Appropriations Bill Lands With a THUD on the Floor

Yesterday, the House Transportation-Housing and Urban Development (THUD) appropriations bill was removed from floor consideration, showing a lack of consensus in Congress regarding how to live within the existing caps. The question of how the Congress should replace sequestration in a fiscally responsible manner is becoming increasingly important with this decision.

Both the House and Senate have both been pursuing appropriations bills that would violate sequestration in some way for FY 2014. The Senate has set overall funding levels at the pre-sequester levels, while the House has chosen to keep the sequester caps, but reallocate funding so that defense spending is funded at the pre-sequester mark, requiring further cuts to nondefense discretionary spending. The House's THUD bill would have required a $4.4 billion cut from post-sequester levels, with an overall funding total not seen since 2006. Pulling the bill from the floor shows that abiding by the steep cuts to discretionary spending required by the sequester for 2014 will be difficult.

House Appropriations Chairman Hal Rogers (R-KY) expressed his disappointment in a statement and argued that yesterday's actions were evidence that the sequester needed to be replaced with a comprehensive plan:

I am extremely disappointed with the decision to pull the bill from the House calendar today. The prospects for passing this bill in September are bleak at best, given the vote count on passage that was apparent this afternoon. With this action, the House has declined to proceed on the implementation of the very budget it adopted just three months ago. Thus, I believe that the House has made its choice: sequestration – and its unrealistic and ill-conceived discretionary cuts – must be brought to an end. And, it is also clear that the higher funding levels advocated by the Senate are also simply not achievable in this Congress.

This Congress must now deal in a productive way to address the nation’s crippling deficits and debt to put our budget back on a sustainable and responsible path. This means that all government programs – not just those on the discretionary side of the ledger – must be reduced. Spending reductions in mandatory and entitlement programs, which are the drivers of our deficits and debt, are the most effective way to enact meaningful change in the trajectory of federal spending. The House, Senate and White House must come together as soon as possible on a comprehensive compromise that repeals sequestration, takes the nation off this lurching path from fiscal crisis to fiscal crisis, reduces our deficits and debt, and provides a realistic topline discretionary spending level to fund the government in a responsible – and attainable – way.

We agree with Chairman Rogers that sequestration should be replaced with a comprehensive package that puts debt on a downward path in the long term. Rogers aptly points out that spreading the savings throughout the budget is much more achievable than the sequester approach, and additional mandatory and entitlement reforms must be part of the package. As should comprehensive tax reform that simplifies the code and reduces the deficit. But even if a sequester is not replaced with a comprehensive plan, any smaller scale replacement must at minimum be fully offset with equal or greater savings. Waiving the sequester without offsets would be a clear failure on the part of Congress.

Given yesterday's actions, it is clear that the current approach the Senate and House are both taking for appropriations is not working. Ideally, lawmakers will begin negotiations toward a comprehensive fiscal framework before the September 30 deadline, as we described in our report on what we expect in the upcoming fiscal discussions. But at the very least, lawmakers should begin to find offsets for a sequester replacement.