By Matt Vallone, Director of Research & Analysis
Main Story: Congress Returns with a Full Plate and a Short Schedule
Late Monday night Senate leadership decided to postpone consideration of the NDAA until September 11th. This week will be focused on passage of Harvey aid and a three month extension of the debt ceiling.
While you might not have guessed it given the constant torrent of news coming out of Washington, Congress has been out of session since the first week of August. As of today, both the House and Senate are back in session with a long list of must-pass items to deal with before the end of fiscal year 2017 on September 30th. Here’s a rough list of the things that Congress must pass:
- Funding to keep the government open into FY 2018
- Legislation raising or suspending the debt ceiling
- Child Health Insurance Program reauthorization
- FAA reauthorization
- Flood insurance reauthorization
- Emergency FEMA aid for Harvey
For a Congress that has frequently had issues with basic legislative procedure, the next four weeks promise to be a major challenge. The current plan appears to be to pass a relatively clean continuing resolution with a final tranche of Harvey aid and a debt ceiling increase at the end of the month. However, it is unclear if this proposal has been approved by the White House or has been discussed with Congressional Democrats. It is highly likely that a Plan B (and possibly Plans C and D) may be necessary to avoid either a shutdown or a catastrophic default on government debt.
In terms of defense, the end of the fiscal year will almost certainly feature a CR through sometime in December. As we have reported before, this is a negative for the defense industrial base, but something that has become so common that it may be less disruptive than it had been prior. Over the summer, we looked into the historical performance of Defense appropriations (specifically the Department of Defense Appropriation) relative to all other appropriations since FY 1996. Two clear trends quickly became apparent. First, that appropriations were taking longer and longer to complete, with the average time growing from under 100 in the late 1990s to almost half a year (162 as of FY 2017).
Second, since the Budget Control Act (BCA) was passed in 2011, Defense appropriations are held up by disputes over non-defense spending. Prior to the BCA being adopted, it was not uncommon to see Defense appropriations pass far earlier than other appropriations. As evidenced in the stacked bar chart below, Defense appropriations since FY 2011 have been linked to all other appropriations (where the blue bar is only visible), In prior years, Defense appropriations passed earlier and were frequently adopted prior to the start of the new fiscal year (most recently in 2009).
However, this week will feature a floor debate on the Senate version of the FY 2018 National Defense Authorization Act (NDAA). Sen. John McCain will return from cancer treatment to manage the floor debate through the duration of the week. While the legislation would enact a topline that would violate the caps imposed by the BCA, the legislation should go through the Senate on a bipartisan basis. One sticking point could be an attempt to address the Trump White House’s proposed ban on transgender individuals serving in the military.
Other than that, progress on defense related activity will be limited by broader disputes over government funding.
House Activity – The House is planning on voting on another appropriations package that would pass all of the remaining bills. While these would be dead on arrival in the Senate, it would represent a significant marker in future appropriations negotiations. It remains to be seen if there will be sufficient Republican support for these bills, as almost all Democrats will oppose the package. The House will likely also take up and pass a first tranche of Harvey aid.
Senate Activity – The Senate will be focused on passage of the NDAA, though it will also take up any Harvey aid package passed by the House.
- SASC – No scheduled hearings
- HASC – 9/7 ‘Navy Readiness – Underlying Problems Associated with the USS Fitzgerald and USS John S. McCain’, Full Committee Hearing, 2118 Rayburn, 2pm
- HAC-D – No scheduled hearings
- SAC-D – No scheduled hearings
Washington Activity Round-Up
Nothing new in CBO of relevance to aerospace and defense, though they did release a review of ‘Options for Changing the Retirement System for Federal Civilian Workers’ that would be of interest to folks working over in the Pentagon.
GAO has released a report on ‘Defense Contracted Services’. They have recommendations on internal structural changes to improve management of the estimated $150 billion in service contracts the Pentagon manages each year. More here.
Though it is not a formal government report, but I would encourage readers to subscribe to Avascent’s podcast, ‘Avascent on the Record’. We post a steady stream of interesting pieces on defense and aerospace activity in the US and abroad.
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