Budget Agreement Remains Elusive as Defense Committees Move Forward on FY20 Legislation

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Source: Forecast International

Congress has yet to reach an agreement on federal spending limits for the next two years, despite the fact that the House Appropriations Committee has already passed its version of the FY20 defense spending bill.

Lawmakers have been in discussions over a new two-year budget deal that would increase Budget Control Act spending limits, which remain in effect through FY21.  Senate Majority Leader Mitch McConnell said he was hopeful a deal would be reached on Tuesday, but an agreement remains elusive.

Talks will continue over the coming days as lawmakers debate how to balance military and domestic spending caps.  The president’s FY20 budget request sought a significant increase in defense spending, funneling money into the BCA-exempt war budget in an effort to sidestep spending caps.  However, Democrats want a boost for domestic spending as well.  Previous budget agreements have provided commensurate increases for defense and non-defense programs.

Raising the debt ceiling is also a part of the ongoing negotiations, and could be included in a final budget deal.  However, the debt ceiling can also be addressed separately if needed, and should not derail broader budget discussions.  Of course, increased spending limits are the very reason for the continued debt ceiling increases, but that reality has yet to generate a desire on the Hill to address trillion dollar deficits.

Even without a spending limit agreement in place, defense committees will continue work on FY20 legislation.  The Senate Armed Services Committee is meeting this week to mark up its version of the defense authorization bill, but the committee’s House counterpart is not planning to meet until next month.  Congress is out of session next week for the Memorial Day recess, and will return to Washington in June.

About Shaun McDougall

Shaun McDougall is an analyst at Forecast International covering the U.S. and Canadian defense markets.

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