May 5, 2017

Both chambers of Congress have now passed the $1.1 trillion omnibus appropriations package funding the federal government through the end of fiscal year 2017 on September 30, 2017. The legislation (taking the form of a previously unrelated bill, H.R. 244) will be signed into law by President Trump today, averting a government shutdown that would otherwise start at midnight tonight.

The House of Representatives passed the bill on Wednesday by a roll call vote of 308 to 118. 56 percent of Republicans and 92 percent of Democrats supported the legislation. Then the Senate passed the bill yesterday by a roll call vote of 79 to 18. 64 percent of Republicans and 100 percent of Democrats supported the bill there.

The text of the enrolled bill is here, the text of the explanatory statement for Divisions A through G is here, and the text of the explanatory statement for Divisions H through L is here. The Congressional Budget Office’s score of the bill is here and the White House’s Statement of Administration Policy on the bill is here.

The long-overdue finalization of the fiscal 2017 budget process sets the table for the submission of the fiscal 2018 budget, anticipated May 22.

This article gives an overview of the entire bill. For detailed information on the Department of Transportation budget, see this article and for details of other transportation and infrastructure spending in the bill, see this article.

The final bill provides about $70.6 billion for all forms of infrastructure spending, as shown in the chart below. (Operating subsidies and overhead costs are removed from the totals where possible, but this is not possible for mass transit operating subsidies, which are at the discretion of local transit agencies.) The definition of “infrastructure spending” shown here is largely consistent with the one used in the March 2015 Congressional Budget Office report Public Spending on Transportation and Water Infrastructure, 1956 to 2014 (which can be read here).

When looking at the big picture, the Appropriations Committees rejected the Trump Administration’s proposed shifts of funding from non-defense programs to defense programs. The appropriators really had no choice – the Trump plan required the Budget Committees to amend the Budget Control Act spending caps on the defense and non-defense categories to allow the switch, which did not happen. Had the appropriators gone ahead with the extra $25 billion in defense spending subject to the BCA cap that the President requested, this would have forced another round of budget sequestration to get defense spending back down to the cap level. And if the defense could not be increased, then the appropriators saw no reason to go along with the Administration’s proposed $15 billion in non-defense cuts, either.

However, the appropriators did provide for a significant increase in defense funding by using a loophole in the Budget Control Act. That 2011 law allowed appropriations for military operations in Iraq and Afghanistan and the “Global War on Terror” to be exempt from the spending caps. And even though Iraq and Afghanistan actions have wound down considerably since 2011, funding for the “OCO” exemption is going strong, indicating that the Pentagon and its appropriators are using the OCO loophole to fill gaps in the regular defense budget that ought to be subject to the spending cap.

As a Congressman, Mick Mulvaney (R-SC) was a strong opponent of the OCO loophole. And as President Trump’s budget director, Mulvaney proposed considerably less funding for defense OCO in 2017 than the House or Senate had wanted. But in the final omnibus negotiations, Mulvaney accepted levels of base defense spending that were $23.2 billion less than he asked for, but the White House got $18.7 billion more in defense OCO than they wanted. So the Administration got over $20 billion of the $25 billion defense increase it wanted – but they got it by circumventing the Budget Control Act’s spending caps instead of amending the caps.

Likewise, President Trump had requested an extra $3 billion in fiscal 2017 for the Department of Homeland Security – roughly half for increased immigration enforcement and half for initial construction of a wall on the U.S.-Mexico border. The appropriators rejected the wall but gave the President the enforcement money. Total funding for the Homeland Security portion of the omnibus bill is $1.4 billion more than either the House or Senate committee version of the bill, which goes for a boost to the regular ICE enforcement budget in title I of the bill and $1.1 billion in special funding in a new title VI of the Homeland bill. The extra Homeland funding was offset by cuts to other subcommittees, principally Agriculture, Financial Services, Labor-HHS-Education, and State/Foreign Operations.

As scored by CBO, the omnibus bill meets the Budget Control Act spending cap levels of $551.068 billion for the defense category and $518.531 billion for the non-defense category. The chart below shows how the final bill broke down the $518.531 billion in net non-defense funding.

Looking ahead to fiscal 2018, unless the BCA caps are amended, the cap levels will actually drop a bit from the 2017 levels. We won’t know the precise levels until the Office of Management and Budget submits its official estimate in the 2018 budget, but CBO estimates the defense cap will drop by $2.029 billion and the non-defense cap will drop by $3.159 billion (six-tenths of one percent).

In 2013 and 2015 budget deals, President Obama and Congressional negotiators agreed on cap increases split exactly evenly between defense and non-defense. But one of the few bragging points the Trump Administration is repeating this week is that the defense OCO work-around is the equivalent of increasing the defense cap but not the non-defense cap. That attitude is unlikely to get Democratic buy-in when negotiating real changes to the caps, which will require 60 votes in the Senate.