Vice President for
Federal Fiscal Policy
House Budget Committee Chair Diane Black is reportedly close to a deal with House Republicans on a 2018 budget resolution that would significantly increase defense and cut non-defense discretionary (NDD) programs, both of which are funded through the annual appropriations process. Black’s budget would break with a longstanding consensus among policymakers that the “sequestration” cuts that lowered the 2011 Budget Control Act’s already tight annual funding caps have severely constrained both defense and NDD funding. While policymakers have provided partial relief from the sequestration cuts on a bipartisan basis by lifting both the defense and NDD caps each year by equal amounts, the Black budget rejects this path — even though a bipartisan deal is essential to overcoming the impasse plaguing this year’s appropriations process.
The Black budget would reportedly set defense funding for 2018 about $72 billion above its sequestration-level cap. In contrast, 2018 NDD funding would be $5 billion below its sequestration-level cap — that is, the budget plan would not only leave the NDD sequestration cut fully in place for the first time, but it also would require a further $5 billion cut. NDD funds key investments, including education, medical research, infrastructure, and other programs that can help fuel economic growth and raise future living standards, as well as an array of vital public services, such as rental housing assistance, child care subsidies, food safety, veterans’ health care, and environmental protection.
Proposing more NDD cuts, or even letting sequestration on the NDD side take full effect for the first time, ignores the cumulative effect of the austere NDD funding over the past seven years that has hindered government’s ability to provide important services, invest in the productivity of the workforce, and meet national needs, as we’ve documented. The Black NDD funding level would be 17 percent below the 2010 level, after adjusting for inflation, and 22 percent below after adjusting for both inflation and population growth, pushing spending on these programs to the lowest level on record, measured as a percent of the economy (with data back to 1962).
More NDD cuts are not only unjustified, but they also ignore the path to a successful bipartisan budget deal, in one of the few areas in which bipartisan agreement has been achieved in recent years. The two major bipartisan budget agreements — those of 2013 and 2015, reducing sequestration in 2014-2015 and 2016-2017, respectively — provided sequestration relief equally to defense and NDD programs (so-called “parity”).
The Trump Administration tried to undermine this parity principle when policymakers were negotiating the final bill for 2017 appropriations earlier this year. But Congress largely rejected that approach and stuck with the 2015 agreement, which boosted the defense and non-defense caps for 2017 by equal amounts.
To the extent that final 2017 appropriations deviated from parity, it occurred outside the caps by providing additional defense and NDD dollars through “Overseas Contingency Operations” (OCO), a special category of funding for overseas military operations and related foreign assistance that’s not subject to the caps. Policymakers funneled funds through OCO as a gimmick to circumvent both the defense and NDD caps and provide more funds for each category (though admittedly more for defense) and avoid the need to offset the cost through budget savings elsewhere. In contrast, policymakers offset the cost of raising the caps as part of the 2015 deal. The Black budget would also reportedly include $10 billion more in OCO funds than the Administration has requested to provide a further, backdoor boost to defense.
Senate Majority Leader Mitch McConnell recently noted that the appropriations process can do little more than tread water until there is “bipartisan agreement on how much we're going to spend.” Ignoring the practical need for a bipartisan solution — in practice, passing appropriations bills and raising the caps will both require 60 votes in the Senate — and proposing lopsided budget plans that don’t provide the requisite funds to address a range of unmet non-defense needs is a dead end. With history as a guide, policymakers should start now to work toward another bipartisan agreement that provides equal amounts of sequestration relief to defense and NDD.