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The first of four parts

Members of Congress returned from the Fourth of July recess this week facing a series of challenging fiscal issues with looming deadlines and no agreed-upon plan to avoid potentially disastrous outcomes.

While the focus over the holiday and into this week has been whether Senate Republicans can pass their Obamacare repeal legislation, lawmakers have an increasingly tight timeline to speed through a consolidated budget and appropriations process and raise the debt ceiling. So far, there is no clear strategy to avoid the brinksmanship that has come to define Washington, D.C., in general, and Capitol Hill, in particular.

Neither the House nor the Senate has passed a budget resolution for Fiscal Year 2018 despite the deadline to do so passing months ago. Neither chamber has yet considered a single appropriations bill, leaving them far behind schedule. Republican members have yet to coalesce around a strategy for raising the debt ceiling – or even determine when they plan to lift it.  

Though a government shutdown deadline of September 30 and a debt limit deadline sometime in October may seem distant, the House has only 13 legislative days before the annual August recess, and only 25 legislative days between now and October 1. The Senate has a slightly larger buffer: 14 legislative days before August, and 31 before the fiscal year ends.

“I am concerned about not having done a 2018 budget and not having begun the appropriations process,” Sen. Pat Toomey said late last month, adding that the danger of an unfavorable fiscal outcome rises with further delay. “It’s not clear to me that there’s a single discrete point in time at which it becomes inevitable, but the odds of a bad outcome do increase … the longer we go without doing a budget resolution and beginning the process.”

Republicans’ decisions over the next several months could come to define their ability to govern  and have significant implications for their electoral future—not to mention the fiscal health of the nation. A government shutdown would likely be blamed on GOP dysfunction since the party controls Congress and the White House, and failure to pass a budget would jolt Republicans’ chances for tax reform, a key agenda item.  

On the flip side, a low-drama solution to funding the government would temporarily eliminate deadline dysfunction, and a budget would ease the glide path for changing the tax code. Failure to lift the debt ceiling could lead to a catastrophic default on the nation’s debt, but lifting it without trouble could reverse the trend of using the debt limit as a partisan exercise.

“I’m hopeful that we’ll complete the process because it’s our job, but I also realize that hope is not a method."

Rep. Steve Womack

“I’m hopeful that we’ll complete the process because it’s our job, but I also realize that hope is not a method and that we have to find a resolve within our conference,” Rep. Steve Womack said.

“We’ll do the right thing, but it may come after we’ve exhausted all the other options,” the Arkansas Republican said when asked how he expected his party to handle the trio of fiscal issues. “It may not be pleasant to look at.”

Republicans have created the uncertainty themselves. The appropriations process is moving on a shortened timeline because GOP lawmakers decided in December, at the request of the incoming Trump administration, to delay completing last year’s appropriations process until the new president took office. The upshot was that funding for this year only passed Congress in May, eight months behind schedule.

Republicans also failed to pass a budget last year – but then issued an incomplete version of last year’s budget in early January to set up using the so-called “reconciliation process” – which allows legislation to pass with a simple majority in the Senate, sidestepping a filibuster there, though it must have a direct budgetary impact. This is not an unusual delay in the first year of an administration. But even so, leaders of the 115th Congress are stalled now because they cannot move on to next year’s budget while continuing to debate Obamacare.  

“Health care has to take a priority,” Budget Chairman Mike Enzi said in early June.

Even amid the scheduling challenges, there have been myriad policy disagreements stalling the process, frustrating lawmakers and imperiling the budget.

First, GOP lawmakers disagreed over the numbers in the budget: Most House Republicans wanted to boost defense spending above President Trump’s request, but fiscal hawks chafed at increasing the deficit. Ultimately, negotiations ended with Republicans agreeing to boost defense spending to a number between what Trump proposed and what many on the Armed Services Committee were pushing – $621.5 billion for next year. In return, conservatives pushed for bigger cuts to mandatory spending – government spending that happens on autopilot, outside the appropriations process.

That fight is playing out on multiple fronts. Budget Committee Chairman Diane Black (“chairman” is her official title; even the committee uses it) has been negotiating with other committee chairs, searching for several hundred billion dollars in savings. Many of the cuts would come from welfare programs including food stamps and housing assistance. But some of those chairs have balked.

