Lawmakers in both parties are increasingly concerned about the status of the White House’s handshake deal with former President Kevin McCarthy (R-Calif.) on spending as they negotiate how the government is expected to be funded next year.
The Biden administration and House Republican leaders worked to pass legislation known as the Fiscal Responsibility Act (FRA) in late spring, as part of a more broad measure to suspend the debt ceiling and set budget caps for Congress to work on when it finalizes its budget. the year financing the bills months later.
But now as Congress attempts to speed up its annual appropriations work, key elements of the months-old deal that weren’t reflected in law are being called into question as ultraconservatives seek cuts more important amid growing debt, said Speaker Mike Johnson (R). -La.) is not beholden to what Democrats view as McCarthy’s full commitment.
“A deal is a deal is a deal,” Sen. Brian Schatz (D-Hawaii), who serves on the Senate Appropriations Committee, said last week. “I think we won’t reach a credit agreement if people can’t meet their commitments.”
In a letter to Republicans this week, Johnson said the FRA remains “the law of the land” that “provides the framework” for spending negotiations as the two chambers work to reach a basic agreement for the funding for fiscal year 2024.
On paper, lawmakers agreed to a base discretionary spending cap of $1.59 trillion, or about $886 billion for defense spending and nearly $704 billion for nondefense spending, to fiscal year 2024. However, the White House at the time detailed other changes aimed at increasing funding for the budget. on the non-defense side, including canceling billions of dollars in IRS funding with the goal of reinvesting it in non-defense programs.
The IRS received $80 billion in additional funding last year, to be spent over the next decade, under the Biden administration’s Inflation Reduction Act (IRA), to the great consternation of the Republicans. As part of the debt ceiling negotiations, the parties agreed that a quarter of the money could be reallocated into annual appropriations.
Ten billion dollars would be withdrawn from the IRS for fiscal 2024 and another $10 billion for fiscal 2025, to be added to non-defense discretionary funds, White House officials said earlier this year .
“We have not addressed each individual element of this bill,” Office of Management and Budget (OMB) Director Shalanda Young said in May. But she said lawmakers would “use the IRS IRA write-offs on the mandatory side.”
“Again, we’re not dictating how,” she said, “but they will write off $10 billion both years, and they will then use that money to reinvest in non-defense discretionary activities. »
The $80 billion total would have generated $200 billion in revenue over the 10-year budget window for a net deficit reduction of $120 billion, according to the Congressional Budget Office. Superficial calculations suggest that the $20 billion reallocated will add $30 billion to the deficit, provided it is not spent on revenue-generating programs.
White House officials also noted their intention to reuse other rollbacks of dollars recovered for coronavirus relief, which they acknowledged are removed in the law.
But as funding negotiations resume between leaders of both chambers, the House Freedom Caucus is turning up pressure on Johnson to stay the course, demanding in a Friday letter that any agreement on a higher level of government funding for FY 2024 “significantly reduce total programmatic spending year over year.”
The group also called on lawmakers to reject “side deals, gimmicks, or any other mechanisms designed to hide the true number.”
“I think it’s very important that we stick to ($1.59 trillion), which is what the FRA agreed to,” said Rep. Andrew Clyde (R-Ga.), a member of the House Freedom Caucus which is also a suitable one. week. “I mean, everyone voted for it. If we don’t do that, I think that’s a problem.
Rep. Andrew Clyde (R-Ga.) speaks during a news conference with members of the House Freedom Caucus and outside groups to discuss government funding on Tuesday, September 12, 2023. (Greg Nash)
But Democrats and their supporters are sounding the alarm about this surge.
Rep. Pramila Jayapal (D-Wash.), leader of the Progressive Caucus, told The Hill last week that she was “very” concerned about the potential cuts. “This must be the overall deal.”
Sen. Jeanne Shaheen (D-N.H.) — whose subcommittee crafts the annual funding bill for the Departments of Commerce, Justice and other agencies — also accused Republicans of “going backwards,” adding that potential funding changes on the non-defense side make a difference for his subcommittee.
With the side deal included, Michael Linden, a former OMB official who was part of Biden’s negotiating team that crafted the debt ceiling deal, argued that the overall deal would provide a “slight increase” on the defense side and “fixed funding for non-defense spending.” – which represents a real reduction, as costs increase every year.
“That in itself was a concession – a big concession – made to avoid exactly this kind of ridiculous back-and-forth, this procedural rigamarole, and just to get Congress to pass normal appropriations bills, which is what the Republicans were saying. to want.” he said in an interview Thursday.
Joel Friedman, senior vice president for federal fiscal policy at the Center on Budget and Policy Priorities, said the handshake deal could net negotiators more than $60 billion in additional funding that could be redirected to the side non-defense.
“The only way to get a freeze on non-defense activities is through $69 billion in side deals,” he argued. “Without that, it would have been 9% in non-defense programs. »
“If it was a 9 percent cut, the White House would not have signed on. Senate and House Democrats reportedly did not sign the deal. They couldn’t have reached an agreement,” he said.
