House Appropriations Actions Set Stage for Battle Over 2020 Funding Levels and Priorities

The House of Representatives has taken important steps forward in funding federal defense and non-defense discretionary (NDD) programs for the coming year. It has approved ten of the 12 annual appropriations bills, adhering to targets that the Appropriations Committee set for each of the 12 bills; those targets are consistent with the overall appropriations level that the House approved on April 9. These House actions provide a blueprint for overall federal discretionary investments and offer insight into House priorities. The House plan would raise total discretionary funding $51 billion above the level enacted for 2019 and $176 billion above the very low “caps” for 2020 dictated by the 2011 Budget Control Act (BCA).^[1] Both defense and NDD funding would be above 2019 levels, with NDD programs receiving the larger boost. This NDD increase would help fund programs for children, job training, the decennial census, medical research, and health care (especially for veterans).

But these increases cannot become law without a bipartisan agreement, supported by at least 60 senators and the President, to amend the BCA by raising the caps. The President and Congress have enacted agreements covering each year since 2013, generally for two years at a time, to increase the BCA’s austere caps. The most recent agreement, for 2018 and 2019, provided sufficient additional funding to allow for new investments in some priority areas.

Absent a new agreement, however, the BCA caps will impose deep cuts in 2020 on both defense and NDD programs.^[2] Moreover, if Congress and the President fail to negotiate a more substantial budget agreement and agree instead only to freeze funding at current levels (and to raise the caps accordingly), the results would still be damaging — particularly for NDD programs. Such a scenario would not only wipe out important investments provided by the House appropriations bills but lead to cuts in most NDD programs, as the expected funding increases to accommodate needs in certain selected areas such as the decennial census and veterans’ medical care would force cuts in the remaining programs.

House Plan Raises Funding for Both Defense and Non-Defense

The House Appropriations Committee approved the 2020 funding allocations for each of its 12 subcommittees on May 6, consistent with the plan the House adopted on April 9.^[3] The Appropriations Committee has since approved all 12 bills and the full House has passed ten of them. These subcommittee allocations and the resulting 12 bills are consistent with the split between defense and non-defense appropriations in H.R. 2021, introduced by House Budget Committee Chairman John Yarmuth and House Appropriations Committee Chair Nita Lowey, which the House Budget Committee approved on April 3.^[4] (See Table 1.)

As Table 1 shows, the House plan would provide increases relative to the 2019 level for both defense and non-defense programs, although the non-defense increase would be larger. Relative to the BCA caps, the plan would add equal amounts — $88 billion each — to defense and NDD programs, an approach that policymakers have termed “parity” in prior negotiations to raise the BCA caps.

Freezing NDD funding in 2020 at the 2019 level would actually result in a squeeze, for several reasons. First, prices rise and the population increases each year. Second, additional NDD needs exist in 2020 due to the added costs of the decennial census and the rising costs of veterans’ medical care, including from the expansion of care outside VA medical centers that was enacted last summer in the Mission Act. An increase over the 2019 NDD levels also would help in offsetting the cumulative cuts of at least $400 billion that NDD programs experienced from 2011 through 2017, relative to the inflation-adjusted 2010 level.^[5] Those cuts were largely due to the BCA caps and would have been even deeper had bipartisan budget agreements not raised the BCA caps for each year starting in 2013.

The House plan for 2020 would thus continue the pattern of cap relief and, like the bipartisan deal covering 2018 and 2019, it would make up for a portion of the lost investments in NDD programs since 2011. The House plan would add $34 billion (5.7 percent) in NDD funding to the 2019 level (an increase of $19 billion, or 3 percent, after adjusting for inflation). In contrast, if NDD funding were limited to the current BCA caps, it would fall by $54 billion or 9 percent below the 2019 level — an 11 percent cut after accounting for inflation.

Funding Increases Vary by Subcommittee to Reflect New Needs, Priorities

Table 2 shows how the House Appropriations Committee has allocated NDD funding for 2020 among the 11 subcommittees that fund NDD programs,^[6] after accounting for various cap adjustments and scorekeeping adjustments to better represent the actual dollar and percentage increases in funding. (See the Appendix for an explanation of the adjustments.)

The NDD category encompasses a broad range of programs: education, scientific research, infrastructure, national parks and forests, environmental protection, some low-income assistance, and public health, as well as many basic government operations including law enforcement, courts, and tax collection. It also includes many programs related to national security, including services for veterans, homeland security, and foreign aid.^[7]

As Table 2 shows, the plan would raise NDD funding by 7.0 percent overall from 2019 to 2020. Each of the 11 subcommittees except the Homeland Security subcommittee would receive an increase over the 2019 enacted level, with the percentage increases varying. Reallocating funding among subcommittees — and thereby among agencies — is a fundamental part of the congressional appropriations process. And the appropriations bills themselves annually reallocate funding among programs within agencies to respond to changing needs and priorities; this is a key virtue of annual appropriations and a liability of biennial appropriations or year-long funding freezes, even if the total levels are otherwise adequate.

