New Gov't Shutdown Averted with $1.1 Trillion Deal
Policy + Politics

New Gov't Shutdown Averted with $1.1 Trillion Deal

iStockphoto/The Fiscal Times

Congress signed off on a massive $1.18 trillion government spending measure on Friday that  averted another feared  government shutdown this weekend and showed that bipartisanship is occasionally still possible in the poisoned political atmosphere on Capitol Hill. 

The bill, assuring adequate government funding through the remainder of fiscal 2012 next October,  emerged late Thursday from the chaos of the final days of congressional negotiations over efforts to extend a two percentage point Social Security payroll tax cut for another year and to continue to provide extended unemployment insurance benefits to millions of Americans. The House approved the bill, 296 to 121 this afternoon, and the Senate was expected to follow suit later in the day.

Although House and Senate negotiators cut spending levels for basic government operations, emergencies, disaster and the Iraq and Afghanistan conflicts by nearly $31 billion below last year’s levels, or 2.5 percent,  Republicans, Democrats and the White House all emerged from the intense weeks of talks with victories they could point to.

“We were able to complete a bipartisan, bicameral compromise that rolls back federal budgets, makes smart investment in programs people rely on, and implement policy changes that will bolster American business and our economy,” said House Appropriations Committee Harold Rogers, R-Ky.  “As with any compromise, this bill isn’t perfect, but it represents the kind of responsible governing that will help move our country forward.”

The 1,200-page spending bill continues strong underlying support for the military, although substantially trimming military construction funding. It also chips away at the State Department and foreign aid and funding for the Environmental Protection Agency,  but without crippling any of the programs. It also boosts funding for veterans programs – always a smart move in an election season – and bumps up spending for the Small Business Administration, with the hope of encouraging job creation. The Securities and Exchange Commission, responsible for enforcing new regulations under last year's financial overhaul, won a 10 percent budget increase, even as the tax-collecting Internal Revenue Service absorbs a more than 3 percent cut to its budget.

The measure would essentially freeze education initiatives for special-needs children and disadvantaged schools, while Obama’s “Race to the top” initiative that provides grants to better-performing schools, would take a 20 percent cut.  While “Race to the Top” is the administration’s signature education program,  many Democrats and Republicans  are not keen on it.

The $1.043 trillion top line for spending for the remainder of fiscal 2012 was set by a funding bill agreed to by Congress and the Obama administration last summer, but it was up to Democrats and Republicans on the House and Senate Appropriations Committees to work out the details. The measure fills in the details of spending for about three-fourths of the government – all but the departments of Agriculture, Commerce, Housing and Urban Development, Justice, State and Transportation, which were settled in a November spending agreement.

The bill -- forged by House and Senate Appropriations Committee members – assures continued strong support for the military despite cutbacks in military construction, chips away at foreign aid and the Environmental Protection Agency but without crippling either program, and sharply cuts Homeland Security programs that have suffered from bloat.

Environmentalists have much to be grateful for because they were able to block practically every significant GOP initiative to roll back Environmental Protection Agency regulations. Most importantly, industry forces seeking to block new greenhouse gas and clean air rules, as well as a new clean water regulation opposed by mountaintop removal mining interests, were denied. But Republicans succeeded in blocking new energy efficiency standards for light bulbs and won delays to a new Labor Department rule requiring a reduction of coal dust responsible for black lung disease.

“The administration came out of this amazingly well,” said Scott Lilly, a former senior Democratic staffer on the House Appropriations Committee. “I thought they were going to get hammered on foreign aid and State Department, but they somehow held things together.”

Lilly, now a senior fellow at the Center for American Progress, noted that faced with limited resources, Congress was forced to short-change funding for many important programs, including military construction, and would have to play catch up down the line. “Even so, my general sense is the losses are more moderate than anyone could have had reason to believe.”

As in every major spending and budget bill, there are clear winners and losers – although those are relative terms. That’s because while some departments and agencies were granted spending increases over the previous year’s levels, the amounts they will receive are substantially below the Obama administration’s requests – sometimes by tens of billions of dollars. Moreover, for those departments that incurred cuts compared with 2011 spending levels, the losses were much more dramatic when compared to the president’s budget proposals.

Passage of the bill represents the second year in a row that Congress has cut discretionary spending – the first time this has happened in modern times. The new legislation awaiting Senate action and the president’s signature is $95 billion below fiscal 2010 spending levels.

Even so,  Americans for Prosperity, a Tea Party-backed organization, called the spending cuts “anemic” and called on appropriators to “do better”.

“Appropriators must be living on an island: rather than proposing real spending restraint and reform, they’ve offered a handful of tepid changes and called it spending restraint,” said Tim Phillips, President of Americans for Prosperity. “The House of Representatives passed the only budget in Washington this year – the Ryan Budget – and now they aren’t sticking to the cuts.  The American people expect much more from their elected leaders.  We urge conservatives in Congress to vote against this spending package.”

Here’s a list of winners and losers in the fiscal 2012 spending bill:


Defense and Military Pay. The bill chips away at overall defense funding as the U.S. winds down the war in Iraq, but includes $518.1 billion in discretionary funding for regular Pentagon operations – an increase of $5.1 billion over last year’s level – and $115 billion for the wars in Afghanistan and Iraq under  a separate account. The bill includes $131.1 billion for 1,422,600 active duty troops and 847,100 reserves, or $4.4 billion more than last year’s level. The measure also includes a 1.6 percent pay raise for the military as requested by the President.