Food stamp programs, for example, are funneled through the Agriculture Committee, led by Texas Rep. Mike Conaway. He is wary of getting locked into cuts now because by next year the committee must negotiate a massive Farm Bill – which authorizes nutrition programs, including food stamps.

“Traditionally, we’ve asked for as much flexibility as possible whenever these things have occurred in the past,” Conaway told reporters. “That would be our position now and we’re working with Diane aggressively to get to a yes.”

For conservatives, the push for mandatory cuts has become essential to back higher spending for the military. Rep. Jim Jordan, the former chair of the hard-line House Freedom Caucus, said they would be open to the higher spending only with major cuts elsewhere. But this is not a unanimous priority among Republicans.

Just before the Independence Day recess, 20 moderate Republicans wrote a letter to Speaker Paul Ryan opposing adding mandatory cuts to the budget, calling it “not practical” and saying it “will make enacting tax reform even more difficult than it already will be.”

Rep. Mario Diaz-Balart, a member of both the budget and appropriations committees, said the proposal to trim mandatory spending through reconciliation could imperil a major overhaul of the tax code – one of the main legislative agenda goals for Trump and congressional Republicans.

“I’m obviously in favor of reducing spending,” Diaz-Balart told RealClearPolitics. But “I want to make sure we do not put tax reform at risk in that bill.”

"Will we make October deadline? That’d be the goal. Will that happen? Probably not.”

Sen. Richard Shelby

Republicans’ search for votes to pass a budget reflects what they faced with their health care legislation: an ideologically divided conference with varied goals, which makes governing an ever-shifting puzzle. While party leaders have largely avoided putting a thumb on the scale of negotiations, they have made clear the end result of failing to pass a budget. 

“It think all of our members know we have to do tax reform if we want to get growth, and we have to have a budget resolution if we want to do tax reform,” Ryan told RCP in an interview in late June.

As House Republicans struggle to patch together enough support for a budget, efforts have barely scratched the surface in the Senate. Because health care is being pushed through reconciliation on last year’s budget, Senate Republicans cannot move forward on this year’s budget until they finish that effort. When Majority Leader Mitch McConnell delayed the health care vote until after the July 4 recess, the budget timeline pushed back further.

Meanwhile, the appropriations process is similarly behind schedule: The House Appropriations Committee has passed three of the 12 bills, and subcommittees have passed four others. The Senate committee has yet to mark up a single bill, but plans to finish its first – Military Construction and Veterans Affairs – this week.

By this time last year, the Senate committee had completed all 12, though none ever passed the floor; the House committee had finished 10 bills, four of which had passed the floor. By this time in President Obama’s first year, the House committee had passed nine bills, and seven had passed the full House; the Senate committee had passed seven and the full chamber had passed one.

Lawmakers and top congressional aides cite finishing last year’s appropriations process in May, and the late completion of the president’s budget around the same time, as reasons for the delay. They were forced to consolidate the entire appropriations cycle into a few months. But even as the House moves appropriations measures in earnest, they are crafting bills and spending levels that violate caps set by sequestration, which are set to take effect at the end of this year. Without a bipartisan agreement to spend above those levels, devastating across-the-board cuts would take effect. Though some lawmakers have called for more immediate negotiations on spending levels, those decisions have mostly been pushed until later in the year.

Instead, some Republicans have pushed for the House to package together and pass all 12 spending bills before the August recess as a way to break through. Though they would likely be fully opposed by Democrats and wouldn't pass muster in the Senate, scores of Republicans say it would be a way to vote on conservative spending bills and set a negotiating position for the fall. The schedule is tight, however, and it could be difficult to whip enough Republican support for a massive spending measure that has little to no chance of becoming law. Still, the committee is marking up two measures next week (and five others in subcommittee), rushing to complete the work before August.

"We want to cast our vision out there, we want to go fight for it and align ourselves together early on and build a strong position going into the fall," said Rep. Tom Graves, an appropriations subcommittee chairman pushing the plan.

 In the Senate, there is little panic among appropriators. The top Democrat on the committee, Sen. Patrick, Leahy, told RCP he is optimistic that passing all 12 bills on the chamber floor is possible with buy-in from both parties’ leadership – even though all 12 bills haven’t been completed on time since 1996 and the Senate hasn’t finished a single appropriations measure on time since 2011.