For example:

• The Commerce-Justice-Science subcommittee would receive an 11.4 percent increase, reflecting the significant cost of the 2020 decennial census. Of note, the House plan would allow $7.5 billion for the decennial census to be funded outside the caps; without this adjustment, meeting the Census Bureau’s increased needs would force corresponding reductions in other programs.
• The Interior and Environment subcommittee would also receive an 11.4 percent increase, boosting funding for programs ranging from environmental protection to Indian programs — especially health — and significantly increasing funding for wildfire suppression, as permitted by a recently enacted provision of law to fund a portion of these costs outside the BCA caps.
• The Veterans Affairs subcommittee would receive a 9.1 percent increase, largely to accommodate the rising costs of veterans’ health care, including the expansions implemented as part of the recently enacted Mission Act.^[8]
• The Labor-HHS-Education subcommittee would receive an 8.6 percent increase, providing investments in key areas such as child care and Head Start, job training, K-12 education, Social Security operations, and family planning.^[9]

Keeping Funding at 2019 Levels Would Place Budget in a Straitjacket

Absent enactment of legislation to raise the BCA caps, policymakers could enact 2020 appropriations via a “full-year continuing resolution” (or CR), which would freeze 2020 funding at nominal 2019 levels, in this case for all of fiscal year 2020 (October 1, 2019 through September 30, 2020) with a few exceptions.^[10] As noted above, a freeze would be inadequate for most programs. More funding would be needed in 2020 just to keep pace with rising prices. Also, the costs of many federal programs depend in large part on the size of the population served. For example, the number of recipients of old-age, survivors, or disability benefits will rise by 1.3 million (2 percent) in 2020, according to the Social Security Administration (SSA), suggesting a corresponding need to increase SSA staffing — the cost of which counts as discretionary funding.

Moreover, a freeze would set in concrete the subcommittee-by-subcommittee priorities enacted for 2019, and within those constraints, the program-by-program priorities that each subcommittee enacted for 2019. Yet needs change from year to year. The most obvious example is that the Constitution demands a census in 2020, which requires substantial additional funding to cover the cost of hiring and training 300,000 enumerators and supervisors, opening field offices, conducting an outreach campaign to improve response rates, going door-to-door to elicit information from unresponsive households, and processing responses. But there are hundreds of programs for which relative needs change from year to year. In short, a freeze would be a straitjacket, not a desirable outcome.

Funding Freeze Would Also Breach BCA Caps, Threatening Deep, Automatic Cuts

A freeze CR that extends past the date on which Congress adjourns, or extends through 2020, would leave NDD funding tens of billions of dollars above the 2020 NDD cap, triggering automatic cuts to NDD programs according to rules laid out in statute.^[11] Those rules, which exempt veterans’ programs and limit the automatic cuts to 2 percent for Indian Health Facilities and Services and for Community and Migrant Health Centers, would subject all other NDD funding — whether inside or outside the caps — to an across-the-board cut of an estimated 11.4 percent. The law dictates that these automatic cuts occur 15 days after Congress adjourns to end the session, which would be mid-January at the latest.

Such a freeze CR would also leave defense funding far above its 2020 cap, triggering automatic defense cuts as well. If the President chooses to exempt funding for military personnel,^[12] the remaining 2020 funding for the Department of Defense would be cut an estimated 11.6 percent across the board, regardless of whether it is designated for regular defense purposes or for war. Additional defense-related funding provided to other agencies would be cut an estimated 9.2 percent across the board.^[13]

To be sure, Congress and the President would be highly unlikely to agree to a freeze CR that they knew would lead to automatic, deep cuts shortly thereafter. More plausibly, a freeze CR would include a provision postponing the automatic cuts (in the case of a temporary CR) or turning them off entirely (in the case of a full-year CR). But even without the automatic cuts, a CR would leave funding both inadequate and poorly allocated, as the previous section of this analysis explains.

Appendix

More Complete Accounting Also Reflects Funding Outside BCA Caps

For policy or technical reasons, some discretionary funding does not count against the BCA’s defense and NDD caps. Table 1 shows only those amounts that count against the caps. Table 2 and Appendix Table 1, below, include all NDD funding available to the subcommittees, both amounts that count against the caps and amounts that don’t. Appendix Table 1 shows the different adjustments that were made.

