Budget Deal Needed to Protect Key Investments

Policymakers should reach agreement on lifting the annual caps on total defense and non-defense funding before they leave for their August recess, so they can complete the appropriations bills in a timely way this fall — without the brinkmanship and uncertainty that can disrupt important government services. Freezing funding at 2019 levels, as some suggest, would shortchange non-defense programs and leave key investments underfunded. Policymakers should instead build on the last bipartisan agreement, which boosted funding for non-defense programs in 2018 and 2019 and began to reverse the federal disinvestment that started in 2011.

The House has already passed 10 of its 12 appropriations bills and advanced the other two — and, in total, they increase 2020 non-defense funding by 7.0 percent over the current level, or 4.4 percent after adjusting for inflation. Even with this increase, non-defense appropriations as a share of the economy would be below the 2010 level and near their historic low under that measure, with data back to 1976. The House bills would make important investments in key areas and show how additional resources can address pressing needs:

• Decennial census. The Constitution requires the federal government to undertake a census every ten years. The next census is set for 2020, and it requires significant additional funding to hire the needed enumerators and supervisors, open field offices, and conduct outreach to improve response rates. In response, House appropriators would provide $7.5 billion for the decennial census, to be funded outside the annual budget caps.
• Veterans. A key driver of Department of Veterans Affairs (VA) funding is the cost of veterans’ health care, which rises each year based on medical inflation and changes in demand. In addition, the President and Congress last year enacted the MISSION Act, which expanded access to government-paid health care provided by private doctors (and other types of providers) to veterans who don’t have easy access to VA health facilities. The House appropriations bill would increase VA health care funding to address the MISSION Act’s cost, which the Congressional Budget Office estimates will require nearly $9 billion in 2020 and more in 2021 and beyond.
• Child care. Child care assistance funding falls well short of what’s needed to adequately support low-income families: only about 1 in 6 children in low- or moderate-income families who qualify for child care assistance receives it. Policymakers raised funding in 2018 and 2019 under the last budget deal, improving access and increasing the resources for initiatives that improve child care quality (such as better teacher pay and training), but the gap between funding and need remains very wide. The House would boost funding in 2020 for the nation’s main child care program — the Child Care and Development Block Grant — by $2.4 billion over the 2019 level, closing more (but far from all) of the funding gap.
• Head Start. Current Head Start funding also falls short of need. In 2017, only 31 percent of eligible three- and four-year-olds had access to Head Start, and only 7 percent of eligible infants and toddlers had access to Early Head Start. The House would raise Head Start funding by $1.5 billion, or 15 percent, over the 2019 level. It would also expand Early Head Start and partnerships between Head Start and child care programs to better support early learning for infants and toddlers in low-income families.
• Housing. Rental assistance is highly effective at reducing hardship for families but, due to funding limitations, only 1 in 5 low-income families with children eligible for housing assistance receives it. The House would boost funding for the Housing Choice Voucher Program and Section 8 Project-Based Rental Assistance by $2 billion in 2020 to cover the cost of rising rents and fully renew the aid that helps keep rent affordable for more than 3.4 million households, nearly all of which include seniors, people with disabilities, or children. Included in these funds is $85 million to help some 9,000 additional homeless veterans and at-risk families with children afford decent, stable housing.
• K-12 education. Quality education is a key driver of economic opportunity, yet federal support for students, teachers, and public schools has fallen in recent years. The House would increase funding by roughly 7 percent for the two largest K-12 education programs: Title I, which provides state and local funding for students from disadvantaged communities, and the Individuals with Disabilities Education Act, which provides funding for students with disabilities. Despite these increases, both of these critical programs would still be 3 to 4 percent below their 2010 funding levels in inflation-adjusted terms.
• Environmental protection. To combat the growing consequences of pollution and climate change, the House would increase Environmental Protection Agency funding by 8 percent. Almost three-quarters of that increase would go to State and Tribal Assistance Grants, which help local authorities clean up brownfields and toxic contamination and ensure the air in their communities is clean and the water is safe to drink. Even with this increase, these grants would still be one-fifth smaller than they were in 2010 in inflation-adjusted terms. The House bills would also increase funding for environmental science research.
• IRS enforcement. Policymakers have slashed funding for IRS enforcement and operations support (which includes office space, information services, and other functions that support the enforcement division) by roughly one-quarter since 2010, after adjusting for inflation, severely weakening the agency’s ability to enforce the law and collect the revenues owed. To reverse this trend, the House would boost funding for IRS enforcement and operations support by 7 percent in 2020 over the prior year. Both the President’s budget and House appropriators also propose a “cap adjustment” that would allow additional IRS enforcement funding outside the budget caps, acknowledging the importance of this basic governmental function and recognizing that — as the Congressional Budget Office and Joint Committee on Taxation have reported — increased funding for IRS enforcement activities would more than pay for itself over time in higher revenues, due to improved compliance.

If policymakers don’t reach a deal to raise the caps and instead rely on a full-year continuing resolution (CR) that effectively freezes funding at the 2019 level, some may argue that they can still address many of these priorities through “anomalies” — a common budget procedure through which policymakers adjust funding for certain accounts in a CR — rather than applying a CR’s default of freezing all appropriations accounts. But, with a freeze CR, anomalies that increase some programs would force corresponding reductions in other programs, leaving them funded below their 2019 levels.

The President and congressional leaders need to negotiate a new budget deal, just as their predecessors have done every time one was needed since the funding caps were first imposed.