Republicans and Democrats are on a collision course on this year's appropriations bills and the fight boils down to funding levels for non-defense discretionary. As a result of some budget sleight-of-hand in the Budget Resolution, defense spending was increased by $38 billion while domestic discretionary spending will see a $20 billion cut to stay under the budget ceilings required by the Budget Control Act.
Republicans were able to plus-up defense by increasing the amount of money in Overseas Contingency Operations (OCO) to $95 billion. The OCO is a fund that does not count against the spending ceilings that are subject to sequestration. The purpose of the OCO is to fund operations in the fight against global terrorism. Instead, the increased funding is being used to backfill the shortfall in funds for everyday operations of DoD. OCO funding last year was $64 billion.
In response, the President has issued a blanket veto threat on any bill that does not meet the spending requests that were submitted by the Administration - spending requests that assume a renegotiation to increase the spending levels for both defense and non-defense. House Democrats have thus far backed up the President and have opposed bills that normally receive large bipartisan support. For example, the Military Construction bill routinely receives around 400 votes. This year, the vote on the bill was 255-163, enough votes to sustain a threatened veto. Solid Democratic opposition to bills that routinely enjoy bipartisan support augers poorly for bills that generally are a much harder lift, such as the Labor, HHS bill.
Senate Democrats have indicated that they, too, will support the President in his efforts to get Republicans to the negotiating table to revise the spending limits for both non-defense and defense spending. This is of particular concern in the Senate where 60 votes are necessary to consider appropriation bills. If Senate Democrats hold firm, Majority Leader McConnell will need to find six Democrats (assuming no Republican losses) to move legislation to the Senate Floor.
Solid Democratic opposition in the Senate and the House point to pressure building and some sort of negotiation occurring. House Appropriations Chairman Harold Rogers (R-KY) reportedly has said there will be increasing support for a budget deal with the President that would provide relief from the spending limits, though he admitted he does not know when, how, or even if a budget deal will happen.
What could trigger such a renegotiation is a looming requirement to increase the debt limit in the Fall. A recent estimate this week by the Bipartisan Policy Group has the Treasury Department being able to service the national debt until November or December, while an earlier estimate by the Congressional Budget Office estimate is October or November. In either case, with Congressional Republicans shy about being portrayed as "shutting down the government", the Administration and Congressional Democrats might attempt to leverage the pressing need to lift the National Debt to get an agreement on increased spending levels.
Whether the Congress will successfully pass any appropriations bills and send them to the President - and whether the President fulfills his commitment to veto those bills - is not clear. It may be that President Obama would welcome that possibility as a way to jump-start negotiations to alter the budget caps under the Budget Control Act and to use the leverage of an impending default on the debt to move the negotiations to conclusion.
What is clear is that the current dynamic - solid Democratic opposition in the House and the Senate bolstering a Presidential veto strategy - indicates that few, if any, individual appropriation bills will be signed into law and there are significant drivers, including growing Republican restiveness with the domestic discretionary caps, that point to a renegotiation of the defense and non-defense budget caps under the Budget Control Act.