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OMB chief worried about shutdown even as funding talks progress

White House budget chief says GOP border demands could derail spending deal

Office of Management and Budget Director Shalanda Young testifies during a Senate Budget Committee hearing on the president’s budget request on March 15, 2023.
Office of Management and Budget Director Shalanda Young testifies during a Senate Budget Committee hearing on the president’s budget request on March 15, 2023. (Tom Williams/CQ Roll Call)

A top White House official said Friday that she is “not optimistic” about avoiding a partial government shutdown starting after Jan. 19 after comments House Republicans made this week, including during a trip to the southern border.

But Office of Management and Budget Director Shalanda Young didn’t rule out a full-year continuing resolution written in line with the debt limit agreement that Democrats in both chambers, the White House and and Senate Republicans support, which could be a potential off-ramp out of a funding lapse.

“I’m typically optimistic, but I don’t want to sound as optimistic this morning, especially after some of the remarks I’ve seen over the last couple of days … trying to conflate not only holding up Ukraine and Israel funding now for border, some in the House Republican conference now saying shutdown over border as well, which is not a great thing for the country,” Young said at a breakfast hosted by the Christian Science Monitor.

Some House Republicans said they would want to shut down the government if they did not get concessions from the White House on border enforcement. Republicans in both chambers are already seeking border policy changes in exchange for support of supplemental war funding for Ukraine and Israel the administration wants. 

“If Joe Biden and the Democrats refuse to secure the border … then we need to cut off funding, we need to shut the government down, until they secure the border,” Rep. Mary Miller, R-Ill., said in a video posted on X, formerly known as Twitter.

Speaker Mike Johnson, R-La., and Senate Majority Leader Charles E. Schumer, D-N.Y., are engaged in negotiations to set a topline funding level for fiscal 2024. This week Schumer said they were “quite close” to an agreement and Johnson said they were working in “good faith.”

An agreement on numbers could come soon, and Young said the White House would back rescinding more IRS money this year as an offset if that’s what it took to get Republicans on board with the $773 billion spending target for nondefense programs agreed to during the debt limit talks last May. 

Still, even if there is a framework agreed to on spending levels, some sources believe it is already too late to wrap up full-year appropriations bills in time for the Jan. 19 deadline. And Johnson has said he will not support any more short-term funding patches.

The first batch of bills due on that date are: Military Construction-VA, Transportation-HUD, Agriculture and Energy-Water. In an interview with CNBC, Rep. Chuck Fleischmann, R-Tenn., the House Energy-Water Appropriations Subcommittee chairman, said he thought one option would be to pass another short-term patch to line up the expiration date with the Feb. 2 deadline for the rest of the spending bills.

Yearlong stopgap

Even then, the border issue and other policy riders could prove too troublesome to wrap up the fleshed-out fiscal 2024 appropriations bills in time. That’s where a possible yearlong CR comes in, which Young expressed openness to as long as steep spending cuts known as a “sequester” are turned off.

Senate Appropriations Chair Patty Murray, D-Wash., and others have warned that due to the caps in the debt limit law, major cuts to nondefense spending would hit under a simple “date change” CR that extends the current stopgap law through Sept. 30.

The Congressional Budget Office said Thursday that could result in $73 billion or 9 percent across-the-board cuts to nonexempt programs, which OMB has said would include funds provided in the infrastructure law as well as regular nondefense appropriations. OMB will set the ultimate percentage cut, however, and hasn’t yet said what it would look like.

[Backstop in debt limit law flips script on spending endgame]

Young said the White House would be “vehemently opposed” to a date-change CR. Defense spending would be $27 billion less than the debt limit pact allowed for fiscal 2024 in this scenario.

But she left the door open for a full-year stopgap bill written to be at the levels in the debt limit deal, which would boost defense spending and keep nondefense spending essentially flat. 

“You can have a full-year CR that completely complies with the budget deal,” she said. “It would not have all the details, and it’s never good to have things on autopilot for two years. However, it’s a lot less devastating” than the date change stopgap. 

Young said nondefense spending needs to be at the $773 billion level agreed upon in the debt limit talks. Johnson and Schumer are discussing a topline at or near that level, though Johnson is seeking additional recissions of unspent pandemic aid and IRS enforcement funds. 

The debt limit deal approved $20 billion in clawbacks to IRS funding appropriated in last year’s climate, health and tax law, with $10 billion in each of fiscal 2024 and 2025.

“From our purview, $20 billion over two or one year is $20 billion,” she said. “We have already worked with IRS to make sure that does not impact their current efforts.” 

The White House is unwilling to allow any future additional rescissions of the IRS funding if they use up the entire $20 billion for this fiscal year, Young said. 

“We have to stop at [$20 billion],” she said. “That is a necessity to ensure that we can continue to undertake what I think is a game-changing opportunity to look at the top one and two percent in this country who do not pay what they owe because they know IRS is so understaffed.”

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