The Republican-led government shutdown in 2013 was billed as a fight over Obamacare. The latest disruption was triggered by Democrats' demands on immigration.
But lost in the headlines is the fact that the biggest common driver in both crises was Washington’s inability to come to grips with what it promised in the Budget Control Act of 2011.
Republicans were alarmed then by the growing federal debt. And after a long hot summer of wrangling, Congress wrote into law discretionary spending caps that promised to save billions while preserving some rough parity between defense and domestic priorities in the annual appropriations bills which keep the government operating.
In the years since, when that spirit is respected, Congress muddles by without breaking down. But when the BCA is ignored, chaos follows. And it’s no accident that this latest shutdown, like 2013 before it, came on the heels of budget plans that sought to dramatically alter the contours of the law.
In 2013, the chief instigator was none other than Paul Ryan (R-Wis.), who was serving then as chairman of the House Budget Committee. To appease his hawks, Ryan proposed a $54 billion increase for defense, all at the expense of non-defense spending under the BCA. The House Appropriations Committee dutifully tried to make the numbers work. But by the end of July, the process collapsed, inviting the shutdown fight over health care in October of that year.
To the surprise of many, President Donald Trump dusted off the same Ryan playbook last May in his budget plan for fiscal 2018. Defense appropriations would go up by $54 billion and the rest of the government would be cut $54 billion below the caps set out in the BCA.
House Republicans winced and sought to soften the edges. Their approach was to lower the caps for domestic spending by only about $5 billion and then double down on defense. Defying the BCA, they proposed going over the president’s own request and adding an estimated $72 billion for the military in fiscal 2018.
Senate Republicans effectively froze in fright. Challenging the BCA as the House proposed would require 60 votes, demanding compromise with the Democrats. Punting the issue down the road was the easier path.
“The resolution’s discretionary figures for this fiscal year are fully consistent with the Budget Control Act spending limits,” Senate Budget Committee Chairman Mike Enzi assured his colleagues. The Wyoming lawmaker then candidly added: “If they weren’t, then the resolution would be subject to a 60-vote point of order.”
Ultimately, this mind-set prevailed. And when the GOP finally passed its joint House-Senate budget resolution in late October, the new fiscal year was already underway, tax cuts were all that seemed to matter to the party and any decision on how to cope with the BCA was put aside.
During last weekend’s shutdown, the White House — and Vice President Mike Pence most notably — accused Democrats of undercutting the nation’s military. But Senate Armed Services Committee Chairman John McCain (R-Ariz.) had accused his fellow Republicans back in October of doing much the same by pursuing tax cuts first before a budget agreement on spending.
“I remind my colleagues that the fiscal year started three weeks ago and that the Defense Department is currently operating under a continuing resolution,” McCain said in Senate debate. “We know the harmful effects it will have on the military. That is why getting to work on a budget deal is so urgent. We must delay no longer. The budget resolution is not meant to provide that broader budget agreement. This budget resolution is simply a means to get us to tax reform.”
Indeed, more than any modern budget cycle, the past year has had the upside-down feel of Alice’s trial before the Red Queen: “Sentence now, verdict later.”
The budget became less a budget than a means to an end: tapping the reconciliation process under the 1974 Budget Act to expedite action on tax cuts.
No matter that reconciliation had been designed primarily as a deficit-reduction tool. Or as its name suggests, the whole notion was to help Congress swiftly “reconcile” the goals set out in its spring budget resolution with what followed, whether it was changes in the economy or higher than predicted costs and deficits.
What’s happened is more the reverse. Reconciliation was triggered before any real agreement on spending and served to enact a tax bill that many predict will increase —not lower — future deficits. The real machinery to keep the government operating was left adrift for months. Indeed, the House Republican leadership was so skittish about any hint of a spending deal that the backroom talks didn’t really gain traction until after the tax bill had cleared the House in late November.
When the shutdown came about last weekend, Sen. Susan Collins (R-Maine) took a lead role in helping pull together a bipartisan group of moderates to end the impasse. But this was a train wreck she had feared for months as a senior member of the Appropriations Committee and the manager of the annual transportation and housing bill.
“It is particularly frustrating for me as an appropriator who works really hard to get the appropriations bills out of committee, that we end up in this situation,” she said. “We can’t get bills brought to the Senate floor because of the absence of this global budget deal on what the new budget caps should be. … I’m frustrated by our inability to prioritize getting a budget agreement.”
It’s popular to dismiss the BCA caps as a shell game. And certainly the 2011 agreement never lived up to its promise of a larger deficit reduction package combining new tax revenue with savings from government benefit programs not subject to the annual appropriations process.
But since 2010, when Democrats last controlled Congress and the White House, the drop in non-defense spending has been significant.
For example, the current BCA cap for 2018 is about $130 billion, or 20 percent, below the adjusted baseline for spending in those 2010 appropriations bills if projected forward to this year. And even under some of the compromises being discussed now, non-defense appropriations in 2018 would end up well below a second, more conservative marker: the 2011 continuing resolution enacted after Republicans took back control of the House in the 2010 elections.
By waiting so long to deal, Republicans have upped the ante. Adjusting the caps upward will require 60 votes in the Senate, giving Democrats some leverage. But the pressure from hawks to go even beyond the House-passed defense levels is such that it seems almost impossible to imagine dollar-for-dollar adjustments in non-defense as well.
Ryan and Senate Majority Leader Mitch McConnell (R-Ky.) are said to resist any such strict parity standard, which has governed past appropriations deals under the BCA. But this may also explain why there have been discussions about adding some dollars to the package to address pension relief and the opioid crisis, a major concern for Republicans as well.
Without doubt, adding the immigration issue and all the emotions around the young Dreamers affected under the Deferred Action for Childhood Arrivals program has greatly complicated the picture. Republicans privately complain that it is now the Democrats who are slow-walking the budget talks by insisting that DACA be part of any numbers deal. There is even the suggestion that by withholding support for raising the BCA caps, the minority hopes to persuade hawkish Republicans to give ground on immigration.
If so, the optics could prove risky, throwing a lot of volatile issues into one pot. And such a strategy would appear to go against House Minority Leader Nancy Pelosi long experience with year-end budget fights. For sure, she has made clear she wants a path forward on DACA as part of any agreement. But the California Democrat rose to the leadership as a member of the House Appropriations Committee and knows it was the numbers that set the table now, long before the DACA issue was added.