President’s Budget Takes a Bite Out of Sequester (and the Hill bites back)

By: Emily Holubowich, Senior Vice President

A budget is a statement of priorities. And in setting priorities, there have always been winners and losers. But in the years since the enactment of the Budget Control Act of 2011 and sequestration, even the winners are losing. The fact remains that even with the partial and temporary sequestration relief offered by the Bipartisan Budget Act (BBA), the spending levels remain too low to allow for meaningful growth; even in programs that have historically been sacrosanct.

Take the National Institutes of Health (NIH), which has historically enjoyed widespread, bipartisan support—so much so that its funding was doubled even when control of the White House and Congress changed hands. President Obama seeks $30.2 billion for the agency in the fiscal year (FY) 2015 budget request. This is an increase over FY 2014 funding, but does not fully reverse the $1.5 billion cut the agency sustained under sequestration in FY 2013. And it’s nowhere near close to keeping pace with inflation.

Now travel back to a better time, pre-BCA. It’s early 2010, and this same President requested $32.2 billion for NIH’s FY 2011 budget. Does the President care any less today about NIH than he did four years ago? Certainly not—he’s mentioned in every State of the Union address since that our nation must prioritize health research. The BCA spending caps and sequestration together have made significant growth in NIH impossible, despite lawmakers’ best intentions. The days of “doubling” any program or agency’s budget are long gone.

Let’s face it: austerity bites!

The administration recognizes this fact, and uses the budget to try to reopen negotiations on sequestration and more meaningful deficit reduction. Specifically, the FY 2015 budget seeks to provide appropriators some much needed wiggle room to strategically reinvest in education, job training, infrastructure and research through a new $56 billion “Opportunity, Growth, and Security Initiative.” This funding—split evenly between defense and nondefense programs—would supplement the $1.014 trillion spending cap for discretionary programs set by the BBA, offset with new revenue and savings from mandatory programs. In addition, the budget request seeks to replace sequestration with a balanced deficit reduction strategy of $1.2 trillion starting in FY 2016. (For more, see our previous budget analysis here.)

The idea of going above and beyond the spending caps, even if paid for, was not well-received on Capitol Hill. Democrats and Republicans alike rejected the opportunity to refight old battles about the overall level of discretionary funding. Thus the $56 billion bolus was rejected before it arrived. So for FY 2015, the BBA will remain the law of the land.

But FY 2016 is just around the corner. Less than a year from now, appropriators will be forced to contend with the full wrath of sequestration as they write spending their bills. And while the sequestered spending cap increases slightly in FY 2016, the impact on discretionary spending will be significant nonetheless. Unconstrained growth in certain defense and nondefense discretionary programs—principally, military and veterans health care benefits—will crowd out funding available for other programs within the strict discretionary caps.

The future of discretionary spending will likely be determined in a post-election lame-duck session, as Congress is sure to have unfinished appropriations business. Will the tough choices required by austerity lead policymakers to default to more continuing resolutions? Will a change of power in the Senate prolong action on FY 2015 until January? Will anyone have time or inclination to think about how to avoid sequestration in FY 2016, before the next budget is delivered to Congress? The answers will depend on the mid-terms, and of course, how much pressure lawmakers feel from their constituents. But for now, there’s no room for serious discussion about additional funding above and beyond the BBA caps.

Lisa Ellington

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