Congress's Spending Debate Won't End With Debt Ceiling

The drama isn't over after the debt ceiling showdown.

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The 112th Congress has developed something of a liking for grand, 11th hour, spending showdowns. Between the near-shutdown of the government over fiscal year 2011 appropriations earlier this year and the most recent fight over the debt ceiling, Congress has clearly demonstrated its affinity for high drama. Don't expect that to end any time soon.

After the nation's $14.3 trillion debt ceiling is raised, America's leaders in Washington have another chance at political theater just around the corner: appropriations. The funding process for the next fiscal year continues after Congress' August recess. And while another high-stakes face off is certainly a possibility, some Hill insiders say that for fiscal year 2012 the spending war will more likely be a series of smaller battles, as the conservative wing of the Republican party appears ready to tackle federal spending agency by agency. "If we get through this somehow, I wouldn't breathe a sigh of relief," says Norm Ornstein, a scholar at the conservative American Enterprise Institute. "We're going to head right into confrontation city again."

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Congress has 12 separate appropriations bills to pass, ideally before October 1, the first day of the new fiscal year. For each funding area, then, the House and the Senate each have to pass their own respective bill, negotiate a compromise between the two, and then pass that negotiated package in each chamber. The Republican-led House has passed half of its bills so far, and, according to the appropriations committee, has plans to pass all by September 30. With roughly a week until the August recess, however, the Democrat-led Senate has only passed one—for military construction and veteran affairs—which still needs to be reconciled with the House's version.

Given the time constraints, there's a great chance of a continuing resolution at the end of September, says J.D. Foster, senior fellow at the Heritage Foundation. A short-term continuing resolution would extend current spending levels and give Congress time to sort out its differences on each bill. Or, if that's not possible, a long-term continuing resolution could also push the debate to the end of the fiscal year—which is what happened back in March.

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Nevertheless, according to Chris Gallegos, minority spokesman for the Senate Appropriations Committee, the hope is that Congress can pass the various appropriations bills separately, rather than as one comprehensive omnibus package or as a long-term continuing resolution. "Nobody's best interests are served with huge omnibus bills," says Gallegos. "It limits the ability of the senators to debate and try to amend the appropriations bills when they're presented as just one huge trillion dollar package."

According to aides in both chambers, appropriations had also been riding on the outcome of the debt ceiling debate. In particular, appropriators watched whether caps on new discretionary spending were part of the final agreement. The deal reached Sunday, which Congress plans to vote on Monday, does indeed include discretionary spending caps for the next 10 years. Aides say that with these caps in place, lawmakers in both chambers would have an easier time negotiating the details of each appropriations bill, or if it comes down to it, a continuing resolution. "If there is an agreed upon topline number, then you would be optimistic that passing a [continuing resolution] would not be as traumatic as it was a couple months ago," says Rob Blumenthal, spokesman for Senate Appropriations Committee Chairman Daniel Inouye. "The disagreement last time was over the level of spending. If you've agreed the level of spending, and you're just working on your bills, then getting a [continuing resolution] should not be nearly as big a deal."

But, says Ornstein, the debt ceiling fight could also make the upcoming appropriations process tougher if Republicans aren't happy with the compromised level of spending cuts. He says it's likely that Republicans, especially freshmen members in the House, will take advantage of the funding process to put pressure on certain agencies in charge of implementing targeted rules and legislation, such as Obama's healthcare reform law, the Dodd-Frank financial reform law, or environmental regulations. "You can imagine what happens when some of these appropriators, who are going to be pissed in the end because they've had to find some compromise...on the debt limit, they're going to be loaded for bear on appropriations," he says.