can borrow to pay the bills it has already authorized — voting to raise it is a politically unpopular move in both parties. Failure to do so, however, could result in a catastrophic U.S. debt default. 

There, too, conservatives are determined to use the must-pass debt-ceiling vote to institute some sort of spending or regulatory reforms. Democrats have demanded a clean lift, but may use the vote to extract their own concessions from Republicans.

In previous years, the debt ceiling vote was folded into wider, last-minute spending deals. The mid-October estimate for when the debt limit will hit this year seems to augur a similar approach this time around.

“The debt limit in particular is a highly unpopular thing when it has to get raised, and lawmakers are aware of that, so the extent to which lawmakers can bury it in some other bill helps when they put out their press releases about why they did what they did,” said Boccia.

“I predict that we’re going to see a big budget deal in September as the deadline for a potential government shutdown is looming and the Treasury is screaming bloody murder that the debt ceiling needs to be raised,” she added.

Until that point comes and Republicans turn to Democrats to negotiate a bipartisan deal, as they did in May for the 2017 fiscal year, Democrats seem delighted at the GOP infighting.

“More than six months into the Congress, Republicans still have no infrastructure bill, no budget, no tax reform, and no jobs agenda of any kind,” House Minority Leader Nancy Pelosi (D-Calif.) said Friday.

–This report was updated at 6:55 a.m. 

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