After a two week recess, the House and Senate reconvene on May 2 and are expected to continue to focus on the federal budget. Congress spent most of the first four months of this session debating FY11 funding levels and finally passed a full year continuing resolution (CR) on April 15 (see Memo, 4/15). Many HUD programs were cut significantly in the final FY11 CR and all programs were subject to an across the board .2% decrease in funding.
Congress will continue the debate over FY12 spending levels in the context of concern over the federal deficit and as federal borrowing is expected to reach the debt limit in July. Additional proposals to address the deficit are expected in the coming weeks. A bipartisan group of six senators, known as the “Gang of Six,” have been meeting to craft a deficit reduction plan that is expected to be built on the report from the President’s bipartisan Commission on Fiscal Responsibility and Reform (see Memo, 12/3/10). Other senators have already expressed their support for the “Gang of Six” proposal even without knowing the details.
President Barack Obama has also called for another bipartisan working group to address deficit concerns. The group, headed by Vice President Joe Biden, will hold its first meeting on May 5.
These proposals are expected to focus again on non-defense domestic discretionary spending, despite this being only 14% of the federal budget. The reach and effectiveness of HUD programs could be severely hurt by proposals that would limit non-defense discretionary spending with multi-year caps, or with spending triggers that would cut non-defense discretionary programs if other federal programs exceeded their target spending levels. Members of both the House and Senate have proposed capping discretionary spending at a percentage of Gross Domestic Product (GDP) that is significantly lower than current spending levels. In recent weeks, several Democratic senators, including Senate Majority Leader Harry Reid (D-NV), have made statements supporting caps as a method to achieve deficit reduction.
As U.S. borrowing approaches the debt ceiling, House Republicans may attempt to pressure Senate Democrats into committing to deeper non-defense discretionary spending cuts than the Senate might propose, in exchange for agreeing to raise the debt ceiling. Failure to raise the debt ceiling will cause havoc in the national and global economies.
While these top-level proposals are debated, the FY12 appropriations process will move forward as usual. The House Budget Committee passed its FY12 budget resolution, H. Con. Res. 34, on April 15 (see Memo, 4/15). The Senate is expected to craft its own resolution based upon the anticipated deficit reduction proposal from the Gang of Six. Senate Budget Committee Chair Kent Conrad (D-ND) is a member of the group of six senators.
The Senate Banking, Housing and Urban Affairs Committee will hold an FY12 HUD budget hearing on May 5 at 10 am in Room 538 of the Dirksen Senate Office Building. HUD Secretary Shaun Donovan will be the sole witness. The Senate Appropriations Committee held a similar hearing at which Secretary Donovan testified in February (see Memo, 2/18).
The House will also move forward with debate regarding the reform of government sponsored enterprises (GSEs). The House Financial Services Subcommittee on Capital Markets and GSEs will hold a hearing on GSEs for May 11 at 2 pm in Room 2128 of the Rayburn House Office Building.