Continuing Resolution for Congress Likely

Not much time is left for Congress to agree to a spending plan to fund the federal government for FY 2014.  The current continuing resolution (CR) funding the federal government for fiscal 2013 expires at the end of the fiscal year on September 30^th, 2013.  If nothing is done, the government will “shut down” on October 1^st, meaning non-essential services would be discontinued due to a lack of funding.  There is support for a short-term continuing resolution, as it is unlikely Congress will come to an agreement in the next two weeks.  The expected CR is likely to last a few months yet some reports are citing mid-December.  I would expect the support for the CR is going to garner wide-ranging support since it would allow Congress more time to focus on Syria and postpone the budget debate till later in the year.  Hopefully we won’t have a worrisome Christmas and New Year’s with sequestration debates, but it is looking like we are going to repeat that piece of history.

The two parties are still strongly divided on spending for the next fiscal year. Under current law, the FY 2014 spending level is set by sequestration, which sets lower spending caps for budget writers to meet on discretionary spending while mandatory cuts remain across-the-board.    Many disagreements exist over individual programs and funding priorities, even within the same party.  The major obstacle in the budget debate is the $91 billion overall gap in discretionary spending levels between the House and Senate budget proposals.  The Senate’s spending plan assumes sequestration is repealed, the House’s plan limits overall discretionary spending to the post-sequestration level, but would reduce non-defense spending caps by more than called for under current law to protect defense spending from the reductions.

Without an agreement to modify these spending caps, any excess discretionary spending above these limits will trigger across-the-board cuts (sequestration) to bring fiscal 2014 in compliance with the caps.  The law does not enact the cuts until January, meaning the New Year has a strong possibility of seeing the same headlines as last year.