House and Senate to Have Serious Debate Over Spending

With the House Appropriations Committee releasing their spending allocations for each subcommittee yesterday, it is useful to examine what the Senate Appropriations Committee, which is still chaired by Senator Daniel Inouye (D-HI), wanted to do with last year's failed Omnibus spending package -- wrapping all 12 appropriation bills into one. Overall, the Omnibus was $54 billion more than what the House has set its targets on ($1.108 trillion vs $1.056 trillion). But that does not tell the entire story -- there are significant differences in each of the 12 spending areas.

  Senate Omnibus December 2010 (billions) House Appropriations February 2011 (billions) Difference (billions)
Agriculture, Rural Development, FDA $22 $20 -$2
Commerce, Justice, Science $58 $54 -$4
Energy and Water Development $35 $30 -$5
Financial Services and General Government $25 $21 -$4
Interior, Environment $32 $30 -$2
Labor, HHS, Education $175 $157 -$18
Legislative Branch $5 $5 **
State, Foreign Operations $54 $47 -$7
Transportation, HUD $66 $56 -$10
Defense $521 $518 $-3
Homeland Security $43 $43 -$1
Military Construction, Veterans Affairs $76 $75 -$1
Total $1,108 $1,055 -$54

Note: Numbers may not add due to rounding

**Less than -$500 million

As one can see from the table above, there are substantial differences in funding for the Departments of Education, Health & Human Services, and Labor, as well as the Transportation and Housing & Urban Development Departments. Such discrepancies will likely set up clashes between the House and Senate -- not to mention the White House, which has veto power (as we noted would happen when the House changed its budget rules setting up a Senate/House conflift). Replacing the continuing resolution (CR) currently funding the government that expires on March 4 will likely be quite contentious. The numbers here are abstract, but they will need to be translated into progrmatic cuts -- for the Senate to reach the levels the House is proposing, more programs will need to be terminated or reduced.

While some lawmakers have balked at the levels set by House leaders, there are signs that some Members are aware of the realities that some spending cuts may be needed, if not as high as this proposal creates. As Senate Majority Whip Richard Durbin (D-IL) said this morning:

"...I have listened to the rhetoric from across the Rotunda and considered the reality. I think that we’re going to be facing some cuts before the end of the year."

At the same time, there are encouraging signs that bipartisan action will occur in the Senate on a comprehensive plan based on recommendations from the White House Fiscal Commission. A long-term fiscal plan that touches on all areas of the budget is the best approach for correcting our fiscal path in a way that does not harm the fragile economic recovery.

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