House Democrats Punt on Budget, Working on Spending Cap Offer

(Bloomberg) -- House Democrats shelved their budget resolution for fiscal year 2020 amid squabbling within the party over expensive progressive policies and how to address the nation’s growing annual budget deficit.

Without agreement among Democrats on a 10-year budget, the House Budget Committee this week plans to consider just the top-line discretionary spending numbers that will have to be negotiated with the Republican-led Senate for 2020 and 2021.

Progressive House Democrats sought to decrease defense spending and use tax increases to balance much higher spending on social programs, while moderates argued for a modest boost for defense funds and new revenue to lower the deficit.

House Budget Committee Chairman John Yarmuth of Kentucky said last week the main sticking point for his party was how much to increase non-defense discretionary spending. He said Democrats agree that the increase discretionary funds should be bigger than the increase for defense, but they are still arguing over how much.

Yarmuth said he proposed increasing taxes to bring in an additional $2 trillion over 10 years, but moderate Democrats don’t want to vote for a tax increase.

The Blue Dog Coalition, a group of 27 fiscally conservative Democrats, called for a full budget to be released.

‘Shared Values’

“Putting forward a fiscally responsible budget would be the first step to prevent our fiscal state from getting worse, all while demonstrating our shared values,” said California Representative Lou Correa.

While a 10-year fiscal plan from Democrats would have little chance of being reconciled with the Senate’s budget resolution, which cleared its committee last week, failing to adopt a budget highlights the difficulty for Democrats in presenting a unified message on fiscal discipline. A full budget resolution isn’t necessary to allocate government funds.

Steve Womack, the ranking Republican on the House Budget Committee, said negotiation on defense and non-defense budget caps should be a bipartisan, bicameral discussion, with input from the White House.

“Their agenda is so full of contradictions that they’re unable to govern,” Womack said of the Democratic House majority. “Not only have they failed to fulfill the chief responsibility of the Budget Committee – drafting a budget resolution – they are struggling to determine their position on discretionary spending caps.”

In the last Congress, the Republican majority agreed on a 2017 budget to unlock special fast-track procedures to ram tax cuts through the Senate. Democrats decried that bill as a giveaway to the rich that will add to yearly budget deficits.

The Republican-led House didn’t pass a budget in 2018. Budget Committee member Rosa DeLauro, a California Democrat, defended her party’s decision to focus on spending caps, noting Republicans’ failure to pass a budget resolution last year.

“What matters is the caps and how do we fund non-defense discretionary spending,” she said.

Avoiding Another Shutdown

The difficulty in coming up with a top-line level of discretionary spending also risks complicating the annual appropriation process that must be completed by Oct. 1 to avoid another shutdown or stopgap spending measure. The budget resolution is supposed to set the total amount the Appropriations panels are allowed to spend.

Some agreement on budget totals will be needed this year to pass the 12 annual appropriation bills. Under current law, defense spending would drop 11 percent to $576 billion in 2020 and non-defense levels would drop 10 percent to $542 billion. The budget resolution from Senate Republicans proposed keeping the caps in place, while the White House proposed giving money to the military using a $174 billion budget maneuver.

Progressive Democrats said Monday they would be open to higher defense spending as long as social spending got a bigger boost.

"My view of that is we shouldn’t be increasing defense spending, but I am open to having this conversation with colleagues about what will be most effective for preserving Democratic priorities given divided government," said California progressive Democrat Ro Khanna.

The decision from House Democrats, led by Speaker Nancy Pelosi, to forgo the procedural step of presenting their own budget resolution provides an opening for Republicans to accuse Democrats of being fiscally irresponsible -- a charge Democrats reject.

"Nancy Pelosi has said for a long time, show me your budget and you’ll show me your values," House Minority Leader Kevin McCarthy said on the Fox Business channel Friday. "They are a new majority and they aren’t going to do a budget."

Oregon Representative Kurt Schrader, a Blue Dog Democrat, dismissed Republican attacks on fiscal responsibility, citing the GOP’s deficit-funded tax cuts.

"After that abysmal tax bill that Republicans ran last cycle, my sympathy for spending cuts has gone out the window,” Schrader said. “I was okay with doing some thoughtful reforms along with some increased revenues, and these chuckleheads passed this bogus bill that helps a few rich people and hurts everyday Americans, and they paid for it in the election.”

To contact the reporter on this story: Erik Wasson in Washington at ewasson@bloomberg.net

To contact the editors responsible for this story: Joe Sobczyk at jsobczyk@bloomberg.net, Anna Edgerton, Laurie Asséo

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