The House of Representatives adopted its rules package for the 118th Congress last Monday. Compared to the initial package, the only substantive changes in the text relate to the “motion to vacate,” which allows members to introduce a privileged resolution that would trigger a no-confidence against the Speaker.
Speaker Kevin McCarthy, however, had to make multiple political commitments to his Republican opponents in order become Speaker that will have significant consequences for the House’s budget and appropriations processes this year.
These commitments were specified in an “addendum” to the rules package, but the actual text of the alleged document has not been made public.
This post summarizes what is currently known about the budget and appropriations commitments in the rules addendum and explains how these commitments will likely affect the House’s budget and appropriations processes in the months ahead.
The post is organized into three subsections: 1) the budget process, 2) the appropriations process, and 3) the debt limit. Each subsection contains an executive summary.
Summary: Speaker McCarthy has committed that the House will vote on a budget resolution for fiscal year 2024 (FY24) that:
- balances the budget within 10 years,
- “includes long-term reforms to budget process and mandatory spending programs,” and
- “caps FY24 discretionary spending at FY22 levels or lower.”
Based on recent budgets passed by House Republicans and organizations aligned with conservatives in the House, it is very likely that the new budget resolution will eliminate annual deficits through spending cuts and optimistic macroeconomic assumptions.
Even though any House-passed budget will be dead on arrival in the Senate, the spending assumptions of the budget resolution will set the House Appropriations Committee’s “top-line” spending budget for next year’s appropriations bills, as well as the spending, revenue, and debt benchmarks the House will use for considering fiscal legislation through the end of the current fiscal year.
It is currently unclear how quickly the House will be able to develop a new budget. If House leaders follow the typical process, the House will likely vote on a new budget sometime this spring, once the Congressional Budget Office’s (CBO) updated budget and economic projections are available, but Leadership could accelerate the process by using CBO’s current baseline projections.
Speaker McCarthy has committed that House Republicans will attempt to pass a budget resolution for the upcoming fiscal year that eliminates annual deficits within the next 10 years. Although budget resolutions are not legislation and never signed into law, passing a budget resolution will require House Republicans to agree in principle on policy changes to bring the federal budget into balance. Even though the House’s budget resolution will be dead on arrival in the Senate, the resolution will determine how the House develops next year’s appropriations bills, debt limit legislation, and other fiscal legislation.
The essential component of budget resolutions are their “levels and amounts” provisions – a long series of dollar amounts that specify the total amount federal spending, revenues, deficits (or surplus), and debt for each fiscal year covered by the resolution. Embedded into these levels and amounts are dozens of assumptions federal policy and the economy, and the Republican’s budget is likely to assume significant spending cuts. Last spring, CBO projected that the federal government will run an annual deficit of $2.3 trillion in 2032 and a cumulative, 10-year deficit of $15.7 trillion (See Table 1-1).
How will House Republicans achieve this level of deficit reduction? Based on past Republican budgets and a recent budget proposal from the Center for Renewing America, a non-profit aligned with House conservatives, it is very likely that the House’s budget resolution will balance the budget through spending cuts and optimistic economic growth assumptions, while also assuming additional tax cuts.
Republicans last adopted a budget resolution in the fall of 2017 as part of the process of passing the Tax Cuts and Jobs Act (TCJA). This resolution ended annual deficits within 10 years by privatizing Medicare, establishing a cap on per capita Medicaid payments, reducing “improper payments,” cuts to nondefense discretionary programs, and optimistic macroeconomic assumptions. The budget also contained revenue assumptions consistent with the TCJA, which was estimated to reduce revenues by $1.5 trillion
House conservatives have also been pointing to a budget proposal released last fall by the Center for Renewing America as a blueprint for the House’s new budget resolution. This proposal would also end annual deficits within 10-years by enacting deep cuts to non-defense discretionary programs, Medicaid, and by making a series of optimistic macroeconomic assumptions about how reduced federal spending will lead to increased economic growth, labor market participation, and reduce debt costs. Unlike other past conservative budget proposals, the proposal claims that it would not reduce Social Security or Medicare benefits.1
When Will The House Vote On A Budget?
