During the week of July 18, several Congressional deficit reduction proposals were unveiled with none emerging as a solution that lawmakers and the Administration could agree upon prior to Congress’s August 2 deadline to raise the debt ceiling.
On July 18, Senator Tom Coburn (R-OK) unveiled a deficit reduction plan that would reduce the deficit by $9 trillion dollars, the highest amount proposed by any lawmaker thus far. Senator Coburn’s proposal includes eliminating or reducing funding for many HUD programs. Then on July 19, the Senate’s Gang of Six, the bipartisan group of Senators that has been meeting on the budget since late 2010, revealed its framework for achieving $4 trillion in deficit reduction (see Memo, 7/15).
Senate Majority Leader Harry Reid (D-NV) and Senate Minority Leader Mitch McConnell (R-KY) continued working out their deficit reduction proposal, which was to include the ability for the President to raise the debt ceiling on his own, while achieving three stages of spending cuts (see Memo, 7/15). By July 22, the plan seemed to be no longer viable.
On July 21, President Barack Obama and House Speaker John Boehner (R-OH) began private negotiations on a plan that Mr. Boehner would then gain agreement on from House Republicans. Many House and Senate Democrats were deeply dissatisfied with the preliminary terms of the plan. On July 22, however, the House and Senate both cancelled their plans to work through the weekend of July 23, indicating that agreement was not imminent. Later the same day, Mr. Boehner pulled out of negotiations with the White House. By the end of the day, the President and the Speaker each held dueling press events to announce that negotiations had broken down yet again. The President met again on July 23 with Senate and House leaders. After this meeting, House and Senate leaders reverted to crafting two separate plans. House leadership plans to finalize the details of its plan the afternoon of July 25 and may vote on the plan on July 27. The White House has reiterated that Congress should craft a comprehensive deficit solution, not a short term solution that would require multiple debt ceiling increases or multiple rounds of spending cuts.
The FY12 appropriations process remains stalled. Spending decisions for FY12 will be determined largely by lawmakers’ broad agreement on managing the deficit, if such agreement is reached.
While the House passed an FY12 budget resolution and the House Committee on Appropriations has proceeded with marking up many of its FY12 appropriations bills, the Subcommittee on Transportation, Housing and Urban Development, and Related Agencies (T-HUD) postponed its mark up the week of July 11 (see Memo, 7/15). With a promise of a deficit deal imminent at the time, the Subcommittee could have marked up an FY12 bill with deep cuts to HUD programs only to find itself with additional funding to allocate from a deficit deal.
The Senate Committee on the Budget did not proceed with crafting an FY12 budget resolution, in deference to the series of bipartisan negotiations led by the White House. Committee on the Budget Chair Kent Conrad (D-ND) intended to use the Senate’s Gang of Six proposal to frame the budget resolution but wanted to wait to reveal the plan until after debt ceiling negotiations were complete. Meanwhile the Senate Committee on Appropriations gave a handful of Subcommittees instructions to proceed with crafting FY12 bills, despite not having a top-line spending allocation from the Committee on the Budget.
After weeks of various collaborations between lawmakers and members of the Administration expiring, the week of July 18 doused any hope of a quick resolution to the deficit debate and with it any understanding of what FY12 funding for non-defense domestic discretionary funding may look like. Until a bargain is struck, FY12 appropriations for HUD programs will remain in limbo.