June 2023 Washington Update

 

On June 3, less than three weeks ago, President Biden signed the Fiscal Responsibility Act (FRA) which raised the debt ceiling, imposed spending caps on defense and non-defense discretionary spending, and made other legislative changes. The bi-partisan bill prevented a possible default on US debt for two years (in the House 149 Republicans voted in favor of the package and 71 opposed it, while 165 Democrats supported the bill and 46 opposed it).  The good news that a crisis had been averted lasted about three days.

 

On June 6, about 12 members of the Republican Freedom Caucus effectively shut down the House of Representatives for about a week to protest the agreement that representatives of House Speaker Kevin McCarthy had negotiated with representatives of President Biden and that Biden had signed three days earlier. (The Freedom Caucus is generally considered to be the most conservative bloc in the Republican House and, according to its website, has 45 members).

 

To quell this uprising, McCarthy has apparently agreed to a number of demands, the most relevant of which for our purposes is allowing Republican members of the Appropriations Committee appropriators to write spending bills at FY2022 levels, which is perhaps as much as $130 billion far below the levels set out in the Fiscal Responsibility Act.

 

This virtually ensures that House appropriators will have to write bills with very deep cuts and program eliminations, including the Labor-HHS-Education bill which funds the Corporation for National Service (AmeriCorps).

 

It remains to be seen whether such bills can pass the House, but if they do pass, they will collide with bills produced by the Democratic majority in the Senate (and President Biden) who will presumably write bills that adhere to the budget caps laid out in the debt-limit deal. 

 

It appears that Senate Appropriators will try to writer bi-partisan bills, but Speaker McCarthy’s decision will make it harder to produce bills and avoid a government shutdown or a continuing resolution.

 

As you know, the fiscal year ends on October 1, so that’s the date that Congress either needs to pass all the spending bills, or approve a Continuing Resolution, in order to avoid a shutdown. Full-committee markups are set to start in the House this week and in the Senate later this month. On top of everything else, the Fiscal Responsibility Act included a provision that says that a one percent budget cut will be imposed if Congress can’t pass all 12 Appropriations bills. 

 

Obviously, funding the government will require the House and Senate to agree to a series of compromises which, if the recent events are a guide, could again trigger opposition from the Freedom Caucus. 

 

There are other flashpoints that suggest that the next few months will be unsettled. Among them, is the threat by some Republicans to cut funding for the Department of Justice, including the FBI, in retaliation for the indictment of former President Trump. Also, a number of Senate Republicans, and many Democrats, want to exceed the defense spending cap of $886 billion. 



We have predicted tough going in the House for funding for national service programs. The decision by Speaker McCarthy makes it extremely likely that there will be deep cuts, if not outright elimination of national service in the House bill. 

 

The next few months will be rough, but we have been in this position before and not only survived but thrived.