With less than 30 days to go before the expiration of the Continuing Resolution, all signs are pointing to Congress doing whatever it takes to avoid a government shutdown and passing a Pentagon budget. This will be a closely run thing, however.
- Time. There isn't much of it. With the Repeal and Replace debacle still reverberating on the Hill, the Senate is about to take up the Supreme Court confirmation of Neil Gorsuch, the House and Senate are separately investigating "Russiagate", and don't forget the Easter recess. Although the House has already passed its appropriations bill, getting a Senate appropriations bill approved, conferenced with the House and then to the President amid this noise in this amount of time is going to be tight.
- Bipartisanship. Not much of this seen recently. The budget requires 60 votes in the Senate and that means Democratic votes are needed even if the Republicans can unify behind legislation (also not recently seen). Roles on the Hill have been reversed and now the Democrats can and have threatened shutdown if must-pass legislation contains what they consider to be poison pills, e.g., defunding Planned Parenthood, funding the "Wall."
- No Alternatives to a bill that conforms to the Bipartisan Budget Act of 2015
- No extension of the current Continuing Resolution. Over the past two weeks, there has been a parade of DoD leadership on the Hill specifying under oath that nearly all forces except those currently deployed and "next to deploy", at least 50% of the force, would essentially shut down in July if the CR is extended significantly.
- There is no real probability of changing the terms of the Bipartisan Budget Act of 2016 that set a cap of $524B on Pentagon baseline spending in FY17. $524B is the topline of the baseline budget proposed by President Obama in February 2016. Although the internal details differ from the initial request, $524B is the topline of the baseline portion of the defense appropriations bill passed by the House 371-48 on March 8. $524B is also what the Senate has produced to date in committee although details differ from both the House and the original estimate. OMB Director Mulvaney's proposal to increase FY17 baseline spending by $25B (to $549B) by cutting non-defense spending by $14B and raising the cap has never been on the table.
- The Pentagon supplemental request for $30B (of which OMB proposed $25B be counted as additional baseline spending) will not be taken up before April 28. If any of this passes, it will not be as a change to baseline spending. This was a rich request and is certain to be pared back. We could see a supplemental of ~$18B (vice $30B) but as emergency OCO spending this summer but only after this April 28 crisis is dealt with.
While getting some kind of deal for FY 2017 spending is not going to be uneventful it will be anticlimatic compared to the coming fights on tax reform, the FY 2018 budget and the debt ceiling extension. The stakes for the FY 2018 budget are much higher than FY 2017 as is the probability of impasse. While the exact terms of these coming battles is not yet fully clear, we do know that there will be least four sets of combatants: the White House, conservative Republicans, moderate Republicans and Democrats. We do not know yet how each of the combatants will align with each other.
