Quick Hit – May 27, 2016

Disruptions to the Appropriations Process….

The smooth path to FY17 appropriations successes in the House ground to halt as the energy and water appropriations bill was voted down yesterday due to an amendment regarding LGBT rights. As Speaker Paul Ryan stated after the bill’s failure:

“When I became speaker one of the commitments I made to our members was to open up this process. That means … more amendments from both sides of the aisle. It means fewer predetermined outcomes and, yes, more unpredictability.”

An open amendment process for appropriations was a key element of Speaker Ryan’s agreement with Republican factions upon assuming the Speakership. Many lawmakers are already predicting that more controversial amendments and failure to individually pass the 12 necessary spending bills will require a continuing resolution at the end of the year.

How the Appropriations Should Go…

Usually, the appropriations bills reported by the House and Senate in May continue to advance through early June, and move to floor consideration throughout the summer. Both chambers typically aim to finish consideration of appropriations bills before the August recess, although the Senate process sometimes continues through the fall — this year’s August recess begins in mid-July due to the Presidential conventions. The fall and winter have recently been dominated by negotiations to reconcile the differences between the appropriations bills passed in each chamber. Debates between Senate, House, and the administration to find an acceptable compromise is what often prompts the passage of continuing resolutions to a prevent government shutdown at the end of the year.

At this early phase of the process, given the differences in the bills, a desire by Democrats to match any defense increase with non-defense increases, and the potential for politically charged amendments (LGBT rights, for example), it will once again be an exciting process. 

Business leaders should be communicating with their government customer regularly in order to understand the mutual implications of a CR on their specific programs.

The Four Defense Bills in Progress…

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Senate Defense Appropriations

The Senate Defense Appropriations Subcommittee approved a bill for FY17 on Tuesday, and the Senate Appropriations Committee approved the bill Thursday; summary found here. The bill adheres to the original budget agreement from last year, allocating $515.9 billion to base defense budget funding and $58.6 billion to Overseas Contingency Operations.

The main difference between the SAC Defense bill and the HAC Defense bill is that the Senate has chosen not to follow the House maneuver to shift OCO funds to prompt an overall increase in the defense budget next year. The Senate bill cuts approximately $15 billion in spending and will redistribute those funds towards operation readiness, maintenance accounts, shipbuilding, and aircraft procurement. Highlights of the Senate Defense appropriation:

Shipbuilding $2.1 billion increase, 3 additional ships, $1 billion for first Polar Icebreaker Recapitalization Project

Aircraft Procurement $2.5 billion increase (not originally requested)

    $979 million for twelve F-18 aircraft (Navy)

    $507 million for two F-35 carrier variant; and two F-35 vertical take-off, Joint Strike Fighters (Marine Corps)

    $367 million for fifteen Blackhawk helicopters (Army National Guard)

    $187 million for twenty-eight Lakota helicopters (Army)

    $160 million for two C-130J aircraft (Air Force)

    $150 million for two MV-22 helicopters (Marine Corps)

    $103 million for Compass Call aircraft replacement (Air Force)

   $75 million for UH-1N replacement helicopters (Air Force)

Readiness $900 million for National Guard and Reserves equipment account

Space Rockets/Engines — $396.6 million to space launch vehicles or rocket engines, launch procurements will be available to all certified launch providers regardless of where the rocket engine was manufactured (addressing the controversy over US use of Russian RD-180 engines)

OCO enables funding for ongoing threats, operations against ISIL, and the European Reassurance Initiative

Senate Majority Leader Mitch McConnell has stated that he would like to take up the appropriations bill after the NDAA. Expect further action on both of these bills when the Senate reconvenes in June.

Senate NDAA

The Senate voted to move forward with debate on the FY17 National Defense Authorization Act on Wednesday, but Democrats pushed against voting on a final version before the recess. Senate Minority Leader Harry Reid contested that the closed SASC markup session did not give lawmakers enough time to read and fully consider the bill.

Additionally, there are now many amendments to the bill that must be considered. At the forefront is SASC Chairman John McCain’s proposal to increase the Pentagon’s budget by $17 billion to provide the military with some of its “wish list” items such as 14 F/A-18 Super Hornets and 11 F-35 fighters, 36 UH-60 Blackhawk and 17 LUH-72 Lakota helicopters. McCain’s amendment would also raise military personnel salary by 2.1%, all in an effort to fight back against “short-sighted cuts,” said McCain, to the defense budget.

Other amendments, totaling over 170, address the Iran missile program, Guantanamo, the Afghan Special Immigrant Visa program, and more. Expect more amendments and more debate on the NDAA when the Senate returns after Memorial Day.

HLS Appropriations

Thursday, the Senate Appropriations Committee approved a $48.07 discretionary spending level for the Department of Homeland Security. The budget includes $6.7 billion for FEMA Disaster Relief Programs and $163 million for Cost Guard Overseas Contingency funding.

The $48.07 level is $245 million above the FY16 spending level and $740 million above the President’s budget request.

Budget Reform

Committee Chairs of the House and Senate Budget Committees are raising the issue of broad budget reform in Congress. HBC Chairman Tom Price is hoping to leverage support from the conservative wing of the Republican party to support passing a budget, in exchange for some rules changes. Efforts in the House are unlikely to gain Democratic support, but chances for SBC Chairman Mike Enzi are slightly better in the Senate. The proposals currently being made would bring significant changes the how the Congressional budget deals with mandatory spending, regulatory costs, etc., but these types of reforms have a long way to go before they gain bipartisan support.

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