Relatively early Thursday night, the Senate voted 51-49 to send its version of a concurrent Budget Resolution to the House where it is virtually certain to be approved next week. Because of a last minute amendment, the Senate version is now close enough to the previously-passed House version that it will proceed almost directly to the House floor, avoiding any potentially messy committee or conference process. The Joint Resolution does not require Presidential signature.
Once approved by the House next week, the Joint Budget Resolution WILL permit the passage of tax reform legislation with a simple majority of the House and Senate. This is the acknowledged sole purpose of this resolution. Specific tax legislation will be introduced by mid-November. The contents of that legislation are still contentious within the Republican caucuses and there is still some drama to be endured before the President gets something to sign.
Significantly, the Joint Budget Resolution DOES NOT change the Budget Control Act caps on defense spending.
While the bill certainly looks like a budget, there is very little support for the numbers within it. The Budget Resolution reflects the FY 2018 BCA ceiling of $549B in baseline "defense" (DoD + DoE) spending with an additional $77B in OCO spending for a total of $626B. The non-defense spending ceiling remains at $516B with an additional $7B in disaster relief emergency spending for a total of $523B. The chart shows the relationship between the BCA (as reiterated in the Budget Resolution), the President's FY18 defense budget proposal and the amount tentatively authorized in the FY18 NDAA which is currently being conferenced.
The Continuing Resolution (CR) currently keeping the government operating expires on December 8. Formal discussions between Republicans and Democrats on how to resolve their views of the balance between defense and non-defense spending have not yet begun.
We believe that the CR will get a short extension and that Congress will repeat what it has done in the past and make a two year deal to raise the BCA caps for FY 2018 and 2019 to a level close to the total NDAA level.