U.S. Customs and Border Protection. Congress will spend $11.7 billion for handling customs and border patrol operations, an increase of $362 million over last year’s level. This funding provides for a total of 21,370 Border Patrol agents and 21,186 CBP officers -- sustaining the highest staffing levels in CBP’s history --as well as additional training and canine units at ports of entry, inspection and detection technology, and Air and Marine operations and procurement.

Immigration and Customs Enforcement (ICE) – The bill provides $5.9 billion for ICE, which is $50 million more than last year’s level. This includes funding for 34,000 detention beds – the largest detention capacity in ICE’s history – and increases in immigration enforcement activities.

Energy and Water – Total  funding level for Energy and Water programs will equal  $32 billion, or $328 million over last year’s level, though substantially less than the administration’s request. Within these funds, priority was given to programs that support the nation’s security and economic competiveness. In total, security-related programs in this section receive an increase of $478 million, while non-security activities were decreased by $150 million compared to last year’s level.

Securities and Exchange Commission (SEC) – Spending on the SEC would total $1.3 billion, or $136 million over last year’s level.  The agency has come under intense criticism for its lax enforcement activities, particularly the agency’s failure to detect Bernard Madoff’s historic $65 billion Ponzi scheme.

Small Business Administration (SBA) – The bill contains $919 million for the SBA – $189 million more than last year’s level. Small business loans – which have seen a marked increase in demand and higher subsidy costs due to the current economic situation – receive an increase of $123 million. The disaster loan program also receives an increase of $72 million to maintain operations, given the depleted supply of emergency funding that has been used for this program in previous years.

National Institutes of Health (NIH) – The bill provides NIH with $30.7 billion in funding, which is $299 million above last year’s level. This bill assumes NIH will support the same number of scientifically meritorious research project grants as last year.


Homeland Security. As the U.S. officially ends the war in Iraq and shifts its investment in the national security agency to focus on domestic issues, its budget will take a $2 billion hit to bring total spending down to $39.6 billion. The bill calls for increased staffing levels for border control, immigration enforcement and other essential security personnel.

Military Construction. As part of the Veterans Affairs bill, funding for the nation’s military with the infrastructure needed to house, train and equip military personnel will decrease by $3.5 billion taking it to $13.1 billion. It would provide a total of 48 new family housing construction projects and 80 replacement projects.

Research and Development. GOP Defense hawks largely won in the area of defense by increasing the department’s overall budget by $5.1 billion. However one area within the Department of Defense’s budget—research and development of new technologies—lost $2.5 billion from its budget, bringing it to $72.4 billion.

Department of Energy loan guarantee. It’s no surprise that the entire $181 million in funding for DOE loan guarantees were eliminated given the recent Solyndra scandal. This includes terminating the program that funded the shuttered solar company Solyndra, which exhausted half a billion dollars of taxpayer money.

State Department. One of the biggest cuts in the bill would come to foreign aid and international programs, viewed as one of the least politically complicated areas of the federal budget to cut. Funding to the State Department, global health programs, economic assistance and other initiatives would be slashed by more than $6 billion.

Federal Emergency Management Agency. It may come as a shock that after a year of wild extreme weather that broke a record of a dozen billion-dollar catastrophes, lawmakers chose to cut $2.9 billion from FEMA to bring its budget to $4.7 billion. Scientists say there is a long-predicted increase in weather extremes triggered by manmade climate change, but 2011 was much wilder than they predicted.

Environmental Protection Agency– The EPA just can’t seem to catch a break from Congress. Although not quite as severe as last year’s spending cuts, its budget will be slashed by 3.5 percent or $233 million from last year taking it to $8.4 billion. During a budget deal in April of this year to avert a government shutdown, Republicans won a big victory with steep reductions in spending at the EPA when its 2011 budget was reduced by 16 percent taking it to $8.7 billion. On President Obama’s watch the EPA’s budget has risen sharply, to $10.3 billion in the 2010 fiscal year, after years in which its funding hovered between $7.5 billion and $7.7 billion.

Labor/Health and Human Resources–Funding for LHHS is down $1.1 billion from last year and $24.5 billion below President Obama’s request.

Employment Training Administration. As part of the Department of Labor, this division is designed to allow for more efficient and effective functioning of the labor market by providing job training and employment. The ETA will see a $68 million cut bringing it to $10.7 billion.

Administration for Children and Families. The budget crisis has forced politicians to make some cold calculations and this ranks right up there. Within the Department of Health and Human Resources, this department is responsible for promoting economic and social well-being of families, children, individuals, and communities. ACF’s budget takes an $855 million cut taking total spending to $29.2 billion. Included in the spending reductions is a $1.2 billion decrease for Low Income Home Energy Assistance Program (LIHEAP) funding at a time when the poverty rate has risen to 15.2 percent, one of the highest in the past 28 years. 

“Race to the Top” —President Obama’s cherished education initiative which provides grants to better-performing schools, would absorb more than 20 percent cut from $698 million down to $550 million.

Internal Revenue Service. With tax collection down by $166 billion, the IRS will absorb a three percent cut to its budget for a total of $11.8 billion.