Spending deal by Dec. 11 hinges on Thanksgiving allocation pact

Thanksgiving seen as key for allocations agreement

One of the remaining issues on a spending deal is whether to include added funds for veterans affairs under budget caps.  (Bill Clark/CQ Roll Call)
One of the remaining issues on a spending deal is whether to include added funds for veterans affairs under budget caps. (Bill Clark/CQ Roll Call)
Posted November 23, 2020 at 7:11pm

As negotiators race against the clock to write final spending legislation for the current fiscal year, signs of optimism emerged that a deal can be reached that would avoid a government shutdown next month.

Top appropriators missed a self-imposed deadline last week for reaching a bipartisan framework for a fiscal 2021 omnibus spending package, but talks continued Monday. Current stopgap funding runs out on Dec. 11.

If Republicans and Democrats can get an agreement on how to divvy up about $1.4 trillion in discretionary spending among the 12 regular appropriations bills before Thanksgiving, there is a path to completing an omnibus on time, according to people familiar with the talks.

“I think they get there,” one former congressional aide said Monday. “December 11th is a quick turnaround, but they can do it if they get an agreement in the next few days [on allocations]. If it doesn’t happen pre-Thanksgiving, then it will be tough to make that deadline.”

Congressional aides expressed hope.

“Good progress has been made and there is still strong momentum to complete an omnibus by the December 11 deadline,” said a Democratic aide on Monday. The aide was not authorized to speak publicly about confidential negotiations.

Nevertheless, obstacles remain. Chief among them is funding for a border wall sought by President Donald Trump and opposed by Democrats, aides said.

The wall is one of the signature policy demands the Trump White House has pushed over the last four years, and it is unlikely Trump will sign a bill that does not include construction money.

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The Senate's draft fiscal 2021 Homeland Security bill would provide the requested $2 billion. The House version provides no funds for the wall, and would rescind $1.375 billion provided in fiscal 2020 for wall construction.

Democrats could be emboldened by the election results to deny Trump the money he wants on his way out the door.

One person familiar with the talks said while Democrats lost seats in the House, the Democratic caucus reads the overall election results as a repudiation of Trump policies and sees no reason to accept any funding for the wall.

“I think that she [Speaker Nancy Pelosi, D-Calif.] needs to signal a new day is here, and it can’t start by caving on this issue,” the person said.

But Trump and Republicans have some leverage. In fiscal 2019 and fiscal 2020, the House and Senate and White House compromised on $1.375 billion for border barrier construction. If there is no agreement on an omnibus, and the Congress instead passes another temporary stopgap funding bill, fiscal 2020 spending, including the funds allotted for wall construction, would generally be extended at current levels.

By the same token, if lawmakers were able to agree on most of the bills but not on the Homeland Security bill, the fallback would be to pass a continuing resolution extending Homeland Security funding into next year, including wall construction spending.

That might be the solution. Democrats would not be giving in to new wall funding for fiscal 2021, but current wall funding would continue for the length of the stopgap.

The talks hit a bump over the weekend due to House Minority Leader Kevin McCarthy’s continuing objection to a $12.5 billion emergency adjustment for a program that gives veterans access to private medical care outside the Veterans Affairs system. The adjustment is in both the House and Senate Military Construction-VA bills.

McCarthy has said it violates a two-year budget deal in 2019 that imposed limits on discretionary spending. Exempting the veterans funding from those limits would free up more money for other nondefense programs. Overall nondefense accounts would see increases greater than 2 percent on average for the budget year that began Oct. 1, as opposed to a less than 0.5 percent boost without the veterans health care carve-out.

While the White House in the past registered some objection to the emergency adjustment, a source familiar with the talks said Treasury Secretary Steven Mnuchin was not necessarily opposed to it, but wanted to make sure all parties in the negotiations were on board.

Removing the emergency designation appears unlikely at this point, given that it is in both the House and Senate bills.

Allocations

Aside from the spat over veterans money, negotiators must resolve differences between the House and Senate over the size of the 12 annual appropriations bills.

The House version of fiscal 2021 spending bills, released in July, and the Senate appropriations measures, released this month, have different allocations. Democrats opted to put more funding toward the departments of Veterans Affairs, Interior, EPA, Transportation, and Housing and Urban Development, while Republicans proposed more funding for Defense, Homeland Security, Energy and the Army Corps of Engineers.

Those differences aren't all that great in dollar terms. And after accounting for spending that is already exempt from budget caps, such as overseas military operations, most agencies are in line for at least small increases over the prior fiscal year’s levels.

But the House bills also included about $233 billion in emergency spending for the COVID-19 pandemic that is not part of the Senate bills. Senate Republicans had balked at combining pandemic relief with regular annual appropriations.

Republicans are likely to get more of their spending priorities included in an omnibus if it is negotiated while Trump is still president. That gives Republicans an incentive to deal.

By the same token, Democrats have an interest in clearing fiscal 2021 appropriations before the end of the year to give President-elect Joe Biden a clear runway to pursue his agenda next year. If they cannot reach an agreement with Republicans, the likely result is a stopgap bill that kicks those decisions into next February or March, delaying other policy goals.

Jennifer Shutt contributed to this report.