By Matt Vallone, Director of Research & Analysis
Main Story: SCOTUS Will Dominate Headlines but Government Funding Debate Is Set to Heat Up
News coverage this week will likely be focused on the confirmation fight over Supreme Court nominee Neil Gorsuch. Heading into the week, it appears likely that the Senate Majority Leader will need to invoke the so-called ‘nuclear option’ and eliminate entirely the filibuster for judicial nominees to ensure Gorsuch is confirmed. While the knock-on effects of such a move may have an impact on defense spending at some point down the line, for now the main point of interest for aerospace and defense should be the upcoming April 28th deadline for government funding and the fate of the White House’s supplemental request. We have long thought that unified Republican control of Congress and the White House would allow for a significant increase in defense spending. The upcoming funding negotiations will present the clear first test as to whether this will be the case.
In terms of what to look for in the negotiations, there are two primary questions that could have a significant impact on the outcome. First, it remains unclear what the White House’s red lines are for funding bills. Second, do the appropriations bills contain policy riders that prevent Democrats from providing their support? The White House has released a $30 billion supplemental funding request for the military and the construction of a wall along the US-Mexico border. In addition, it has laid out approximately $18 billion in reductions it would like to see in the FY 2017 spending bills. However, so far Congressional negotiators seem to be effectively ignoring both proposals. The fate of the supplemental is less clear; while there would likely be support for increased defense spending in both chambers, Democrats would demand additional non-defense spending. Conservatives in both chambers would then be opposed. Should the White House choose to push hard for funding for the wall or the supplemental, existing negotiations may be derailed. Given the recent series of setbacks, the Trump administration may decide it needs to get a win in the funding fight, which would potentially create obstacles to passage of previously agreed-upon appropriations.
In terms of policy riders, it does not appear that leadership in the House or Senate is currently looking to include any “poison-pill” proposals in FY 2017 appropriations, such as defunding Planned Parenthood or eliminating financial regulations. This is likely because they would prefer to avoid the possibility of a Democratic filibuster in the Senate, but also a recognition of the fact that Democratic votes will likely be needed in both chambers for passage. The reluctance of conservatives in the House to vote for almost any funding legislation has meant that most successful appropriations bills of the past few years have been bipartisan. So far, there have been no reports of any controversial policy riders, but should they emerge, it would bode poorly for avoiding a potential shutdown.
Overall, there appear to be three likely outcomes to this funding debate. The first, and the least likely, is a short government shutdown. In this scenario, the White House or conservatives in the House push for the inclusion of controversial material in the funding legislation that Democrats reject, causing a shutdown, at the end of which Congress would likely adopt one of the two other possible outcomes of the funding debate: a full year continuing resolution (CR) or the passage of omnibus appropriations. Given the progress being reported in terms of appropriations negotiations, this appears to be the most likely outcome. However, things will undoubtedly heat up as the deadline approaches and, given that Congress is only in session for a handful of days before funding expires, any significant problems would likely result in a CR being adopted.
House Activity – The House should have a relatively quiet week, as all three bills that will be subject to a rule-received bipartisan support. It will vote on legislation clarifying that stop-loss insurance should not be regulated like normal health insurance, a bill that would increase the level at which firms must disclose stock options, and finally a measure to increase the number of people able to invest in a venture capital fund before it must register with the SEC.
Senate Activity – The Senate, and most of the political press, will be focused on the nomination of Neil Gorsuch to the Supreme Court. On Monday, the Judiciary Committee will vote on his nomination and then there will be a midweek cloture vote on his nomination. Should Gorsuch fail to get 60 votes, as appears likely at this time, Senate Majority Leader Mitch McConnell would likely use a parliamentary procedure to abolish the filibuster for Supreme Court nominations (former Senate Majority Leader Harry Reid did this for all other nominations in 2013).
- 4/4 ‘United States Strategic Command Programs’, Full Committee Hearing, SD-G50 Dirksen, 930am
- 4/4 ‘CLOSED: Cyber Threats to the United States’, Subcommittee on Cybersecurity, SVC-217 Capitol Visitor Center, 230pm
- 4/6 ‘United States Southern Command and United States Northern Command’, Full Committee Hearing, SD-G50 Dirksen, 930am
- 4/4 ‘Assessing Progress and Identifying Future Opportunities in Defense Reform’, Full Committee Hearing, 2118 Rayburn, 10am
- 4/5 ‘Damage to the Military from a Continuing Resolution’, Full Committee Hearing, 2118 Rayburn, 10am
- 4/5 ‘The Current State of the U.S. Marine Corps’, Readiness Subcommittee, 2212 Rayburn, 2pm
- 4/6 ‘Evaluating the Defense Contract Auditing Process’, Oversight and Investigations Subcommittee, 2212 Rayburn, 9am
- HAC-D – No hearing scheduled
- SAC-D – 4/5 ‘Closed Briefing to Review Intelligence Programs and Threat Assessments’, SVC 217, Capitol Visitor Center, 1030am
Government Activity Round-Up
The CBO has released its ‘Long-Term Budget Outlook’ for 2017 and it’s particularly bleak. CBO projects deficits to rise from 2.9% of GDP in 2017 to 9.8% in 2047. Plenty of justification material and some really useful graphics in the report found here.
The GAO has released a pair of aerospace and defense-relevant reports. First is GAO’s annual ‘Assessments of Selected Weapon Programs’, which looks at the top 78 acquisition programs in DoD. Overall performance in these programs was mixed. Details here. The second report looks at DoD’s funding for acquisition workforce development and opportunities for improvement. Full report here.
Lastly, the majority of the House Armed Services Committee (HASC) released their views and proposals for the FY 2018 budget request. This is a document submitted to the House Budget Committee as it prepares to introduce a budget resolution for FY 2018. However, it also lays out many of the priorities and assumptions that will inform the FY 2018 National Defense Authorization Act, making it well worth reading. Should there be an increase in funding for FY 2017 or FY 2018, the priorities in this document are likely to align rather closely with where the funding goes.
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