It is not exactly clear when the House would try to adopt a budget resolution, and it will depend on whether House Republicans want to use CBO’s current baseline projections or wait to use CBO’s next spring baseline. Under the typical process, the Budget Committees develop their budget resolutions based on CBO’s spring baseline. And CBO, in turn, relies on budgetary information from the President’s budget to update its baseline projections. The President usually submits their budget request in early February, and CBO updates its baseline projections within several weeks. This year, however, the President’s budget is going to be released sometime in March, meaning that the House would likely be voting on a budget resolution in April or May.2
But there is no requirement that the House Budget Committee must use CBO’s new spring baseline. The Committee could instead use CBO’s current baseline projections for the FY24 resolution, which would allow the House to vote on a budget resolution sooner.
It is likely that CBO’s updated spring baselines will make it more difficult for House Republicans to balance the budget in 10 years. Late last fall, CBO released a preview of its updated macroeconomic projections for 2023 and 2024. Although these projections have not been finalized, they are likely to show lower economic growth, higher unemployment, and higher inflation relative to CBO’s Spring 2022 projections and other leading macroeconomic forecasts. These changes would, all else equal, push the agency’s deficit projections higher.
Long-Term Budget Process And Mandatory Spending Reforms
In addition to specifying total levels of spending, revenues, and debt, budget resolutions usually contain procedural provisions. If the House passes a budget resolution, these procedural provisions will remain in effect through the end of the 118th Congress or until the House adopts another budget resolution. The rules addendum allegedly contains a commitment that the resolution will include “long-term reforms to [the] budget process and mandatory spending.” This phrase is intentionally open-ended, and I have seen any reporting indicating what specific reforms might be under consideration.3
Capping Discretionary Spending At Fiscal Year 2022 Levels
Speaker McCarthy has agreed that the budget resolution will cap the total amount of spending that the House Appropriations Committee ma.y use for next year’s appropriations acts at the level of the FY22 appropriations.4
This would equal a nominal $131 billion reduction from the recently enacted FY23 appropriations – and represents a 9% reduction in total discretionary spending.5
It is important to highlight that this $131 billion cut does not account for baseline inflation from FY23 to FY24. In inflation-adjusted terms, keeping discretionary spending at FY22 levels would result in a larger cuts to discretionary programs as the programs would to stretch their FY22 budgets to cover higher program costs in FY24.
Over the last week, this commitment has been criticized by the leaders of the Sente Appropriations Committee and other House Republicans. Senators Patty Murray and Susan Collins – the chair and vice-chair of the Senate Appropriations Committee – have already issued a statement calling for “funding the government in a responsible and bipartisan manner.” And Republican appropriators Rep. Tom Cole and Rep. Steve Womack are already expressing skepticism that the majority of House Republicans would support holding discretionary spending to FY22 levels.
What Happens If House Republicans Cannot Pass A Budget Resolution?
If House Republicans cannot reach agreement on the budget resolution, section 3(e)(1) of the House rules package could become very important. This provision is a “deeming provision” that states that:
“the allocations, aggregates, and other appropriate levels submitted for printing in the Congressional Record by the chair of the Committee on the Budget shall be considered for all purposes in the House to be the allocations, aggregates, and other appropriate levels under titles III and IV of the Congressional Budget Act of 1974.”
In plain English, this means that whatever budgetary levels and amounts are submitted by the Budget Chairman will become the levels and amounts the House will use for the remainder of the budget process.
Procedurally, this provision is contingency plan for the possibility that House Republicans cannot bridge their internal fiscal disagreements. If House Republicans are not able to pass a budget resolution, this provision will allow the Chair of the Budget Committee – without the need for a floor vote – to set the budgetary levels that the House needs in order to develop appropriations bills and consider other fiscal legislation.
Appropriations Process Commitments
Summary: In addition to capping the total amount of discretionary spending, the rules addendum allegedly contains several other commitments that will affect the House’s appropriations process, including:
- Considering each of the 12 annual appropriations bills separately and under “open” special rules,
- Passing all the annual appropriations bills before September 30th, and
- Refusing to negotiate with the Senate unless it passes appropriations bills.
The commitment to return to using open rules would bring major changes to the House’s appropriations process. These rules would also give members greater ability to offer amendments – and this could result in more bipartisan compromise amendments, as well partisan poison pills. It would also make it harder for House Leadership to manage the floor debates of appropriations bills, and the House will likely have to devote more floor time to appropriations bills.
