The Better-Late-Than-Never Omnibus Appropriations Bill

David Super

      In the wee hours of March 9, congressional leaders filed the text of a bipartisan, bicameral agreement on funding for the fiscal year that is now almost half-completed.  This legislation contains both provisions of considerable short-term importance and clues about significant changes in how Congress operates.  I will briefly summarize each.    

     Although the vast amount of public attention has focused on President Biden’s American Rescue Plan Act and his pending Build Back Better reconciliation bill, his proposed increases in domestic discretionary spending would have been almost as transformational.  This oversight results from the tendency of scholars and advocates (myself included) to shy away from annual appropriations legislation.  The appropriations process is relatively opaque and sometimes corrupt, it involves vast numbers of programs that no one person can know at all well, it involves a lot of crude rent-seeking, it is purportedly non-substantive (rules in both chambers preclude changing programs’ terms through appropriations bills), and it is nominally only for one year at a time.  Those of us that engage with fiscal affairs would much rather discuss permanent changes in tax law or in major entitlement programs such as Social Security, Medicare, and Medicaid.  Even the Court sometimes treats appropriations acts as junior statutes.

     This neglect of appropriations is a mistake.  Many crucial government functions cannot be organized into entitlements; many others could be but are not because of the bad political odor attached to the term “entitlement.”  Defense spending, which can easily crowd out other priorities, comes in annual appropriations; so does most low-income housing assistance, low-income child care subsidies, low-income energy assistance, and so forth. 

     The temporal distinction is blurring, too.  More and more tax changes and direct spending (“entitlement”) program changes are not permanent.  Conversely, because more and more appropriations come by way of continuing resolutions based on the prior year’s appropriations level – or through omnibus agreements like this one negotiated in the shadow of a possible continuing resolution – a single year’s increase or decrease in spending for a discretionary program can transform that program for years to come. 

     The Congressional Budget Act limits reconciliation treatment to revenue and “direct spending” legislation so the discretionary funding that annual appropriations acts provide is not eligible.  As a result, moving this package required ten Republican votes in the Senate.  In prior years, Democrats might have tried to work out a deal with a subset of Republicans – moderates or members of the Appropriations Committee – sufficient to provide the necessary votes.  Strong party discipline, and the disappearance of moderates in the traditional sense, has ruled out that approach.  This agreement therefore was made with the Republican leadership, representing the whole of the Republican Caucus.  The Republican Caucus is, to say the least, unsupportive of President Biden’s agenda.  It extracted a high price for this agreement. 

     President Biden’s budget proposal would have provided a 15.5% increase in funding for non-defense programs whose funding annual appropriations bills controls.  Similarly, the House-passed appropriations bills would have increased those programs by 16%.  These increases sought to make up for some of the deterioration in spending levels left by the across-the-board sequestration cuts congressional Republicans forced on President Obama and austere appropriations ever since.  The final agreement apparently increases these programs by 6.7%.  This leaves important needs unaddressed, but it is far better than the freeze that would have resulted from a year-long continuing resolution that would have funded programs in the absence of a deal. 

     Conversely, Republicans insisted on substantially more for defense – a 5.6% increase – than the President or Democrats would have preferred.  They spent the year insisting that defense spending increase in tandem with non-defense appropriations; depending on how one measures, they either achieved or fell slightly short of their goal of “parity.”  The final agreement can be seen as balancing Democrats’ desire for more non-defense spending with their aversion to the additional defense spending that would have been required to secure Republican support for more on the domestic side. 

     Underscoring the widespread understanding that appropriations bills have consequences for spending levels far beyond the year they nominally cover, this package segregated out two major categories of spending that are believed to be genuinely short-term:  aid to Ukraine and public health spending to combat the coronavirus pandemic.  Historically, supplemental appropriations bills were passed months after the regular appropriations to address unforeseen developments in the interim; this omnibus contained two supplemental appropriations that supplement itself. 

     Republicans insisted that the supplemental appropriation for the coronavirus be offset with reductions in other spending.  Congressional rules do not require such offsets – and nobody seriously suggested that the Ukraine spending be offset despite it being functionally indistinguishable from the coronavirus supplemental.  What appropriations are and are not offset is largely arbitrary at this point, but Republicans discerned that they had political leverage to force spending cuts in the amount of the coronavirus supplemental.  When Democrats are in power, Republicans demand offsets for spending on non-recurring emergencies to keep overall appropriations levels unchanged.  (They paused this demand during the Trump Administration.)  A significant quantity of substantively meaningless “offsets” – money that can be formally rescinded but that would not have been spent in any event – typically can be found, but this year Republicans insisted that the offsets be real.  

