Spending Fight Could Reach 'World War III' Levels, Lawmaker Warns

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By Yuval Rosenberg

Welcome to the weekend! Leo Messi is likely to make his Inter Miami debut tonight, while the U.S. women’s national soccer team will start its defense of its World Cup title in a match against Vietnam. And we have to mention Barbenheimer, the box office battle between “Barbie” and “Oppenheimer,” two of this summer’s most highly anticipated movies, both of which reach theaters today.

Here’s what else we’re watching.

Spending Fight Could Reach 'World War III' Levels, Lawmaker Warns

In response to the demands of the most conservative members of their caucus, House Republicans are preparing deeper spending cuts in their 2024 appropriations bills, setting up what could be an intense budgetary battle that one lawmaker likened to global war.

The move comes as members of the House Freedom Caucus and the Republican Study Commission insist that Republican appropriators stick to the 2022 discretionary spending level of $1.47 trillion — the target conservatives wanted but failed to hit during the debt-ceiling negotiations earlier this year. Instead, House Speaker Kevin McCarthy agreed to a discretionary spending level of $1.59 trillion for fiscal year 2024, angering conservatives who want to see bigger cuts in federal spending.

House conservatives are reportedly warning McCarthy that they will not accept the use of budgetary gimmicks, including recissions or clawbacks of unspent Covid and IRS funds, in place of genuine spending reductions.

"Folks ... want real spending cuts, and this place is famous for math that never really quite works out," Republican Study Commission Chair Kevin Hern told Axios’s Juliegrace Brufke. The vast majority of the Republican Study Commission — the largest GOP caucus and largest ideological caucus of any type in the House — oppose the use of clawbacks as a means of achieving savings.

In a letter to House Republican leadership sent last week, Freedom Caucus Chair Scott Perry and 20 other conservatives stated their position. “Rescissions are useful in reducing spending and we encourage their use, but we cannot support using them to shift funding to the very bureaucrats implementing the Biden agenda at roughly current levels of spending, thereby enshrining and continuing Democrats’ reckless inflationary spending,” they wrote.

One lawmaker said the coming fight over the final spending levels was going to be like “World War III.” Others have expressed doubt that the House would be able to finish its 12 spending bills before the end of the fiscal year on September 30, raising the specter of a government shutdown.

Earlier this week, McCarthy said he still hopes to pass the 12 spending bills on time but stepped back from his long-standing pledge to pass each one individually — something conservatives have long called for, to make it easier to amend the bills. The failure to pass the bills separately could be another flash point in the expected battle ahead.

To further complicate matters, lawmakers in the Senate are headed in the opposite direction, as they plan to push 2024 spending above the levels set by the debt-limit deal. Senate Appropriations Chair Patty Murray announced this week that she had reached an agreement with Sen. Susan Collins, the senior Republican on the committee, to add $13.7 billion in emergency spending to the 2024 funding package, with $8 billion going to defense and $5.7 billion going to non-defense programs.

The bottom line: Despite the bipartisan agreement on spending levels, the final 2024 spending package remains in flux. House Republicans still need to hash out the final form of their spending bills, which then need to be reconciled with the bills coming from the Senate. The fighting could get fierce, and last well into the fall.

Opinion of the Day: A Faster, Cheaper Way to Make Prescription Drugs

Better, cheaper prescription drugs are on the way thanks to an innovative manufacturing process that needs some additional support to become more widespread and revolutionize the industry, the opinion editors at Bloomberg write today.

“Most drugs are made using batch manufacturing, a laborious, multistep process that stretches across continents,” they explain. An advanced alternative process called continuous manufacturing has significant advantages — it “can develop a new drug product in weeks — something that would take months by batch processes — all in a single facility. … Automation limits waste, saves energy and improves accuracy, thereby lowering operating costs by up to 40% and capital expenses by 75%. The scale of potential change has been compared to the auto industry’s transition to the assembly line.”

But while some large pharmaceutical companies have adopted continuous manufacturing, obstacles to wider use remain, including high upfront costs and regulatory uncertainty. The government could do more to foster broader use of this better technology, Bloomberg’s editors argue:

“The FDA should accelerate the application process by eliminating duplicative reviews for minor changes and establishing site-based, rather than product-by-product, approvals for advanced facilities. It should also reduce inefficiencies during the review process and better align with global regulators on approvals. Such measures would go a long way toward gaining the buy-in of senior management, which tends to prioritize research and development over manufacturing investment.”

And Congress should look to pass a bill to establish so-called centers of excellence that would help expand use of the faster manufacturing methods. “Allowing companies to deduct R&D costs immediately — a once-standard practice that Congress has now inadvertently outlawed — would also boost innovation and investment in the field,” the editors write.

Read the full piece at Bloomberg.

Number of the Day: 25

Unemployment in June was at or near a record low in fully half of U.S. states, Bloomberg’s Reade Pickert and Alexandre Tanzi point out: “The unemployment rates in 25 states are currently at or within 0.1 percentage point of a record low, Bureau of Labor Statistics data showed Friday.”

New Hampshire and South Dakota led the way with jobless rates of just 1.8% last month, while Arkansas, Mississippi, Oklahoma, Pennsylvania, Ohio, Massachusetts and Maryland reached record-low unemployment rates.

At the other end of the range, Nevada’s 5.4% unemployment rate is highest in the country, while the District of Columbia’s jobless rate has risen to 5.1% and California’s is up to 4.6%, an increase of 0.7 percentage point compared to a year ago. “In a dozen states and DC, the number of people on payrolls remains below pre-pandemic levels,” Pickert and Tanzi note. “That includes New York and Hawaii. Idaho, Utah, Texas and Florida were among the states with the biggest gains in employment since February 2020.”

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