Previewing the President’s FY 2016 Budget
The Administration will release the President’s FY 2016 budget later today, Monday, February 2. Federal agencies will host briefings to outline the President’s priorities and provide background on the proposed budget numbers. Congressional budget committees will then kick-off a series of hearings on these proposals starting Tuesday, February 3, as legislators begin work towards a budget resolution setting out their own priorities for FY 2016. Though federal law requires the budget resolution be passed by April 15, this deadline is rarely met. Once the budget committees have agreed on their FY 2016 fiscal framework, the House and Senate Appropriations Committees will provide allocations to each of their subcommittees, kick-starting the appropriations process sometime between mid-April and mid-May. House Appropriations Committee Chairman Harold Rogers (R-KY) recently set a goal of moving all 12 appropriations bills through the House before the end of the current fiscal year, echoing a similar call by his Senate counterpart, Chairman Thad Cochran (R-MS).
The President’s budget is expected to call for tens of billions of dollars in increased federal spending, increasing both defense and non-defense accounts at $74 billion above sequester levels, but without significantly scaling back entitlement programs like Social Security, Medicare, or Medicaid. The President is also expected to continue the theme unveiled in his recent State of the Union remarks calling for increased support for the middle class, including tax reform focused on middle-class tax breaks and increased spending on new benefits targeting that segment of the population.
But legislators will ultimately determine whether to raise sequester caps for FY 2016. It remains to be seen whether the Republican-led Congress will be able to secure enough support to ease the pressures of sequester, especially while more conservative members of the party may call for limited spending and smaller government, and defense “hawks” push for increased spending on defense, and not domestic, programs.
Congressional Budget Office Releases Budget and Economic Outlook
The Congressional Budget Office (CBO) released its annual Budget and Economic Outlook on Monday, January 26. CBO’s report relies on current federal law to project spending, tax revenues, deficit levels, and other economic factors tied to the federal budget over the next decade. The report predicts that the federal deficit will fall further in 2015, to $468 billion (or 2.6 percent of GDP). However, it cautioned that, assuming current deficit and sequester policies continue, the deficit will begin to rise again in 2018, with budget shortfalls numbering in the trillion dollars and the national debt reaching 79 percent of GDP by 2025.
CBO Director Douglas Elmendorf appeared before the House and Senate Budget Committees following release of the report. Elmendorf’s term as CBO head expired at the beginning of January; while Republicans have not confirmed whether or not they will ask him to remain, reports indicate that Budget Committee Republicans are interviewing a shortlist of candidates to replace him.
This Week’s Hearings
- Tuesday, February 3: The Senate Committee on the Budget will host a hearing titled “The President’s Fiscal Year 2016 Budget Proposal.” The hearing’s only witness will be Shaun Donovan, Director of the Office of Management and Budget.
- Wednesday, February 4: Following its Senate counterpart, the House Committee on the Budget will host a hearing titled “The President’s Fiscal Year 2016 Budget.” The hearing’s only witness will also be Shaun Donovan, Director of the Office of Management and Budget.