Senate Republicans Make Opening Bid on Negotiating Spending Caps

(Bloomberg) -- The Republican head of the Senate Budget Committee released his party’s draft budget resolution for fiscal year 2020, an opening bid in negotiations over budget caps that will be key in determining whether there’s another federal government shutdown on Oct. 1.

Wyoming Senator Mike Enzi’s plan would let automatic cuts to defense and non-defense spending kick in on schedule while maintaining current levels of war funding that aren’t subject to the budget caps. President Donald Trump’s budget request would boost the military’s contingency funding in order to give the Pentagon more money.

The committee is set to vote on the proposal Thursday ahead of possible floor votes later in the year. The overall plan differs from past Republican budgets in that it covers only five years, rather than 10, and doesn’t project a balance. Instead, deficits over five years would be reduced by $538 billion.

The proposal is more an exercise in negotiating than actual budgeting for the government. House Democrats are debating whether to produce their own budget plan, trying to find common ground between swing-district moderates who want to produce a budget that reduces the deficit and progressives who want to ramp up spending on the social safety net.

Negotiations

The most likely effect of Enzi’s proposal will be on talks between both parties on the legal limits for discretionary spending that cap the overall cost of the 12 annual appropriations bills. Under current law, the $716 billion defense budget cap would fall to $576 billion in fiscal 2020 and the $597 billion non-defense cap would fall to $543 billion.

For Democrats leading the House Budget Committee, raising the legal limits on discretionary spending is “the biggest budget issue Congress faces this year,” according to committee spokesman Sam Lau.

“Without action, our defense and non-defense investments will fall by 10 percent, crippling our national and economic security,” Lau said in an email. He said Democratic Chairman John Yarmuth “continues to work on a budget proposal that will ensure we raise the caps and meet our responsibilities to the American people.”

Without a bipartisan deal on budget caps, Congress won’t be able to complete the annual spending bills needed to keep the government open after the start of the next fiscal year on Oct. 1. While it could use a stopgap measure to extend current funding levels, the automatic cuts would kick in at the end of the calendar year if Congress fails to act.

Enzi proposes allowing those caps to be reduced while keeping war funds at $67 billion. Trump in his budget this month proposed keeping both caps in place while supplying defense with $165 billion in war funds not subject to automatic cuts and another $9 billion in emergency funds.

Enzi’s budget contains language that would allow the caps to be adjusted, if the spending increases are offset by spending cuts on the mandatory entitlement side of the budget over 10 years.

The chairman said he is attempting to start reducing deficits that now total almost $1 trillion per year.

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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