Sequestration cuts on horizon for 2017 if Congress doesn’t act

The White House’s biannual report to Congress says the House version of the 2017 spending bills would be $792 million above the limit for the defense and non-...

Agencies are safe from the impact of sequestration for the rest of fiscal 2016 — all five weeks — but next year is a different story.

The White House warned lawmakers in a new report on sequestration that one version of the government’s discretionary budget for 2017 could cause the return of sequestration.

“If the 2017 discretionary caps remain unchanged, this report estimates that, if enacted, the actions by the House of Representatives would result in a sequestration of $17 million in the defense category and a sequestration of $775 million in the non-defense category,” the White House’s Aug. 19 report stated. “This report finds that the Senate is in compliance with both of the current 2017 spending limits.”

The Senate’s versions of the 2017 spending bills would come in about $2.2 million under the sequestration caps.

The concerns about the House’s version of the spending bills, of which none have become law with about five weeks left in the fiscal year, come even though the administration and lawmakers raised the discretionary spending caps in 2016 and 2017 as part of the Bipartisan Budget Act of 2015.

The 2015 BBA restored $25 billion each to the defense and non-defense categories in 2016. It also lowered the reductions in 2017 for the defense category to $38.9 billion from $53.9 billion, and for the non-defense category to $22.5 billion from $36.5 billion for a total of $29 billion going back into discretionary accounts. The total discretionary budget for the defense category in 2017 is $609.9 million. The total discretionary budget for the non-defense category in 2017 is $543.6 million.

Shaun Donovan, the Office of Management and Budget’s director, said in the report that because Congress hasn’t taken any actions to stop or change the discretionary spending limits for 2018 to 2021, the lower discretionary spending caps remain in place and would require agencies to cut their budgets in those out years.

Agencies haven’t faced budget cuts because of sequestration for the last three years.

The good news for 2016 is not only will agencies not bust the discretionary caps under the BBA, but neither will the administration’s supplemental funding request to respond to the Zika virus concerns. The White House back in February a requested $1.9 billion, with $1.7 billion for 2016 and $200 million for 2017.

The House and Senate have each passed their own supplemental and have produced a bill out of conference. Lawmakers attached that bill to the Military Construction, Veterans Affairs and related agencies appropriations bill for 2017. OMB says the conference bill, which includes $349 million increase in discretionary spending and $1 billion in emergency spending wouldn’t breach the BBA caps for 2016.

The MilCon-VA bill is one of six spending bills the House passed before heading to recess. The Senate, however, has only approved the three bills, including the Defense Department and combining the Transportation-HUD and the Military Construction-Veterans Affairs appropriations bills.

Congress returns from recess on Sept. 6 and will have 17 days in session to pass all the spending bills or a continuing resolution to keep the government running into the new fiscal year.

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