Cornerstone Report from Washington

Vol. 11, No. 8 – September 27, 2013

 

Appropriations and Farm Bill Update – The Saga Continues

 

FY 2014 Appropriations

Congress is currently debating a Continuing Resolution (CR) to fund operations of the federal government after the new fiscal year begins on October 1. The House has already passed a version of the CR which would fund programs until December 15 at the same amounts they received in FY 2013.
 

Today, the Senate made two changes to the CR as passed by the House. First, they removed the prohibition on funding for implementation of the Affordable Care Act (aka Obamacare). Second, they shortened the time covered by the CR until November 15 in an effort to force discussions to occur sooner on funding government for the balance of FY 2014.

 

At this juncture, the House has two options. One is to pass the Senate amended version that strips the House provision defunding the ACA and send it to the President, and take the policy debates to future legislation. (This option is considered unlikely.) The other option, which House Speaker John Boehner (R-OH) has already announced, is for the House to further amend the CR and send it back to the Senate.

 

A number of House Republicans will oppose the removal of ACA defunding language, and will want new provisions in return to get their votes. Rumors of new House provisions include cancellation of health insurance subsidies for Capitol Hill staff and lawmakers, a repeal of the medical device tax, and/or a one-year delay of the ACA’s individual mandate.

 

Meanwhile, some House Democrats have voiced opposition to the CR’s funding level because they don’t want the sequester levels to become the “new norm.” There is a higher possibility that the inherently slower Senate procedures will not allow the Senate to consider a bill returned to them again with additional changes, thus prompting a government shutdown. Although House Republican sources indicate that a shutdown will be averted, most evidence points to the opposite conclusion.

 

Speaker Boehner is attempting to avert this brinksmanship by using the legislation to raise the debt-ceiling as an opportunity to have the debate on policy differences. Treasury Secretary Lew has announced that the United States will reach the debt limit on October 17, and Republicans in both chambers view this upcoming debate as a better avenue to delay the ACA for a year and secure other concessions such as revamping the tax code, repealing the medical device tax, and jump-starting the Keystone XL pipeline (among many others).

 

Despite intra-party fractures, many Republicans in both chambers recognize that they could be blamed if there is a government shutdown. Therefore, it seems likely that they will shift their fight to the debt-ceiling bill, even as President Obama remains adamant that there will not be negotiations over the “full faith and credit” of the United States.

If Congress is able to avoid a government shutdown, there will be a strong push to restore a sense of normal order to the appropriations process. Senate Appropriations Committee Chair Barbara Mikulski (D-MD) was the catalyst behind shortening the Senate version of the CR to November 15, and she is hoping to pass real appropriations bills for the remainder of FY 2014 after the continuing resolution expires. That scenario envisions a second CR that keeps the government running through December 15or some other date, but keeps pressure on the process to work out as many of the 12 appropriations bills as possible.

 

Farm Bill

Meanwhile, many provisions of the 2008 Farm Bill, which were largely extended earlier this year (through September 30, 2013), are set to expire concurrently with FY 2013. All versions of the CR being considered in Congress would extend funding for the Supplemental Nutrition Assistance Program (SNAP – formerly known as Food Stamps). However, no other provisions of the Farm Bill would be extended under the CR or other legislation being considered in Congress. As in the past, there are very few practical implications of this expiry, however should Congress not act before January 1, 2014, consumer prices for milk are expected to rise sharply as provisions of the Agricultural Act of 1949 would come back into effect.

 

In addition, the House Rules Committee on September 25, reported a resolution that would reunite the House-passed nutrition bill with the larger House-passed Farm Bill (H.R. 2642). H. Res. 361, a “martial law” rule that allows the House to quickly consider debt and funding bills over the weekend, includes a provision providing for the consideration of the Senate amendment to H.R. 2642 to provide for the reform and continuation of agricultural and other programs of the Department of Agriculture through fiscal year 2018.

 

Although H.Res. 361 is a critical step in proceeding to a formal joint House-Senate Farm Bill conference, it will not prevent the 2008 Farm Bill from expiring on September 30. In addition, although the Senate has already appointed conferees to the joint conference committee, this process will require the Senate to reinitiate their conference request and reappoint conferees, which could be subject to delays. Indeed, many feel that the Farm Bill legislative process has become so complicated that a formal conference is still unlikely and an informal agreement is the most likely outcome which could be included in some larger must-pass bill.

 

We are monitoring the status of the CR and Farm Bill discussions and will keep you apprised as circumstances warrant.

 

THE CORNERSTONE TEAM