Will Congress Break the Budget Caps This Time Around?

Posted: July 18th, 2017

By Walter Pincus

Pulitzer Prize Winning Journalist Walter Pincus is a contributing senior national security columnist for The Cipher Brief. He spent forty years at The Washington Post, writing on topics that ranged from nuclear weapons to politics. He is the author of Blown to Hell: America's Deadly Betrayal of the Marshall Islanders. Pincus won an Emmy in 1981 and was the recipient of the Arthur Ross Award from the American Academy for Diplomacy in 2010. He was also a team member for a Pulitzer Prize in 2002 and the George Polk Award in 1978.

The Congress is heading for another budget crisis as the beginning of fiscal 2018 approaches on October 1.

At issue is when and how Congress will act to repeal, replace, or amend – not Obamacare in this case – but the 2011 Budget Control Act (BCA) and the looming, black cloud of sequestration.

Last Friday, the House passed by a bipartisan, 344-to-81 vote, the fiscal 2018 Defense Authorization Bill, which contained $621 billion for core Pentagon spending. During floor debate, Rep. Susan Davis (D-CA), a House Armed Services Committee member, called the measure’s $621 billion an “unfortunately aspirational” number.

Why? Because, as Rep. Jackie Speier (D-CA), another committee member, said, members ignored “the big elephant in the room,” sequestration and the BCA, which was the compromise Congress agreed to six years ago in order to halt growing deficits by capping defense and non-defense discretionary spending.

By that law, which still exists, the BCA set a cap or limit on core fiscal 2018 Defense Department spending at $549 billion. Congressional approval of anything higher would trigger sequestration, the automatic across-the-board reductions to reach the capped figure.

However, supporters of Friday’s House bill disregarded that legal limit and approved a figure $72 billion above that amount.

As Rep. Adam Smith (D-WA), the ranking minority member of the Armed Services Committee, pointed out during last week’s House floor debate, “It is very possible that $72 billion of what is in this bill is going to disappear between now and the end of this [fiscal] year unless we address the broader issue of sequestration and budget caps.”

Truth be told, Smith should have put the figure at $82 billion, because another $10 billion for core Defense spending was put into the $75 billion Overseas Contingent Operations (OCO) account in the fiscal 2018 bill, funds that don’t count against the BCA base budget limit because they are to pay for costs directly related to fighting abroad. Or at least are supposed to.

Smith went on to say, “In order to break the budget caps, the House and the Senate have to vote to break the budget caps. It is July. We haven’t done that. I will emphasize that in the Senate it actually requires 60 votes to break the budget caps.”

That means Congress and the public are facing another fiscal year-end set of cliff-hanging negotiations before September 30 and after – a situation that marked many years of the Obama administration. Chances are we may also see one or more continuing appropriation measures, complicated by the need this year to increase the debt limit.

Congress has three times since 2011 amended the BCA, the last coming in 2015 when under a bipartisan agreement spending caps were raised by $50 billion for fiscal 2016 and $30 billion for this year, with the money split between defense and non-defense spending caps.

This year is proving more complicated, illustrated by the failure to date for the House Budget Committee to come up with its breakdown of fiscal 2018 defense and non-defense discretionary spending. A markup meeting has now been scheduled for tomorrow [July 19] where it’s been reported the split will be $621.5 billion for defense, and $511 billion for non-defense.

It’s unclear how the panel will handle the BCA defense cap, if at all.

Meanwhile, two proposed pieces of legislation to modify the BCA have been sent to the Budget Committee for consideration, but neither has been taken up.

Rep. Mike Turner (R-OH) introduced a bill March 8 that would, according to the Congressional Research Service, “eliminate the sequestration for security and defense spending,” but not for non-defense spending. Rep. Smith introduced a bill March 23 that would eliminate sequestration for both.

Where is the Trump administration?

During the 2016 campaign, candidate Trump in late October listed “rebuilding our military by eliminating the defense sequester” as one of the many things he would accomplish in his first 100 days. That never occurred.

The Office of Management and Budget’s July 11 Statement of Administration Policy on the fiscal 2018 Defense Authorization bill, sent to the House on July 11, did open by saying, “The bill supports key Administration priorities, including ending the defense sequester.” But the OMB statement never again mentions sequester or how or when it will be ended.

Meanwhile, other Republic-chaired congressional committees are merrily marking up legislation related to the Defense budget and also ignoring the current BCA cap.

On June 15, the Senate Armed Services Committee approved its version of the fiscal 2018 Defense Authorization Bill putting core Defense budget spending at $640 billion. That exceeded the BCA cap by a whopping $91 billion. In its executive summary of the bill, the committee said of sequestration, “Ultimately, the solution must be to repeal or revise the BCA, and the committee urges Congress to do so immediately.”

The Senate has yet to take up the bill.

On June 29, the House Appropriations Committee approved its version of the fiscal 2018 Defense Appropriations bill which provided $584.2 billion for core Pentagon spending, just $39 billion over the BCA cap.

Today, the Pentagon must wait to see what money is going to be available to it come October 1, the start of fiscal 2018. Despite Trump in the White House, this annual budget dilemma, caused by inaction when it comes to the BCA, has not yet changed.