Major Policy Developments for the 114th Congress:
Many challenging issues await the 114th Congress. In the pages that follow we will attempt to give you a sense of what potentially lies ahead; we will sketch out our sense of what is in store in the areas of appropriations and budget matters, defense and national security, energy and the environment, financial services , food and agriculture policy, healthcare, homeland security and cybersecurity, international policy issues, tax, technology and telecommunications, trade, and transportation and infrastructure.
The recent bipartisanship on budget issues will be tested early in the 114th Congress. Another financial cliff looms in 2015 as the nation’s borrowing authority will lapse in late spring/early summer, requiring an increase in the debt limit, and sequester-level budget caps are scheduled for reinstatement in FY 2016, which begins on October 1, 2015. The debt limit is the total amount of money that the U.S. Government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefit military salaries, interest on the national debt, and tax refunds. Congress must increase the nation’s debt limit periodically. Failure to increase the debt limit would cause the government to default on its obligations, something the United States has never done. The debt limit has been addressed nearly 80 times since 1960, most recently in February 2014, when it was extended through March 15, 2015. This is a soft deadline, as the Department of Treasury typically employs “extraordinary accounting measures” to further extend the limit. Treasury has indicated that the current extension wills be sufficient until summer.
Sequestration is the “poison pill” included in the Budget Control Act of 2011 (BCA) that imposed discretionary spending caps through 2021 to achieve $1.2 trillion in deficit reduction required to offset an increase an increase in the debt limit. This provision was included in the BCA as a way to incentivize the Joint Committee on Deficit Reduction, also established through the BCA, to develop a compromise deficit reduction plan. The failure of the Joint Committee to come to a bipartisan agreement forced the implementation of sequestration in FY 2013, ultimately resulting in an eight percent reduction in defense discretionary funding and a fi percent reduction in non-defense discretionary funding for that fiscal year. The BCA also identified specific topline funding levels for defense and non-defense programs through 2021.
The FY 2016 budget process will commence this spring with the submission of the President’s Budget Proposal to Congress, in which he is expected to propose higher discretionary spending caps than those mandated by the BCA. The Senate and House Budget Committees will also work on preparing a budget resolution for FY 2016. A budget resolution represents an agreement between the House and Senate on a budget plan for the upcoming fiscal year and several years going forward. A budget resolution is considered “concurrent” once it is agreed to by both the House of Representatives and the Senate, but is not enacted into law; rather, it serves as the framework for subsequent budget- related legislation.
If Republicans can work through philosophical fiscal differences within their own party, they should be able to approve a budget resolution for FY 2016, a component of the federal budget process that has been lacking for the past four years. The Senate requires a 60-vote threshold to end debate and advance legislation; hence, despite holding a slight majority, this requirement may limit the ability of Republicans to advance budget legislation that is too austere. Incoming Budget Committee Chairmen Senator Jeff Sessions (R-AL) and Representative Tom Price (R-GA) both share current House Budget Committee Chairman Paul Ryan’s vision to achieve a balanced budget within 10 years, although they may forgo some of Ryan’s more controversial methods, such as the privatization of Medicare, in order to secure sufficient Republican support in the Senate. (Ryan’s most recent budget proposal received only 41 Republican votes in the Senate.) Both chairmen have stated they believe the BCA-mandated spending cap is the ceiling for FY 2016 discretionary spending.
A budget resolution can also include reconciliation instructions that direct certain committees to recommend changes to laws impacting revenue or spending within their jurisdiction that would be required to implement the proposals outlined in the budget resolution. In addition to discretionary spending, reconciliation can incorporate revenue, entitlement reform, and debt limits provisions, as long as the measure does not increase the long-term deficit. Budget reconciliation requires only a simple Senate majority, allowing the majority party to bypass the typical 60-vote threshold to pass budget-related legislation. The reconciliation process was last utilized by Democrats in 2010 to help pass healthcare reform. However, lacking the necessary two-thirds majority to overcome a presidential veto, the use of reconciliation could backfire on Republicans, as it did in the mid-1990s when President Bill Clinton vetoed a reconciliation bill and congressional Republicans were blamed for the resulting government shutdown.