After the Easter/Passover break Congress returns next week with the legislative focus on President Biden’s proposed budget, and the continuing discussion of a large infrastructure bill. On Friday the Biden Administration released the outline of its budget recommendations.
Democrats have long complained that too much federal spending was going towards defense at the expense of needed domestic spending. The proposed Biden budget starts to realign budget priorities with defense spending increasing just 1.7% to $753B, while non-defense spending is increased 16% to $769.5B. The Department of Education, which was cut during the Trump years, has a 40% proposed increase. Other domestic agencies also see proposed increases with 23.1% at HHS, and 15.1% at HUD.
However, Presidential budget requests are just that – requests – and are regularly changed by Congress no matter who controls the White House or the legislative branch. It has become regular practice for Congress to miss the completion of the federal budget by October 1 when the new fiscal year begins. The common practice is for Congress to approve a Continuing Resolution (CR) to fund the government at current spending levels. Democrats in Congress are anxious to see increases in domestic spending so there may be some incentive to reach agreement with Republicans which is likely to require greater spending of defense.
In addition to federal spending, by year end Congress will need to pass an increase in the debt ceiling. One of the oddities of the US Government is that there is a legal celling on the amount of debt the US can have outstanding at any one time. The debt ceiling is regularly increased to accommodate increased spending, but it is always a difficult vote for Members of Congress. The current ceiling exemption expires on August 1, but Treasury has developed a package of “extraordinary measures” that can keep the government afloat for several months. But at some point by yearend Congress will need to increase the ceiling, and it is sure to add drama to the closing weeks of the Congressional calendar.
In addition to the President’s fiscal year 2022 budget, Congress is starting to develop a strategy to act on the Biden $2T infrastructure proposal. While the President plans meeting next week with Republicans in an effort to develop a bipartisan infrastructure program, there is a great deal of focus on ways to approve the Democratic package without Republican support, as Congress did in the Covid Relief bill earlier this year. The Covid bill was passed using the filibuster proof Budget Reconciliation procedure. In the past Congress has been limited to one Budget Reconciliation Bill; but Senate Leader Schumer has developed a plan with the Senate Parliamentarian that would allow for one amended version of the Budget Resolution which would contain instructions for an amended Reconciliation Bill. At this point it is not clear whether or not this is an agreed upon plan to pass the infrastructure bill using Reconciliation or leverage to try and win some Republican support. It is important to remember, as seen in the failure to include a minimum wage increase, that there are limits as to what can be in a Reconciliation Bill.
In the coming weeks the issues of the 2022 Federal Budget, increasing the debt ceiling, and acting on infrastructure will all be front and center in DC.