Other appropriators were similarly optimistic.

“It would be my hope that after the difficult time we’ve had on health care, that Sen. [Chuck] Schumer and Sen.  McConnell would see this as an opportunity for the Senate to function the way it’s supposed to,” said Republican Sen. Lamar Alexander.

"You can’t jam a health care bill down our throats, jam tax cuts down our throats and then when they can’t get unity in their caucus on the debt ceiling come ask us to bail them out.”

Sen. Chris Murphy

But the optimism is far from universal.

“October is looming because August is basically penciled out,” Republican Sen. Richard Shelby said in early June. “The question, you beg the question -- will we make October deadline? That’d be the goal. Will that happen? Probably not.”

Many lawmakers and aides expect the process to go as it has in recent years: passage of a continuing resolution to avoid a government shutdown, and one omnibus bill to fund the entire government passed at the end of the year. The singular unknown among lawmakers remains the president, who tweeted in May that the country might need a “good shutdown.”

Few on Capitol Hill consider a shutdown desirable -- or likely: Republicans, controlling all levers of government, understand they would take the blame from Democrats and the media, and probably voters as well. The bigger trouble for Republicans may be the other looming deadline, something that is anathema to many GOP lawmakers: raising the debt ceiling, something done with increasingly regularity as the debt has ballooned over the past two decades.

Republicans haven’t been forced to raise the debt limit under a GOP president in more than a decade – before it became a massive partisan football – and there are deep divisions within the party over what, and how much, can be added without risking a disastrous default.  

Ryan told RCP that he likely wouldn’t support a “clean” debt ceiling raise – lifting the limit on paying for America’s borrowing without enacting other legislative priorities. Democrats originally took a hard line in June, saying they wouldn’t back any increase without guarantees that any GOP tax reform wouldn’t increase the deficit. They quickly backed away from that gambit, with House Minority Leader Nancy Pelosi saying Democrats would back only a clean raise – which is what Treasury Secretary Mnuchin has called for. But some Democrats still want to take a hard line.

“You can’t jam a health care bill down our throats, jam tax cuts down our throats and then when they can’t get unity in their caucus on the debt ceiling come ask us to bail them out,” Sen. Chris Murphy told RCP.  

Some lawmakers on both sides of the aisle expect the debt limit to be tied into spending bills, paired with a bipartisan agreement to lift spending above the sequestration levels. Moderate Republicans, such as Rep. Charlie Dent, are calling for the issues to be taken off the table with bipartisan negotiations in July. And Rep. Mark Meadows, chairman of the Freedom Caucus, even called this month for leaders to move ahead on the debt ceiling. Though Meadows personally opposes a clean raise, he acknowledged that in the past Democrats and a small group of Republicans have passed those measures, and expected the same pattern to take hold this year.

“It’s like a florist being surprised by Feb. 14,” he told reporters late last month. “If they’re surprised by the fact that the debt ceiling is coming up, shame on all of us.”

But a clean raise would face stiff opposition from the staunchest fiscal conservatives in the party, and would put immense pressure on Republicans willing to join Democrats to pass it.

“I don’t like increasing the debt ceiling, but understanding [that] these are things you have to do, boy, I sure would like something,” said Sen. Ron Johnson. The Wisconsin Republican added that the vote “should be to try to instill some sort of fiscal control.”

But even those close to leadership say they don’t yet know how the issue will be resolved. Asked if the party had a debt ceiling strategy, Rep. Tom Cole, a close leadership ally, said, “I’m sure we do, but it hasn’t been shared.”

Ryan, in the RCP interview, wouldn’t entertain different hypotheticals, saying he was keeping different options open. He also wouldn’t say whether the issue will be handled before August.

“We’re talking,” he said. “Yes, I can tell you when: It’s going to be before [the debt ceiling is] hit.”

 Tomorrow: What keeps going wrong?

Correction: The number of appropriation bills approved by the House and Senate (or committees therein) during the same time period in the Obama administration were changed to reflect updates since the original draft of this story was completed. 

 

James Arkin is a congressional reporter for RealClearPolitics. He can be reached at jarkin@realclearpolitics.com. Follow him on Twitter @JamesArkin.

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