     Democratic leaders concluded that rescinding unused state and local aid provided in last year’s American Rescue Plan Act would be politically painless.  They were wrong.  Although partisanship has severely weakened the once-mighty National Governors’ Association, the potential loss of $7 billion across thirty states roused it to action.  Democratic leaders should have been able to afford a fair number of defections from Members responding to their governors’ concerns, but apparently the Republican leadership refused to commit to providing the votes needed to pass the package they had negotiated.  Accordingly, after extensive delays, Democratic leaders struck both the coronavirus money and the offsets and passed the remainder of the package. 

     Part of the Democratic leadership’s problem was a technical one:  they were relying on the rigid measures the Treasury has for when appropriated funds are legally obligated rather than a more pragmatic understanding of when money has been committed in practice.  The legislatures of several states had finished enacting their budgets for the upcoming fiscal year in reliance on these federal funds and would have had to have convened special sessions to slash those budgets had the rescission been enacted.  Republican negotiators, most of whom had never liked the state and local aid in the first place, cited Treasury’s listing of large “unobligated balances” to argue that states are “drowning in money”, and Democratic negotiators failed to look deeper.   

     The other part of the Democratic leadership’s problem was political:  failing to understand how the Republican Party has changed.  Historically, when the two parties reach agreement on contested legislation, each commits to deliver the votes of a majority of its Members.  When Speaker John Boehner was unable to do that, Minority Leader Nancy Pelosi extracted substantial additional policy concessions in exchange for providing most of the votes for must-pass legislation.  Here, not getting a commitment for Republican votes in the House put the leadership at the mercy of their defectors.  The leadership could be forgiven for not seeing the need to do so as the NGA in recent years often has been unwilling to defend states’ fiscal or autonomy interests when doing so would interfere with national Republican initiatives.  Here, however, Republicans apparently saw reducing state and local aid funds as a move they forced on Democrats rather than their own initiative so Republican governors felt free to green-light NGA’s protest.   

     To accommodate divisions within both caucuses, leaders brought the omnibus to the floor under a special rule calling for separate votes on two halves of it – very roughly its defense and non-defense parts – so that Members opposed to one half could oppose it without sinking the entire package.  The rule provided that, if both components passed, they would be combined automatically into a single engrossed bill sent to the Senate.  As it happened, both components received overwhelming support once the state and local funding cut was removed.  This splitting procedure, a variant of which Republicans also employed when they ran the House, allows Members to obscure what they are doing by voting against provisions they ensured would pass with a relatively opaque procedural one – to establish the splitting procedure – that journalists and voters are unlikely to understand.  This is vaguely analogous to a Supreme Court opinion that commands different majorities for its various parts – but the justices do not have to run for re-election. 

     The omnibus legislation now goes to the Senate, where it easily has the votes to pass.  A handful of Republican senators will surely oppose it for “spending too much” or conceding too much to the Democrats.  If they so desire, Senate rules allow them to slow it down for several days even though the bill has a super-majority sufficient to end any filibuster.  When Senator McConnell publicly declared that quick passage was vital to helping Ukraine, he signaled strong disapproval of such tactics (although a few Republican senators often take pride in undermining him). 

     More likely the bill will be brought to the floor under a unanimous consent agreement crafted by Leaders Schumer and McConnell that allows each side to offer a finite number of amendments, with limited time for debating each.  This agreement likely will specify that the amendments fail unless they receive sixty votes.  This procedure allows each side to force senators of the other party to take politically difficult votes without any risk that an amendment would be adopted that would destabilize the deal.  It also allows up to nine senators to vote against their party without doing any immediate damage.  That is more than enough “free passes” to cover potentially endangered incumbents in this year’s election.   

     The path forward for the coronavirus supplemental appropriations that were dropped from the package is far from clear.  Republicans may see little reason to agree to move it separately, even with this or another offset, now that the omnibus is gone.  Democrats could presumably pass it through the House without an offset, force Republicans to filibuster it in the Senate, and hope that the impending exhaustion of important pharmaceuticals will increase pressure on Republicans to make a new deal.  By the time this happens, however, pipeline issues may prevent prompt replenishment of those supplies.

     @DavidASuper1