House and Senate negotiators wrapped up the $1.1 Trillion FY 2014 Omnibus Appropriations with House and Senate passage occurring at the end of last week. Appropriators sought a short-term extension of the current Continuing Resolution to allow themselves enough time to tidy up the nearly 1600 page bill. The White House has indicated that the President will sign the bill.

As in any bill of this size, both Democrats and Republicans could declare some form of victory—often on the same issue. For example, Senate Budget Chair Barbara Mikulski (D-MD) stated that there was "nothing in the bill that knocks Obamacare" but the bill did reallocate the $1 billion that was supposed to go to the health law's Prevention Fund this year for other programs, most of which are not directly related to the Affordable Care Act. Republicans also touted the elimination of $10 million in funding for the Independent Payment Advisory Board, set up in the new law to make binding recommendations to Congress for reducing Medicare costs beginning in fiscal 2015.

Overall, spending was reduced for the following Departments: Defense, Homeland Security, Transportation, Housing and Urban Development, and State. In addition, the legislative branch and foreign operations saw reductions in their overall spending levels. These department's budgets were held below the levels enacted in fiscal 2013 spending allocations. Even then, the allocation for defense is above the level that would have been in place if sequestration had been allowed to go into effect.

Most other departments saw modest increases from fiscal 2013 to fiscal 2014. Some programs that saw funding increases included the National Institutes of Health, which received a budget increase of $1 billion to $29.9 billion and the Centers for Disease Control and Prevention, which received $567 million more than in fiscal 2013. However, wherever a program was given additional resources, corresponding reductions were often necessitated in other programs.

Omnibus passage dims prospects of action on FY 2015 Budget Resolution

The Budget Agreement passed in December 2013 accomplished three major things. First, it gave the Appropriations Committees additional resources to spend in FY 2014. Second, it averted the blunt instrument of the impending sequester that was scheduled to hit in January 2014 and gave Congress the ability to shift cuts within the Departments. Third, it established spending caps for FY 2015.

The major reason that an annual Budget Resolution needs to be passed is to set the overall allocations for appropriations for the upcoming fiscal year and to establish the level of overall revenue for the national government. Absent any consensus on changing the level of revenues and the reconciliation directives that would be included in the Budget Resolution, there really isn't any need for Congress to pass a Budget Resolution for FY 2015. If a Budget Resolution is taken up in either Chamber, it will most likely be a "if I were King of the Forest" political statement of what the majority party would like to see spending levels set at. Such an exercise would afford vulnerable members of both parties to cast votes that could serve to insulate them from attacks from political opponents during the upcoming campaign.

Debt limit to be the next show-down

The deal to end the government shutdown in October raised the debt ceiling until February 7. Importantly, the legislation did not foreclose the use of extraordinary measures by the U.S. Treasury. It is estimated that the use of those extraordinary measures could extend the deadline from somewhere from late February to June depending on the volume of tax receipts received. Expect to see the internal divisions in the Republican party to play out over the next several weeks. Already, some House and Senate Republicans, encouraged by outside conservative groups, have started laying down markers over the impending increase in the debt limit with talk focusing on forcing changes in mandatory spending programs. On the other hand, Speaker Boehner said earlier this week that no decisions have been made in that regard. House Republican leadership staff also acknowledge that even if they are successful at leveraging changes via the debt limit, there could be a substantial political price to pay. The House Republican leadership will likely raise the issue at their annual issues retreat scheduled for the end of January to gauge the sentiments within the Republican conference.

-George C. Crawford