By Matt Vallone, Director of Research & Analysis
Main Story: CR Will Likely Pass by Friday, but Length Is to Be Determined
With only four days remaining until the current continuing resolution expires, Congress’ path forward remains unclear. House Republican leadership has announced that they will pass a two-week CR that would continue funding through December 22nd. However, they appear to have done so prior to getting support from the House Freedom Caucus, Democrats, or defense hawks, creating the possibility that the vote on the CR Wednesday fails. The Senate will wait to see whether the House can pass the two-week CR before moving forward on a funding resolution. Any delay beyond Wednesday could raising the likelihood of a shutdown given the timelines required to move legislation through the Senate.
In the background to all of this will be negotiations over an eventual omnibus spending bill that would provide appropriations for the remainder of FY 2018 and set spending levels for FY 2019. Negotiations wobbled last week as President Trump tweeted a series of attacks at Democrats, leading House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer to cancel a planned meeting at the White House. The meeting has now been rescheduled, but the state of relations between Democratic leaders and the White House remains concerning given the rapidly approaching funding deadline.
Most reports indicate that any deal will provide a significant increase in defense spending in FY 2018 (base funding would be approximately $600 billion) and then a more limited increase in FY 2019 ($615 billion). As I discussed in the podcast we recorded last week, this type of an arrangement would be very good for providing certainty around spending — but also increases the importance of the 2018 mid-term elections. If Democrats were to manage to capture the House (something that is possible given historical trends), that would immediately put pressure on any future defense increases for FY 2020 and FY 2021. This is all just more to think about while watching the wheeling and dealing going on in the next few weeks over spending.
The Senate also passed major tax legislation last week. The Tax Cuts and Jobs Act represents the most significant reform of the nation’s tax code since 1986 and will have a major impact on businesses and individuals alike. The Joint Committee on Taxation estimates that this legislation will increase deficits by $1 trillion dollars over the next decade, though that assumes that many of the reductions in the bill are not extended. Given the dramatic impact that deficit concerns have had on defense spending in the years following the implementation of the Budget Control Act, the potential increase in the deficit is worth monitoring. The House and Senate are now engaged in negotiations to resolve differences between the two chambers of the bill prior to sending it to the White House to be signed into law.
House Activity – The House will spend most of the week grappling with funding the government. In addition, it will likely pass legislation requiring states to recognize other states’ concealed carry permits.
Senate Activity – The Senate will confirm nominations for most of the week while it waits for funding legislation to come from the House.
- 12/7 ‘Department of Defense Acquisition Reform Efforts’, Full Committee Hearing, SD-G50 Dirksen, 10am
- HASC – No hearings this week
- HAC-D – No hearings this week
- SAC-D – No hearings this week
Government Activity Round-Up
The CBO has released an assessment of the administration’s long-term goals for the military and their costs. CBO estimates that the base budget will need to rise to at least $688 billion if DoD were to execute on all of the administration’s goals for “improving readiness, modernizing equipment, and increasing the number of military personnel.” More information at the link here, but there’s a lot to digest.
The GAO has a few interesting reports for aerospace and defense, such as a look at DoD’s use of lowest price technically acceptable for acquiring services and the need for planning to sustain amphibious operations capabilities in the Navy and Marine Corps. However, we thought it would be interesting to flag a GAO review of automated vehicle planning. GAO recommends that the Department of Transportation create a comprehensive plan for integrating automated vehicles with existing fleets. GAO recognizes that DoT has made some progress on this planning but believes a more holistic approach would be beneficial for managing this process. Full report here.
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