Trump Budget Seeks Massive Non-Defense Cuts, But Congress Will Have its Say

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By Daniel Sheehan
AFOP Executive Director

The White House has announced the overall discretionary appropriations totals President Trump plans to include in his first budget request (for fiscal year 2018) later this year. The president will propose an immediate nine-percent increase in defense spending to $603 billion, offset by an aggregate 11-percent decrease in non-defense appropriations to $462 billion.  White House Budget Director Mick Mulvaney said the $54 billion increase in defense spending is one of the largest increases in history, and that cuts to the topline non-defense number will be the largest proposed reduction since the early years of the Reagan Administration.

Before this plan can go into effect, Congress must first adjust the annual statutory caps on discretionary appropriations (enacted in the Budget Control Act (BCA) of 2011) prior to enactment of the yearly appropriations bills.  Unless the spending caps are amended, another round of across-the-board sequestration cuts will automatically be ordered and will reduce defense spending back to the spending cap levels.  The caps – one for defense and the other for all other discretionary spending – are already scheduled to decrease in 2018 by a combined $5.2 billion below the 2017 levels, as required by BCA. The aggregate cut in non-defense discretionary spending under the Trump plan, measured versus the FY 2017 cap level (by which the pending 2017 appropriations bills must abide) would be a reduction of about 11 percent in total. 

However, DOL may see a different level of spending reductions.  A senior Republican appropriator is quoted as saying that everyone knows that Congress is never going to cut Homeland Security and Veterans Affairs (indeed, President Trump has indicated that veterans funding may actually be increased), so you have to back those programs out of any assumptions of aggregate cuts in non-defense spending in order to determine the overall level of cuts in other non-defense programs. After Homeland and Veterans are held harmless, the aggregate cuts to the remainder of non-defense spending get even worse, to a reported total reduction of 14.1 percent. 

Congressional Democrats are certain to oppose these massive spending reductions, but some Republicans, particularly those on the House and Senate Appropriations Committees, will oppose them, too.  After all, they are the ones who have to try to write bills that can get enough votes to pass each chamber.  In addition, Republicans on the various authorizing committees that oversee federal agencies may not like the proposed cuts either.

The way the traditional budget process is supposed to work is like this:

  1. The president submits a budget request, ideally in early February, but new presidents in their first year get a grace period.
  2. The House and Senate take the president’s overall spending and tax totals and priorities into consideration, then pass a congressional budget resolution that sets the spending and tax totals that will govern which bills can be considered in Congress for the remainder of the year. This resolution also gives the Appropriations Committees one big lump sum of money to spend in the upcoming year, which they subdivide as they see fit.
  3. The Appropriations Committees write their annual spending bills.

 The BCA spending caps complicate the traditional process. No matter what discretionary spending levels the president proposes in his budget, and no matter what lump sum the congressional budget resolution gives to the Appropriations Committees, if total defense appropriations for the year exceed the BCA cap level, another round of sequestration is ordered to reduce defense spending back to the cap level. Similarly, if total non-defense spending exceeds the cap level, sequestration automatically cuts it back.

The $54 billion increase in defense spending proposed by the White House will not be possible unless Congress first amends the Budget Control Act to fix the spending caps.  And the $54 billion in non-defense spending cuts proposed by the White House, even if enacted into law, can’t be used to offset the defense spending increase unless Congress first amends the BCA to fix the caps.  

So the big issue for FY18, obviously, is the fate of legislation to amend the spending caps.  Any legislation changing the spending cap levels will have to get 60 votes in the Senate (unless Senate Republicans decide to invoke the “nuclear option” and get rid of the filibuster as it pertains to legislation).  Indeed, it is hard to imagine eight Democratic senators voting to break a filibuster or waiving points of order to approve a $54 billion cut in non-defense spending, even if it does offset a $54 billion increase in defense spending.  And such a high level of non-defense cuts would probably lose a handful of Republican Senate votes, as well.

In the absence of agreement on a law amending the spending caps, either bipartisan or partisan, the levels written into current law would remain in place, which would mean a $3.2 billion cut in total non-defense discretionary spending in 2018 (compared to 2017) instead of the president’s proposed $54 billion cut.  A much better, but still painful scenario.