Update on Government Funding

As Congress prepares to leave for August recess, the nation is scheduled to reach the debt ceiling by the end of September, at the same time Fiscal Year 2017 agency funding expires. To date, none of the Fiscal Year 2018 appropriations bills have been enacted and there remains no agreement on a budget or whether to adhere to the 2011 Budget Control Act, which established sequestration.

Agency ShutdownHeading into the August recess, Congress is leaving a long list of work it must complete in the Fall. In addition to consideration of health care, immigration, and tax reform, Congress must vote before September 30 to increase the debt ceiling and pass a continuing resolution, 12 appropriations bills, or some combination thereof to keep the government open as of October 1, 2017.

Complicating matters is the impact of sequestration on government funding. The 2011 Budget Control Act (PL 112-25) established a sequester (so-called budget caps) to reduce discretionary and mandatory spending, equally divided between defense and nondefense programs, after a Joint Select Committee on Deficit Reduction was unable to reach a new budget agreement governing the coming decade. The law also provides for a separate enforcement sequester to make across-the-board cuts in discretionary spending if Congress exceeds statutory discretionary caps.

The two-year budget and debt limit agreement (PL 114-74) signed into law in November 2015 raised discretionary spending limits by $50 billion for Fiscal Year (FY) 2016 and $30 billion for FY 2017. It also extended across-the-board mandatory spending reductions into fiscal 2025. However, the two-year budget deal did not extend to FY 2018, meaning that lawmakers will need to negotiate another budget deal or face a return to lower, statutory sequestration spending levels on October 1, 2017. The statutory discretionary spending limits for FY 2018 are $549 billion for defense and $516 billion for nondefense.

FY18 Budget Resolution

Pay cut - bill cut with scissorsOn July 19, the House Budget Committee favorably reported its FY18 Budget by a vote of 22-14 along party lines. The bill sets higher discretionary spending levels for FY 2018, including $621.5 billion for discretionary defense and $511 billion for nondefense discretionary spending. It would allow up to another $87 billion in war and associated security funding that is outside the constraints of the statutory caps. It is important to note that the House Budget Committee’s FY 2018 discretionary spending levels conflict with current law.

This committee-passed budget also provides reconciliation instructions directing 11 House committees to craft legislation to reduce the deficit by a minimum of $203 billion over 10 years. One of the committees given such instructions is the Committee on Oversight and Government Reform, which handles all federal employee legislation. That committee has been tasked with crafting legislation to produce at least $32 billion-if not more- in cuts. Such cuts could only come from federal employee benefit programs, with the House Budget Committee’s budget recommending sizable increases in federal employee retirement contributions, the elimination of the FERS supplement for all employees, and the future elimination of the FERS pension. NTEU is working to block various proposals to gut federal employee retirement. There is discussion of bringing this budget to the House floor early in September. At this time, the Senate has not introduced an FY 2018 Budget.

Debt Limit

GrowthTreasury Secretary Steven Mnuchin has notified Congress that the federal government will reach the debt ceiling at the end of September. Since mid-March, Treasury has been using special accounting measures (called extraordinary measures) to keep the government from defaulting on its obligations, which include tapping into the Civil Service Retirement and Disability Trust Fund and the Thrift Savings Plan (please note that these actions do not impact individuals’ retirement income). If Congress did not raise the debt ceiling before these measures are exhausted, the United States would begin to default on payments that it is legally obligated to make, payments that Congress has already promised that we will make. Such a situation could create significant disruption in markets and ultimately the world economy.

Secretary Mnuchin is pressing for a clean bill raising the debt ceiling. However, some Members of Congress are indicating that any increase in the debt ceiling would need to be accompanied by spending cuts.

FY18 Appropriations

A dark contrast photo of the US Capitol against cloudy gray skies.The House voted 235-192 on July 27, to pass a nearly $790 billion minibus appropriations package that includes the fiscal 2018 Energy-Water (HR 3266), Legislative Branch (HR 3163), Defense (HR 2319), and Military Construction-VA (HR 2998) funding measures. This package includes FY 2018 funding for the NTEU-represented Department of Energy (DOE). NTEU is working with our allies to increase DOE FY 2018 funding to proper levels. It is unclear at this time if the minibus will be sent to the Senate for consideration, or attached to the remaining eight spending bills the House plans to take up in September (as an omnibus, or even a Continuing Resolution), all of which have all been reported by the House Appropriations Committee.

The Senate Appropriations Committee has approved six of the 12 spending bills, so far. However, none have been considered by the full Senate. The Senate Appropriations Committee has approved temporary allocations (dollar funding levels) for its 12 fiscal 2018 spending bills which are meant to be a tentative outline for the committee until congressional leaders negotiate a new budget framework that would allow for higher spending.

The level of spending in both the House and Senate appropriations bills are higher than what is allowed by current law. If these higher funding amounts were to be enacted for FY 2018, then the across-the-board enforcement spending cuts would be triggered, unless Congress first passed a new, separate budget agreement.

As Congress begins to work in earnest on FY 2018 funding bills and a possible grand-scale budget and spending deal, NTEU will continue to fight against proposals to cut retirement benefits and agency funding while pushing for a fair pay increase.

I will also keep you informed on FY 2018 agency funding, as well as regarding a possible shutdown and other developments, as we near October.

To see what you can do, visit the NTEU Legislative Action Center now.