CBO predicts nondefense spending bills won’t face automatic cuts post-April 30

The nonpartisan Congressional Budget Office (CBO) said Wednesday that funding for nondefense programs will not be subject to automatic spending cuts even if Congress doesn’t pass its remaining six spending bills by an April 30 deadline.

The forecast is a potentially important one in the ongoing funding fight between Republicans and Democrats, which could lead to a partial government shutdown next weekend.

It would mean defense programs could still see a 1 percent cut, the CBO said, which could amount to a reduction of as much as $11 billion.

Under a budget caps deal brokered between President Biden and House GOP leadership last year, funding for defense and nondefense programs stood to see an across-the-board 1 percent cut from fiscal 2023 levels if lawmakers didn’t finish their funding work by an April 30 deadline.

Initially, there were concerns that nondefense programs — including a number of Democratic priorities — could see a bigger cut than Democrats previously bargained for.

In an estimate from early January, the CBO said nondefense programs could have seen as much as a 5 percent cut, or a reduction of $41 billion, under the penalty at the levels recorded then.

But a new forecast from the CBO, based on the six government funding bills Congress passed last week, found that nondefense programs could be shielded from cuts — potentially giving Democrats more leverage in the funding fight.

However, the office notes that “ultimately, the authority to decide whether sequestration is required and to calculate the percentage reductions, if any, rests with the Office of Management and Budget (OMB).”

Over the weekend, Biden signed a package that contained six of the 12 annual government funding bills, approving full-year funding for the departments of Veterans Affairs, Agriculture, Interior, Transportation, Housing and Urban Development, Justice, Commerce and Energy, among other offices.

The six bills were written from a spending top-line agreement largely in line with the Fiscal Responsibility Act, the bipartisan debt limit deal hashed out last year that included spending caps for Congress to work from for fiscal 2024.

Lawmakers are still working to strike a deal on the remaining six bills, which includes funding for the departments of Defense, Labor, Health and Human Services, Education, and Homeland Security.

In the meantime, those offices are being funded through a stopgap measure that freezes spending at fiscal 2023 levels.

Factoring in that stopgap, along with the funding bills passed last week, the CBO said that “nondefense funding in those acts is $3 billion below” the $736 billion cap, adding, “so no sequestration of nondefense budgetary resources would be required.”

Bobby Kogan, senior director of federal budget policy for the Center for American Progress, cited three factors that contributed to funding for nondefense programs now running lower than the cap.

That includes, Kogan said, lawmakers fixing an overpayment issue for the VA and the Indian Health Service in last week’s funding package, changes in mandatory spending he said helped offset government funding, as well as temporarily more emergency spending.

“We were running too high. Why were we looking at a 5.4 percent cut instead of a 1 percent cut? Well, there were a couple of things going on,” Kogan told The Hill. 

“We were running too high because we had over-appropriated to the VA and to Indian Health Services and facilities, and we were also running too high because we were bringing in less lower housing receipts than expected and so those things as a team basically were leading to there to be an issue.”

Updated at 7:38 p.m. EDT