Based on the House’s appropriations track record over the last 25 years, it would be unprecedented for the House to consider all of the annual appropriations acts under open rules.
The commitment to refuse to negotiate with the Senate cannot be enforced procedurally.
Returning To Standalone Bills And Open Rules
Until recent Congresses, the House typically considered appropriations bills under unanimous consent agreements or “open” special rules, which allowed Members to offer and debate floor amendments with relatively few restrictions.6
Over the last several Congresses, the House has moved toward using increasingly more restrictive forms of special rules for appropriations bills. In 2015 and 2016, the House began using more “modified-open” rules that required members to preprint their amendments or put overall time caps on floor debates to provide more structure to floor debates. This process began fraying in 2016, when partisan amendments disrupted floor debates and even led to an extremely rare defeat of an appropriations bill on the floor. These disruptions from poison pill amendments worsened in 2017, and derailed the entire appropriations process in the House.
Since then, the House has only considered appropriations bills under “structured” rules, which require the Rules Committee to preapprove all amendments, and has combined multiple appropriations bills into multi-bill “minibus” packages.7 This procedural combination has limited members ability to offer and debate amendments, but has also allowed House Leadership to prevent partisan amendments from derailing the House’s consideration of appropriations bills.
If the House does return to considering appropriations bills as standalone measures under open rules, one thing is certain – it will take more floor time for the House to consider appropriations bills. Without structured rules, members would be free to offer as many germane amendments as they like and there would be no upper time limit on the amending process.8
How the amending process would play out under open rules is far more uncertain and – if it happens – would be a fascinating natural experiment. It is possible that the House would repeat the partisan patterns of 2016 and 2017, using poison pill amendments to force members to take politically difficult votes. But it is also possible that bipartisan coalitions could use the freedom of open rules to pass amendments that would otherwise never been approved under a structured rule. Either way, if Speaker McCarthy keeps this commitment, we will all learn more about the House’s current capacity to consider appropriations bills on the floor.
If the House sticks to its usual appropriations schedule, it will be several months before the annual appropriations bills hit the floor. At the same time that Congress receives the President’s budget request, federal agencies will submit their spending proposals and budget justifications to the Appropriations Committees, which contain the detailed information the Committees need to begin drafting next year’s appropriations acts. Shortly thereafter, the House Appropriations Subcommittees will hold hearings with Administration officials and begin developing next year’s appropriations bills. If the President submits his budget in in March, the House Appropriations Committee will likely be voting on appropriations bills in late May or June and the House will begin considering bills on the floor in June and July.
This schedule assumes that House Republicans will be able to agree to a level of total discretionary spending for FY24 the budget resolution. If they are unable to agree, it will delay the Appropriations Committee’s work because the Committee will not know the total amount of spending they can allocate to each appropriations bill.
Passing All 12 Annual Appropriations Bills By September 30th
The commitment for the House to pass all 12 annual appropriations bills before September 30th is an admirable goal, but it is in tension considering appropriations bills under open rules. Since 1995, the House has never passed all the annual appropriations acts without using at lease one structured rule. During the last period that Republicans controlled the House from 2011 to 2018, the House considered an average of seven of the 12 annual appropriations bills, with an average of two bills being considered under structured rules.9
Negotiating Appropriations With The Senate
This commitment is staking out an initial negotiating position with the Senate, and appears to be an outgrowth of the antipathy between House conservatives and the Senate Republicans who supported the omnibus appropriations act signed into law last month.
This commitment is purely political and not enforceable procedurally – the House, simply put, has no control over the content of legislation passed by the Senate.10 The reality is that the House and Senate will have agree to some form of appropriations before September 30th or the federal government will shut down.
That said, the Senate could benefit from additional pressure to pass appropriations bills, as the chamber has not held an initial floor vote on an appropriations bill since the fall of 2019.11 Although the joint statement by Senate Appropriations chair and vice-chair indicate that any partisan appropriations bills passed by the House will be dead on arrival in the Senate; it is hopefully an indication that the Senate Appropriations Committee is intending to bring appropriations bills to the Senate floor.