We use the phrase “does not count” against the caps to cover four types of funding:

• Funding that technically counts against the caps but also triggers dollar-for-dollar increases in those caps, so that it effectively does not count. (See rows (a) and (b) in Appendix Table 1.) The largest and most well-known of these adjustments is for war costs, known as Overseas Contingency Operations or OCO. Other cap adjustments operate the same way as the OCO adjustments.
• Funding for the CURES Act, which covers some medical research, opioid addiction prevention and treatment, and other health-related initiatives. (Row (c) in the table.) By law this appropriation does not count against the cap and does not trigger a cap adjustment; it is effectively scored off to the side.
• Funding offset by certain housing fee income from the Federal Housing Administration (FHA) and the Government National Mortgage Association (Ginnie Mae or GNMA). (Row (d) in the table.)
• Funding offset by provisions in appropriations bills that reduce mandatory funding, thus freeing up room for more discretionary funding within the stated caps. (Row (e) in the table.) Savings from these “changes in mandatory programs” (CHIMPs) have always been credited to the Appropriations Committees as a matter of committee-by-committee accountability.^[14]

Some outside-the-caps funding does not change from year to year. For example, the House plan would limit the Defense Department’s war-related funding for 2020 to the enacted 2019 level of $69 billion. Accounting for this war-related funding makes the 2019 and 2020 totals $69 billion larger but makes the percentage increase from 2019 to 2020 slightly smaller (2.4 percent vs 2.6 percent). The same is true for non-defense, war-related funding provided to the State Department, which would receive the same amount — $8 billion — in both 2019 and 2020 under the House plan.

But most such outside-the-cap funding does grow from year to year. This is especially the case because, under the House plan, $7.5 billion in funding for the decennial census will not count against the 2020 NDD cap. That $7.5 billion would raise both the 2020 NDD total and the 2019-2020 NDD growth rate. Similarly, the BCA caps were amended in March 2018 to allow enactment of $2.25 billion outside the 2020 and 2021 caps for wildfire suppression, which assists in fire prevention and other forest management work; this provision is first effective in 2020 and so increases the 2020 total but not the 2019 total, and therefore increases the 2019-2020 growth rate.

The House plan would also create a new outside-the-cap adjustment of $400 million for 2020 for added IRS enforcement activities as part of a plan to limit the hundreds of billions a year in taxes that are owed but not paid.^[15] And it includes $1.85 billion for other, existing outside-the-cap program integrity activities. These include Social Security Administration reviews of disability recipients’ continued eligibility for benefits, efforts by the Centers for Medicare and Medicaid Services to combat health care fraud and abuse, and the Employment and Training Administration’s review of use of unemployment benefits. In each case, the additional funding is understood to recoup considerably more than the cost of the extra funding itself.

Working in the other direction is the fact that the Congressional Budget Office’s estimate of how much discretionary funding will be offset by certain housing fee income will fall by $2.1 billion from 2019 to 2020. So while the gross level of funding available to the Transportation-HUD subcommittee is higher in both 2019 and 2020 than shown in the subcommittee’s formal allocation (which are net of the housing receipts), the overall increase from 2019 to 2020 is substantially lower.

None of the tables in this analysis reflect discretionary funding enacted outside the caps in response to natural disasters or other emergencies because no one can predict whether the need for such funding in 2020 will be quite small or unusually large, or even whether more disasters will strike in 2019. Moreover, any increase or decrease in such a funding does not represent a change in budget policy.

Similarly, none of the figures in this analysis or adjustments discussed in this Appendix include costs of “appropriated entitlement” programs, such as Medicaid. Those programs are also funded in annual appropriations bills but are mandatory and so are not subject to the BCA’s caps on discretionary programs, and the Appropriations Committee has no effective choice in how much funding to provide for these programs.

Finally, none of the figures in this analysis or adjustments discussed in this Appendix include funding for highways and mass transit that is derived from the Highway Trust Fund. This funding is treated as mandatory, not discretionary, by the Congressional Budget Office and the Office of Management and Budget, and therefore is not subject to caps or otherwise constrained by the BCA and is not part of the House plan. However, for more than 40 years the Appropriations Committees have set annual obligation limits on the use of that mandatory funding, and the budget process treats the spending that flows from those obligation limits as discretionary. As a consequence, a full treatment of discretionary spending would include Highway Trust Fund expenditures. For that reason, we and others sometimes add the trust fund obligations to discretionary funding to produce a hybrid total, but we have not done so for this analysis.