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Latest Continuing Resolution Both Naughty and Nice

by Nan Swift / /

Congress is moving quickly to wrap up the 114th Congress with a Continuing Resolution, or CR, to fund the government through April 28, 2017.  As usual, the appropriations package is a hodge-podge of spending measures, reauthorizations, and policy tweaks - not simply a straight extension of current spending levels. 

The Nice List

Taxpayers were concerned that as lawmakers hustled out of town, some for the last time, they might load up the must-pass bill with corporate welfare and other bad policies. It seemed possible that expiring tax provisions aimed at propping up “green” energy industries, a change to the Export-Import bank quorum rules that would restart their handouts to big corporations, and perhaps even the dreaded Internet sales tax could all be attached. Luckily, these weren’t included in the final version and legislators deserve credit for keeping those fights out of the lame duck session.

The CR also ensures that the D.C. Opportunity Scholarship Program will continue to have funding available to provide vouchers for low-income students to attend the school of their choice.

The Naughty List

Sadly, the CR is not all merry and bright. The legislation contains more than $15 billion in new spending, above the budget caps, including $4.12 billion designated as emergency funding, making those dollars exempt from pay-for requirements.

The bill also includes a $47 million bailout from the Abandoned Mine Land Fund for the long-term health care benefits of United Mine Workers of America (UMWA). Like many other public and private pension plans across the nation, from teachers to teamsters, the UMWA is facing a massive $5.6 billion shortfall due to underfunded, overly generous promises.  While it’s unfortunate that anyone should lose the health and other retirement benefits they were long-promised, this sets a dangerous precedent that opens the door to other pension bailouts. This could potentially add billions to our already staggering debt and further burden taxpayers who often already pay out of pocket for their own health and retirement plans. Thankfully, lawmakers scrapped an earlier plan to include the disastrous Miners Protection Act, a bailout paid for by raising taxes on imported goods.

Another short-sighted provision is $773 million for advance procurement of parts for the Ohio-class submarine replacement. This is a major commitment of taxpayer dollars for materials long before they are needed in the construction process, essentially locking in funding commitments for an expensive program. As Taxpayers for Common Sense explains, “Because if you spend hundreds of millions of dollars on buying materials you won't actually be using in the coming fiscal year, you create a powerful argument to continue the program, even if circumstances change and a weapon system becomes a lower priority to future policymakers.”

The Maybe List

The holiday equivalent of purgatory, it’s less clear how some of the CR’s overall funding levels and mechanisms will work out for taxpayers – keeping us in budgetary-limbo for the time being. The 2011 Budget Control Act (BCA) and subsequent 2015 Bipartisan Budget Act (BBA 2015) prescribe separate, equivalent caps for base defense and non-defense discretionary spending. The CR makes a departure from this parity rule by funding non-defense discretionary spending at levels exceeding the base defense numbers and $2.946 billion above the FY17 caps. The legislation also delays the BCA’s sequester mechanism until after the end of the CR’s funding period.

There are rational arguments for this budgetary quirk – not all agencies and federal programs spend funds at the same rate and it might be necessary to frontload some spending in a short-term CR that would otherwise be smoothed out in a full-year appropriation.

Another problem is the funding for the always troublesome Overseas Contingency Operations (OCO) account. The CR provides for two tranches of OCO funding: $59.372 billion in the base bill and an additional $10.075 billion ($5.775 billion for the Department of Defense and $4.3 billion for the Department of State and USAID) in a supplemental bill attached to the CR. This exceeds the BBA 2015 OCO cap, but is overall largely in-line with Administration requests, including the November supplemental request from the Pentagon to fund expanded operations in the Middle East.

However, shifting a planned $15.7 billion from OCO to fund base budget requirements could leave frontline efforts underfunded after April, necessitating yet another supplemental and/or a significant increase in defense spending in the next government funding bill. This, combined with the non-defense spending plus-up and sequester modification, increases the likelihood that taxpayers could be hit with yet another costly budget deal and more broken promises.

Lawmakers can avoid a budget crisis by passing appropriations bills that fund the government within the caps of the BCA and steering clear of cap loopholes like OCO and other types of “emergency” spending. Better yet, Congress could go further and cut additional spending by better prioritizing to our real needs and reforming budget-busting entitlement programs.

Be Good for Goodness Sake

Because the legislation is for only a partial fiscal year, the actions Congress takes during the latter half of 2017 will ultimately determine whether this CR was bad or good. In the meantime, the CR remains just the latest reminder that OCO is a problematic way to fund our national defense and that passing appropriations bills under normal order provides the best opportunity for real reform and spending restraint. If lawmakers play their cards right in 2017, maybe next year taxpayers will see some savings in their stockings.