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  • Spending Bills Setting Up Reckless Defense Cuts

    Cracks in the Budget Control Act’s (BCA) spending caps are growing more visible as negotiators near completion of the first three appropriations bills for fiscal year (FY) 2012.

    Unless the House changes course, appropriations could be sailing toward a breach of the BCA limits and a debilitating freeze on defense spending while still gushing “disaster” and “emergency” funds that escape the BCA boundaries entirely.

    Under the agreement taking shape, House negotiators have essentially conceded to higher spending levels than those in the House-passed versions of the three spending bills—Agriculture, Commerce–Justice–Science, and Transportation–Housing and Urban Development—which are packaged together in a so-called “minibus.”

    The deal would put the final total for the minibus at $127.8 billion in budget authority—roughly identical to the Senate’s recommended total for the three measures and about $5.1 billion more than the House originally proposed. In addition, the Senate bills include $3.2 billion in “disaster relief” funds that are totally exempt from the spending caps, i.e., the money spent in excess of the BCA limits.

    This is because the BCA allows a formula-based amount of additional spending above the “official” BCA cap of $1.043 trillion to help remedy the effects of past weather “disasters” declared by the President. According to Administration calculations, the total of disaster funds could run as high as $11.3 billion if all the authority is used, and not a dime of it would count under the BCA limits.

    The BCA also allows unlimited additional spending for future events designated as “emergencies” by Congress and the President. When coupled with the disaster loophole, this makes the BCA caps almost meaningless.

    The Senate has larded its 12 appropriations bills with a total of $8.6 billion in “disaster relief” funds. House appropriators, to their credit, proposed no disaster spending. (See the Heritage Foundation Appropriations Tracker.) Nevertheless, on November 3, the House passed a procedural motion, with the support of 79 Republicans, urging minibus negotiators to insist on “the highest level of funding” for Federal Highway Administration disaster relief funding, which represents $1.9 billion of the disaster funds in the Senate bills.

    The motion is not binding, but it is likely to influence House appropriators to accept at least some of the Senate’s added spending. That would be the first opening of the disaster spigot, which would then likely widen with subsequent spending measures.

    Even more problematic, however, is how the path set by these first three appropriations bills could further risk military readiness with an irresponsible freeze in the defense spending bill.

    House versions of the 12 regular appropriations bills total $1.04 trillion, about $3 billion below the official BCA budget authority cap for FY 2012. The distribution of funds in the House measures includes $530 billion for the defense bill, an increase of 3.3 percent over FY 2011. The Senate provides a higher total for its non-defense spending but freezes the defense bill at the 2011 level of $513 billion.

    Therefore, depending on the sequence in which the appropriations are considered, each non-defense budget measure that passes at or near the higher Senate level increases the pressure on subsequent bills, including defense, to absorb deeper cuts to stay under the total BCA cap.

    Negotiations on a House-Senate version of the defense budget bill have not yet been scheduled.

    A defense freeze would be especially reckless now. Base defense spending has already sustained deep reductions in recent years and could face additional cuts ranging from $445 billion to $825 billion through 2021 under the existing BCA limits.

    The 112th Congress did succeed earlier this year in reducing discretionary spending by 3.8 percent, but its commitment to spending restraint has started flagging. Members gave up early on aiming for the pre-stimulus 2008 spending levels, as once promised. After the House budget resolution passed, House appropriators set their spending levels to meet its total of $1.019 trillion in discretionary spending. But as soon as the BCA was agreed to, with its higher $1.043 trillion ceiling, they added on extra spending, mostly in the Labor–Health and Human Services–Education bill.

    For all its faults, one virtue of the BCA is that it does call for a real spending cut of $7 billion in FY 2012 compared with 2011. The ceiling is riddled with loopholes, but appropriators do not have to exploit them. Instead, if they insist on this extra spending, they should offset any and all disaster or emergency spending with reductions elsewhere and stay under the official BCA cap.

    The unacceptable alternative, which appears to be taking shape, is to keep punching holes in the BCA cap—further eroding any credibility of the debt ceiling deal—and allow irresponsible cuts in defense spending. The vote on the first minibus bill will go a long way to determining which course Congress chooses.

    Posted in Economics [slideshow_deploy]

    2 Responses to Spending Bills Setting Up Reckless Defense Cuts

    1. Bobbie says:

      America can't afford unconstitutional matters! Please focus on her recovery! Obama isn't negotiating, he's giving ultimatums and one of them is compromising the safety and protection of this country! Please be concerned he even considers this! America needs your strength and bravery!

    2. Stan Doric says:

      If economics is budgets it seems like the whole of USA economy is frozen, those that have the money are not spending…Perhaps to get the wheel moving money should be given to the poor to show the rich how to spend, the rich will get the money spent by the poor and not have any more space to hide it and will have to spend ,with luck spend some of their initial hoarded dollars.Movement excitement confidence stimulation is health and security for all entities.

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