A Strange, New World

By Mark Lee

On October 26, the House passed the Senate version of the FY2018 Budget Resolution. During Senate debate the previous week, House and Senate GOP leadership came to an agreement that would eliminate the need for a potentially time-consuming conference of the House and Senate resolutions.  Under this agreement, the House would accept the Senate’s resolution which includes reconciliation language authorizing $1.5 trillion over 10 years for the Congressional tax-writing committees – House Ways & Means and Senate Finance – to produce tax reform legislation.  Reconciliation is a legislative process that allows the Senate to pass budget-related bills with a simple majority of 50+1, instead of the 60 votes typically required. The resolution also includes a blueprint for nearly $47 trillion in federal outlays over 10 years, $35.4 trillion for defense and $11.5 trillion for domestic spending. 

The House version envisioned deficit-neutral tax reform, however authorized $300 billion in lost revenue over 10 years for tax reform.  As part of the agreement, the House gave up its insistence on $203 billion in mandatory domestic cuts over 10 years.  The Senate agreed to accept the House’s push for higher defense spending without offsets, or cost reductions, in other areas of the federal government.    

The passage of the resolution does not mean that Congress has passed the 12 appropriations bills that make up the federal budget for FY2018.  Since October 1, the federal government has been operating on a Continuing Appropriations Resolution (CR), which expires on December 8.  This budget resolution is primarily a vehicle for tax reform through reconciliation.

This year, the House passed an FY2018 omnibus appropriations bill on September 14, and the original House version of the FY2018 Budget Resolution on October 5. Typically, a budget resolution is adopted before the appropriations process can begin, however Section 303(a) of the Congressional Budget Act (CBA) enables the House to begin the appropriations process if a resolution has not been adopted by May 15. 

The Senate has not passed its appropriations bills and some Senate Appropriations subcommittees, including the Subcommittee on Financial Services & General Government which has jurisdiction for funding the Small Business Administration (SBA) and the Community Development Investment Fund (CDFI) at Treasury, have not yet held mark-ups on their bills. 

For FY2018, Congress has two choices:  follow the path of FY2017 -- which included three CRs prior to enactment of an omnibus spending bill, or complete the appropriations process by December 8.  We’re in uncharted territory when the appropriations process precedes the passage of a budget resolution. Regardless, AEO will be working overtime to ensure that the priorities of our nation’s microentrepreneurs and small businesses are not forgotten in this strange, new world.