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Budget Deal Could Bust Caps by $200 Billion

Two-year agreement expected to draw motley crew of supporters

Marc Short, left, White House director of legislative affairs, and Nebraska Sen. Ben Sasse at the Capitol on Dec. 1. (Tom Williams/CQ Roll Call)
Marc Short, left, White House director of legislative affairs, and Nebraska Sen. Ben Sasse at the Capitol on Dec. 1. (Tom Williams/CQ Roll Call)

Congressional negotiators have moved well north of $200 billion in their discussions of how much to raise discretionary spending caps in a two-year budget deal.

The higher numbers under consideration follow an initial Republican offer several weeks ago to raise defense by $54 billion and nondefense by $37 billion in both fiscal 2018 and 2019 — a $182 billion increase in base discretionary spending.

That proposal would have raised the defense limit to $603 billion from the fiscal 2018 cap of $549 billion and increased nondefense to $553 billion from the cap of $516 billion — matching the statutory caps as they stood before they were lowered by the sequester starting in 2013.

Democrats then responded with a counteroffer to increase both defense and nondefense by $54 billion, raising the two-year cost above $200 billion. 

The budget deal could provide more money for nondefense than the numbers would suggest, since it could include the use of some $20 billion in so-called changes in mandatory programs, or CHIMPs, which serve as temporary offsets allowing higher discretionary spending.

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“We’ve agreed to where we should be on defense spending. We’ve not yet agreed on the nondefense spending angle,” said Marc Short, legislative liaison for the White House, in an interview Friday on MSNBC. Short indicated the defense number could be in the $54 billion ballpark before walking that back as a “hypothetical” figure. 

In fact, Republicans have contemplated even bigger increases — possibly $70 billion or more for defense in 2018 and $80 billion or more for defense in 2019, according to one Republican with knowledge of the talks.

That level of increase would put defense funding at $619 billion or more in 2018, about halfway between the $603 billion requested by President Donald Trump and the $634 billion agreed to for defense purposes in the defense authorization bill and other legislation.

A Democratic aide, however, denied that negotiators are even considering defense increases that high. Democrats remain committed to a dollar-for-dollar increase in nondefense spending compared to defense, the aide said.

Striking an agreement on how high to raise the caps and finding a solution to the Democrats’ demand for parity remain the key challenges in reaching a budget deal between Republican and Democratic leaders and the White House. 

Policy riders

Beyond raising the statutory spending caps, negotiators are discussing adding a wide range of other legislation to the deal, including a third emergency supplemental, reauthorization of the Children’s Health Insurance Program, extension of cost-sharing reduction subsidies, creation of a health care reinsurance program, aid for community health centers, extension of various special Medicare provisions and reauthorization of the National Flood Insurance Program, according to aides from both parties.

The cost-sharing reduction and reinsurance subsidies stem from an agreement between Senate Majority Leader Mitch McConnell and Republican Sen. Susan Collins of Maine to add two health care bills aimed at stabilizing the individual insurance markets to a “must-pass” bill before the end of the year.

Those bills include one from Sens. Lamar Alexander, a Tennesee Republican, and Patty Murray, a Washington Democrat, that would fund the 2010 health care law’s cost-sharing reduction payments, which the Trump administration stopped making to insurers earlier this year. The other is by Collins and Democratic Sen. Bill Nelson of Florida and would provide $2.25 billion annually for states to set up reinsurance programs, which provide funds for high-cost patients.

People familiar with the discussions said a disaster supplemental of between $70 billion and $80 billion is also under consideration as part of the package.

The caps for fiscal 2018 are set at $549 billion for defense and $516 billion for nondefense.

If defense were increased by $70 billion or more, nondefense could be increased by $40 billion or more in 2018 and by $50 billion or more in 2019, a Republican with knowledge of the talks said.

The deal could also put $100 billion or more in the Overseas Contingency Operations account for fiscal 2018, with the bulk of that funding going to the Pentagon.

Some budget experts with negotiating experience anticipate the final deal will provide a $60 billion to $70 billion increase to defense and a $50 billion to $60 billion increase to nondefense each year — less for defense than Republicans want and also short of the strict dollar-for-dollar parity sought by Democrats.

The budget deal could be attached to another continuing resolution extending agency funding into January, to give appropriators time to write an omnibus fiscal 2018 spending bill. The current CR, which President Donald Trump signed into law Friday, expires Dec. 22.

Democrats have been pushing to make permanent a program that allows about 800,000 undocumented immigrants brought illegally to the U.S. as children to remain in the country, and to include it in a budget deal, but Republicans have just as strongly insisted that the issue be considered separately.

More than a few conservatives have opposed budget deals in the past, and there is an expectation among some that congressional leaders will rely on a mix of defense hawks, mainstream Republicans and Democrats to provide the votes for a deal.

A GOP aide who works for conservatives speculated that a budget agreement will be announced the week of Dec. 18, ahead of the Dec. 22 deadline for Congress to pass another stopgap funding measure. That week is also likely to see the unveiling of a conference agreement on a GOP tax bill.

Ryan McCrimmon, Kellie Mejdrich, Jennifer Shutt and Joe Williams contributed to this report.

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