Note: The Steptoe Appropriations Newsletter will not publish next week due to the upcoming holidays. We'll be back January 5. Happy Holidays!

Steptoe is tracking the fast-moving developments in the federal appropriations process on behalf of our clients. Below are the top developments you need to know.

The Topline:

The Senate remained in session this week in hopes of reaching a deal on supplemental funding for Ukraine, Israel, and border security. Despite reports that negotiators are making notable progress, they were ultimately unsuccessful this year and will postpone negotiations until after the holiday break.

Meanwhile, leadership remains deadlocked on topline spending numbers for FY24. Lawmakers will have limited time to reach a deal once Congress returns in January, with deadlines on January 19 and February 2. The controversy centers around an unwritten "side deal" between House and Senate leaders (including former Speaker Kevin McCarthy who is now gone) and not the specific terms of the Fiscal Responsibility Act (FRA). With the updated CBO projections resulting in lower non-defense discretionary funding available under the FRA, the "side deal" has become a potent issue on both sides of the aisle.

Speaker Mike Johnson indicated in November an unwillingness to entertain another short-term continuing resolution (CR) for FY23. However, without one, the government will face a partial shutdown on January 19. There is speculation if a topline spending deal is reached that Speaker Johnson would agree to a CR until February 2, but not further than that. Certainly, some in the GOP Conference would prefer a CR to the end of the fiscal year, or September 30, 2024.

We are already hearing that the White House could be weeks late in submitting its FY25 budget request to Congress, which should be done by the first Monday in February. Stay tuned to our regular updates in January as this will be a busy and consequential month!

House:

  • Dec. 20 - Lawmakers are dragging out preliminary negotiations to fund the government beyond their deadlines on Jan. 19 and Feb. 2, making for a busy beginning to 2024. Negotiators still don't have a deal on basic topline funding levels and are divided over a side deal that accompanied the debt-limit measure enacted in June. The side deal would allow appropriators to use redirected rescissions, changes in mandatory programs, and cap-exempt emergency funds to add $69 billion above the nondefense discretionary spending cap enacted in the debt-limit law. BGOV
    • Related: House Appropriations Committee Ranking Member Rosa DeLauro (D-CT) briefed progressive groups this week on the funding deadlines facing Congress in January. The only outcome that won't cause a world of pain, she said, is spending legislation that sticks to the terms of the bipartisan debt deal from this summer. Democrats on the Committee are circulating a fact sheet explaining how Republicans are trying to buck the terms of that debt accord, unpacking the GOP's push to nix up to $69 billion in additional funding for domestic programs that wasn't explicitly written into the law. Fact Sheet Politico Pro
    • Related: House conservatives hated the summer debt deal so much they ousted former Speaker Kevin McCarthy for negotiating it. But now they're weaponizing the agreement heading into next month's budget showdown, with behind-the-scenes coaching from Donald Trump's former budget chief. Strategically, it's a 180-degree turn by GOP hardliners. But six months after McCarthy and Democrats struck the debt accord, its terms have become more favorable to them — and they see it as a handy way to cut domestic spending. Politico Pro
  • Dec. 20 - Republican Study Committee Chair Kevin Hern (R-OK) and Rep. Ben Cline (R-VA), who leads the panel's budget and spending task force, sent a letter to the Treasury Department this week demanding the undoing of a rule that they argue would prevent Congress from tapping into unspent COVID aid as a way to offset new spending. Letter; Politico Pro

Senate:

  • Dec. 20 - Senators won't be able to pass a border and immigration deal until next year, and members are instead aiming to leave town for the holidays soon and then move legislation in a jam-packed January. A border deal is meant to unlock conservative support for Ukraine aid, as part of a major funding bill that would also include funds for Israel and Taiwan. Negotiators say there's been progress but still no agreement on border measures, the politically touchiest component of the package. Instead, members aim to pass the emergency bill next month, when they also face a Jan. 19 deadline to enact four of the 12 regular appropriations bills. BGOV
    • Related: Senate Majority Leader Chuck Schumer (D-NY) and Minority Leader Mitch McConnell (R-KY) said in a joint statement that they hope to "take swift action on the national security supplemental early in the new year." BGOV
    • Related: The U.S. will run out of funding for Ukraine this month if Congress does not act to pass President Joe Biden's emergency supplemental spending request that has been stalled for weeks on Capitol Hill, a top U.S. official said. Politico Pro
  • Dec. 19 - Senior Senate appropriators blamed the House for an apparent impasse over topline figures for funding the government for the rest of the fiscal year past deadlines in January and February. BGOV

Administration:

  • None

Next Week

Hearings

  • None

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