Congress

One-year spending cap option, warts and all, gains momentum

Yarmuth signals openness to deal, echoing comments made by Shelby a day earlier

House Budget Chairman John Yarmuth, D-Ky., said Democrats would be open to a one-year spending deal, but acknowledged it might create problems for getting another deal during an election year. (Caroline Brehman/CQ Roll Call file photo)

Senior lawmakers are increasingly considering a scaled-back plan to raise discretionary spending limits for just the upcoming fiscal year, in what would be a departure from the two-year deals enacted in 2013, 2015 and again last year.

A decision to limit a deal to only fiscal 2020 appropriations might simplify negotiations that have been stalled for months. But it would also set the stage for another difficult showdown over spending levels next year, just before the presidential election.

“I think we’d be willing to accept a one-year deal if the numbers work out right and they meet our principles and our values and our priorities,” House Budget Chairman John Yarmuth said Friday in an interview for C-SPAN’s “Newsmakers” program airing over the weekend. “But we’d much prefer a two-year deal because that takes us out of the situation of having to go back at this next year to avoid another round of sequestration.”

The Kentucky Democrat’s comments echo those of Senate Appropriations Chairman Richard C. Shelby a day earlier.

“A lot of people were thinking of a one-year deal at the beginning,” Shelby said Thursday. “It could be trending the other way, but it’s not there yet.”

The Alabama Republican said he would still prefer to see a two-year deal. “But we don’t know yet, honestly,” he said.

A 2011 deficit reduction law imposed strict caps on discretionary spending through fiscal 2021. But almost like clockwork since 2013, Congress has passed two-year budget deals raising the caps to allow for more spending while avoiding the across-the-board cuts known as sequestration that the law would otherwise trigger.

Congressional leaders have said they would like another two-year deal to cover the final two years of the 2011 law and avoid the risk of another government shutdown. But such a deal would be costly, potentially adding $2 trillion to projected deficits in the coming decade. That’s because the Congressional Budget Office assumes discretionary spending would grow with inflation from the most recently enacted spending level, and raising the caps for fiscal 2021 would then put such spending along a higher trajectory for the remainder of the decade.

A one-year deal, by contrast, would limit the financial damage, at least temporarily, to make negotiations possibly a bit easier. Without any deal, discretionary programs for the fiscal year that begins Oct. 1 would have to be cut by about 10 percent, or $125 billion, from this year’s enacted level. And the risk of cuts of that magnitude could grind the appropriations process to a halt and trigger a government shutdown this fall.

Speaker Nancy Pelosi also said this week that a spending caps deal had to occur before Democratic leaders would agree to raise the statutory debt ceiling, which has to occur this fall as well or the Treasury Department would lose the necessary borrowing authority to finance any federal obligations.

In response, acting Office of Management and Budget Director Russell Vought tweeted Thursday that “Democrats’ threat to hold the debt limit hostage to trillions in new spending is reckless and irresponsible, risking America’s full faith and credit.”

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