Committee for a Responsible Federal Budget

Short-Term CR Looking More Likely

Feb 28, 2011 | Budgets & Projections

UPDATE 3/1: House passes two-week CR by vote of 335-91. Senate Majority Leader Harry Reid (D-NV) says that the bill will be taken up in the Senate and is likely to be passed within the next 48 hours.

With the current CR for FY 2011 coming to an end March 4, both parties in Congress are issuing short term plans to avoid a government shutdown, or at least to have political cover in case the government is shuttered.

After House Republicans passed their $61 billion spending cut budget last week, Senate Democrats offered a 30-day CR at current levels, which was shot down immediately by Republicans in the House. Now, two more plans are being considered. House Republicans unveiled a short-term two-week CR to fund the government, which would include $4 billion in cuts over that period. This is pro-rated to be consistent with the $61 billion spending cut bill for remainder of the fiscal year, although it only includes a select portion of cuts from the larger plan.

At the same time, Senate Democrats have also been working on a seven-month spending bill to fund the government for the remainder of the fiscal year. Although the exact amount of funding is still unknown, it is reported to represent a compromise solution, including some of the $15 billion in discretionary terminations and reductions from President Obama's FY 2012 budget -- only bumped up into FY 2011 -- and the $8.5 billion in earmark funding that has also been looked at by Republicans.

However, a consensus is emerging that the Senate will take up and likely pass the two-week CR developed in the House. That bill includes $1.24 billion in cuts achieved by terminating eight programs, all of which had been identified as terminations and reductions in the President's FY 2012 budget. These include election assistance grants, broadband loan subsidies, the Smithsonian Legacy Fund, four Department of Education programs, and additional spending for the Highway General Fund. Additionally, $2.7 billion would be saved by rescinding money designated in earmarks in the previous CR, passed in December. This is an interesting development because previous attempts to eliminate earmarks have been criticized for not doing anything to reduce spending. This would actually strip the previous bill of funding by the amount of earmarks designated for rescission.

The House is expected to consider and pass this legislation tomorrow. Then it will be sent to the Senate. Republicans in the House have sent a clear message that they expect this bill to be passed unamended to preserve the amount of cuts they have identified. Senate Democrats have signaled that this may be acceptable. A spokesman for Senate majority leader Harry Reid issued a statement, where he said:

"We are encouraged to hear that Republicans are abandoning their demands for extreme measures like cuts to border security, cancer research and food safety inspectors and instead moving closer to Democrats’ position that we should cut government spending in a smart, responsible way that targets waste and excess while keeping our economy growing.

“The plan Republicans are floating today sounds like a modified version of what Democrats were talking about. We’re glad they think it’s a good idea, but we should keep our focus on what we need to do to cut spending and keep our economy growing in the long-term. If we need a little more time to agree on a responsible path forward, we should pass a short-term CR for no longer than the next month. But the ‘my way or the highway’ approach Republicans have been taking in the past only signals a desire for a government shutdown that our country can’t afford. We hope this is a sign that they have abandoned it and will work with Democrats moving forward.”

Overall, these developments are positive, in that they may avert a government shutdown. However, this only reinforces how broken our budget process is. So far, FY 2011 has had no budget -- just funding at 2010 levels -- and now a portion or all of the rest of the year will be funded by a series of new, short-term CRs. All of these budget debates have occurred while the FY 2012 budget and our longer-term fiscal challenges (including tax and entitlement reform) should be taking top priority. Something must be done to fix this process, such as acting on the recommendations of the Peterson-Pew Commission on Budget Reform's report, Getting Back in the Black.

We hope for an increased level of bipartisan cooperation, as both sides will need to work together to tackle all of these pressing issues and get control of our unsustainable budget projections.