FY18 Budget Caps Increase By Another $558 Million

April 5, 2018

The Bipartisan Budget Act of 2018 was enacted on February 9 of this year to much fanfare and increased the statutory caps on annual appropriations for fiscal year 2018 by $143.2 billion – to $629.000 billion for defense appropriations and $579.000 billion for non-defense appropriations. The omnibus appropriations act passed by Congress precisely met those limits – as scored by the Congressional Budget Office just before Congress passed the bill.

The 2018 caps were raised by another $558 million this week, but very quietly. And, as usual, it is the fault of the Transportation-HUD Subcommittee.

On April 3, the White House Office of Management And Budget issued its official budget score of the FY 2018 omnibus appropriations bill (required by law to be issued within seven calendar days, excluding weekends and holidays, of the bill’s enactment, and the bill was enacted on March 23). OMB was given complete authority on scoring fiscal legislation for the purposes of sequestration-backed budget enforcement by the U.S. Supreme Court in the 1986 Bowsher v. Synar decision.

OMB declared that the total appropriations subject to the spend caps totaled $629.004 billion and $579.554 billion, as follows:

You might think that the fact that OMB, not the Congressional Budget Office, is in charge of scoring appropriations and enforcing the budget caps means that we are in for an infinitesimally small round of defense sequestration and a slightly larger but still small round of non-defense sequestration. However, in the FY 2018 omnibus appropriations act, Congress also included, in section 748 of Division E, the following:

Sec. 748. If, for fiscal year 2018, new budget authority provided in appropriations Acts exceeds the discretionary spending limit for any category set forth in section 251(c) of the Balanced Budget and Emergency Deficit Control Act of 1985 due to estimating differences with the Congressional Budget Office, an adjustment to the discretionary spending limit in such category for fiscal year 2018 shall be made by the Director of the Office of Management and Budget in the amount of the excess but the total of all such adjustments shall not exceed 0.2 percent of the sum of the adjusted discretionary spending limits for all categories for that fiscal year.

This means that OMB has the power to increase the statutory spending caps by a total of $2.416 billion (0.2 percent of $1.208 trillion) due to scorekeeping differences, but they are only using $554 million of that authority. The changes to the caps will be made official when OMB issues its final sequestration report for 2018, which should be within a few days.

As the table above indicates, the non-defense overage is because of the Transportation-HUD Subcommittee, and as usual, it is because of differences between OMB and CBO in the estimates for how much money the Federal Housing Administration (part of HUD) will receive in mortgage insurance premiums. The difference between OMB and CBO on that account is $826 million, explained by OMB as follows:

CBO scores ‐$7,701 million in negative subsidy receipts, whereas OMB scores ‐$6,875 million. In addition to differences due to CBO’s slightly more favorable estimates of subsidy rate and loan volume for forward mortgages, this difference reflects updated estimates by both OMB and CBO of negative subsidy receipts based on administrative changes to the Home Equity Conversion Mortgage (HECM) program announced by HUD on August 29, 2017.

The rest of the scoring differences in the Transportation-HUD Subcommittee only add out to $5 million.

Not all appropriations are subject to the statutory spending caps. When you look at total appropriations for 2018, there is one much bigger difference in scoring that jumps out:

FY 2018 Discretionary Appropriations
Millions of dollars of budget authority.
Base Defense 629,000 629,004
Base Non-Defense 579,000 579,554
OCO 78,097 78,097
Disaster Relief 7,366 7,366
Program Integrity 1,896 1,896
CURES Act 1,056 1,056
Emergencies 125,639 109,668
TOTAL 1,422,054 1,406,641

OMB and CBO have a $16 billion discrepancy as to how much the emergency appropriations for hurricane relief enacted in FY 2018 to date will cost. From OMB’s score of the November 2017 hurricane relief package:

OMB and CBO have conceptual differences in how to score debt forgiveness for the National Flood Insurance Program (NFIP), which results in a $16 billion difference in 2018 budget authority for the scoring of section 308 of this Act. CBO scores a $16 billion budget authority cost in 2018 to section 308 for cancelling $16 billion of NFIP’s debt. CBO’s baseline assumes that funding for NFIP is constrained by premium and fee receipts and their statutory limitation on borrowing authority. Therefore, CBO views cancelling the debt as resulting in increased spending to claimants. OMB’s baseline assumes the cost of paying the full amount of claims when they are due, not as they are financed, and views the cancellation of debt as allowing new borrowing to liquidate previously‐incurred contractual obligations for flood insurance claims rather than providing additional authority to obligate. Therefore, OMB scores no budget authority cost to section 308.

However, since appropriations designated by Congress as an emergency and for which the President signs an emergency declaration are exempt from spending caps, the scoring really doesn’t matter. Whether or not the eventual cost is closer to the CBO estimate, the OMB estimate, or double either estimate, the commitment has already been made.

Also, the OMB report makes it clear that the White House lost round one of the “War on CHIMPs” by a convincing margin. CHIMPs (changes in mandatory programs) are provisions in appropriations bills that change mandatory budget authority but, because they are contained in an appropriations bill, are scored as discretionary. Most CHIMPs budget gimmicks – the changes in budget authority (potential money) do not result in any changes outlays (actual money), but the “savings” are used offset new appropriations that will lead to the spending of real money. (Rescissions of highway contract authority are a prime example such a gimmick.)

The White House had hoped that, since the non-defense spending cap was just raised by $63 billion (all CHIMPs are in the non-defense budget since there are almost no mandatory programs in the defense category), the appropriators could finally dispense with the gimmicks, and in its unofficial proposal for spending the extra cap money, OMB included a $17 billion line item for getting rid of almost all of the $17.9 billion in CHIMPs that had been included in the FY 2018 budget request. And in the final FY 2018 budget resolution Congress enacted last year, section 4102 tried to limit all FY 2018 CHIMPs to an aggregate total of $17.0 billion.

Not only did the final omnibus appropriations bill ignore the Administration’s request to get rid of almost all CHIMPs, they also blew by the budget resolution’s $17 billion ceiling by a half-billion dollars. This does not bode well for the Administration’s proposal to change budget scoring rules so that CHIMPs can no longer be used to offset new discretionary appropriations.


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