With lawmakers still negotiating spending levels for the 2024 fiscal year, the government is operating under a continuing resolution that maintains the federal budget at 2023 levels until January 19 for some agencies and February 2 for the rest. The unusual structure of the continuing resolution as chosen by House Speaker Mike Johnson means that Congress faces two fiscal cliffs in rapid succession, each of which could produce a partial government shutdown.
That’s not the only unusual dynamic in play. Under the terms of the debt ceiling deal agreed to by President Joe Biden and Congress last summer, the federal budget faces automatic cuts if lawmakers decide to extend the continuing resolution for the rest of the year, as has happened in the past. Under the terms of the agreement, federal agencies would be hit with across-the-board cuts of 1% on May 1 if lawmakers fail to pass appropriations for 2024 and instead rely on a continuing resolution beyond the deadline of April 30.
Under the Fiscal Responsibility Act, signed into law in June just days before the U.S. faced a potential default on its obligations, discretionary federal spending in fiscal years 2024 and 2025 is capped. For 2024, total discretionary funding is capped at $1.59 trillion — $886 billion for defense and $704 billion for nondefense. However, if lawmakers don’t pass the required appropriations bills by the end of April and instead operate under a continuing resolution, automatic cuts take effect. Defense spending would be capped at $850 billion, while nondefense would be capped at $736 billion (an increase over the agreement, but a cut from 2023 spending levels of $777 billion).
On Thursday, the Congressional Budget Office provided a more detailed estimate of how those spending cuts would actually play out. The math is complicated due to factors that exempt some spending from cuts, lawmakers’ ability to move funds around and the fact that the fiscal year is already underway, but overall, CBO found that the caps would produce significant spending cuts, especially in nondefense spending.
Here’s the summary: “In the scenarios CBO examined, if enacted funding equaled the annualized amount of funding under the continuing resolution, sequestration would be required and would result in across-the-board reductions ranging from 5 percent to 9 percent for nondefense funding and from zero to 1 percent for defense funding, depending on when appropriations were enacted and what form they took.”
As CBO notes, the final numbers would be determined by the Office of Management and Budget, which could make adjustments within the terms defined by the FRA. Congress could also affect the outcome by adjusting or eliminating the caps.
Rep. Brendan F. Boyle, the senior Democrat on the House Budget Committee, highlighted the CBO letter Thursday and called on Republicans to pass 2024 appropriations. “Passing full-year government funding bills is the most basic task of Congress,” Boyle said in a statement. “We cannot allow indiscriminate and harmful cuts to happen because House Republicans are incapable of doing their jobs. We have a bipartisan budget agreement which two-thirds of House Republicans voted for: It’s time for Republicans to stop the posturing, get back to governing, and write appropriations bills that honor the full terms of that agreement.”
The Republican chairman of the Budget Committee, Rep. Jodey Arrington of Texas, issued his own statement calling for spending cuts. “With U.S. debt at a record $34 trillion, deficits of almost $2 trillion, and interest payments alone projected to be at $1 trillion next year, it is imperative that elected leaders on both sides of the aisle follow through on their commitment to rein-in spending,” he said.
