The annual appropriation process is intended to produce 12 spending bills that provide funding for government agencies, and congressional operations, for the fiscal year that starts October 1.
The process is moderately complicated. It starts with both chambers of Congress agreeing on a budget outline, something that has not happened this year or for several years. Then House and Senate committees separately develop and pass 12 appropriations bills. Joint House-Senate conference committees then develop compromise bills that can pass both the House and the Senate and be signed by the President. The last time Congress was able to complete all of the appropriations bills by the start of the new fiscal year (FY) was 1994.
This year should be more difficult than in the past. The House and Senate budget outlines are radically different. House appropriators are operating under the premise that the approximately $100-billion-per-year cut mandated by the 2011 Budget Control Act (Sequestration) will not apply to Defense spending, but will be applied wholly to non-Defense programs. This results in approximately 20-percent cuts for non-Defense programs. The Senate is assuming that sequestration will be revoked and the budget deficit will be reduced in part by tax increases. As a result Senate appropriations are only slightly reduced from fiscal year 2012. Another difference is that the Senate is more generous to research and environmental protection than the House.
As of July 23, three of the appropriation bills had passed the House and none had been voted on by the full Senate. Time is running out; there are only nine days that the House is in session between the August recess and October 1. Even if all the bills were passed by both the House and the Senate, reaching a compromise that would itself pass both chambers seems impossible.
Without standard appropriations it is assumed that there will be one or more Continuing Resolutions (CR) starting on October 1. CRs fund agencies at the prior year’s level. But even this plan has unpleasant complications: the second round of sequestration cuts would take effect in January, reducing Defense spending to $54 billion below the level the House has proposed in its FY 2014 budget. Adding to all this budget uncertainty is the expectation that the US will reach its borrowing limit in October. Whether there will be another threatened default on the US debt is unknown.