Debt Limit Commitments
Summary: Speaker McCarthy has allegedly made two commitments related to the debt limit:
- that he will not allow the House to vote on increasing the limit without spending cuts or other “commensurate” fiscal reforms ,
- that the House will also develop “debt prioritization” legislation specifying how the Treasury Department should prioritize payments if the debt limit is not increased.
These commitments are designed to position House Republicans in negotiations with the Senate and White House, and are similar to the demands that House Republicans made in 2011 to extract spending concessions from the Obama Administration.
If Speaker McCarthy does not bring a “clean” debt ceiling bill to the floor, Democrats and moderate Republicans could use a discharge petition or defeat and amend a special rule to bring such a bill to floor.
Echoes Of The 2011 Crisis
The first real test of how the new House Republican majority will negotiate with the Senate and Biden Administration will be over the debt limit. On Friday, Treasury Secretary Janet Yellen informed Congress that federal borrowing would hit debt limit this week and that the Department is taking its usual “extraordinary measures” to prevent a default until mid-June.12
Once these measures are exhausted, the United States will no longer be able to issue additional debt to meet the federal government’s obligations. This would cause debt default that would likely trigger a global financial panic and deep recession.13
In order to avoid this outcome, Congress and the President will need to enact a law that either increases, suspends, or eliminates the debt limit within the next four months.
The rules addendum allegedly contains two debt limit commitments that are political, not procedural. First, Speaker McCarthy has committed to “not agree to a debt limit increase absent a discretionary budgetary agreement in line with the House-passed budget resolution or other commensurate fiscal reforms to reduce and cap the growth of spending.” Second, additional reporting has disclosed a second commitment to “advance a debt prioritization bill through regular order by the end of the first quarter of 2023.”
These commitments are echoes of Republican arguments used during the 2011 debt limit crisis. In the run up to that crisis, then-Speaker John Boehner insisted that any increase in the debt limit be accompanied with a greater amount of spending reductions. Other Republicans, like then-Senator Pat Toomey, argued that Treasury could technically avoid a debt default by prioritizing debt service payments over other federal obligations, like paying Social Security and other entitlement benefits or federal employee salaries. The Obama Administration and Congress were narrowly able to avoid a default through a combination of policies, but the brinkmanship that enabled the deal deeply rattled financial markets.
Two Ways Of Brining A Clean Debt Limit Bill To Floor
In response to growing concerns that Speaker McCarthy’s debt limit commitments may lead to a repeat of 2011, some lawmakers are exploring ways for the House to bring a clean debt limit bill to the floor for a vote over the objections of House leadership. So far, this effort has focused on the House’s “discharge petition” process, which allows bills supported by at least 218 members to be brought directly to the floor for a vote without being reported by a committee.14
This process, however, takes a long amount of time due to two “layover” requirements of the petition process. First, for a bill to even qualify for a discharge petition, it has to be referred to committee and then committee has to take no action on the bill for 30 “legislative” days.15 Once 218 members sign a discharge petition, a minimum of seven additional legislative days have to elapse before the House can discharge a bill to the floor.16 The bottom-line effect of these requirements is that a debt limit bill would need to be introduced months in advance of its eventual floor vote.
There is a quicker way for a simple majority to quickly bring a bill to the floor without using a discharge petition. If any special rule is defeated on the floor, the minority party gains control of the floor and has the opportunity to amend the rule.17 Under this process, if Democrats and five Republicans defeat a special rule on the floor, they could amend the rule to call up and consider debt limit legislation. Unlike the discharge process, there will be numerous opportunities to attempt this procedure, as the House routinely votes on special rules.
Regardless of whatever method is used, however, these votes will be very difficult for any Republicans who decide to vote against the rest of their caucus. The last time the House used a discharge petition to bring legislation to the floor was 2015, when a group of moderate Republicans joined with Democrats to force a vote on a bill reauthorizing on the Export-Import Bank. The discharge petition was approved by a vote of 246-177, with 62 Republicans voting to support the petition. The next day, 127 Republicans voted to approve the bill itself, which passed 313-118. This 65-vote gap between the two votes demonstrate that the discharge petition vote – which was a direct rebuke of the House’s leadership – was a more difficult vote than the actual legislation. This dynamic will be present in any debt limit vote. Regardless of the procedure involved, it will not be easy for rank-and-file members to defy the leadership of their party.