On February 9, Congress’ funding leaders announced a four-months-late move toward the first federal funding agreement of the Biden presidency. Now, negotiators must move at lightning speed to design a new government-wide funding bill, called an “omnibus,” by a self-imposed March 11 deadline before risking a federal shutdown.
The U.S. government is still running on fiscal year (FY) 2021 funding levels set during the Trump Administration. Congress failed to pass a new agreement by the beginning of FY 2022 last October 1, forcing Congress to adopt several short-term extensions to keep the government open. These extensions shortchange defense, infrastructure, and more: the Department of Defense recently warned it could lose $26 billion without an updated agreement, while the Departments of Energy and Transportation can’t implement parts of last year’s bipartisan infrastructure law (P.L. 117-58) without corresponding funding increases from Congress. Hundreds of members of Congress also need a new agreement to deliver earmarked funding for local infrastructure and nonprofit projects.
FY 2022 negotiations stalled last year when Democrats proposed to raise domestic spending by 14% and defense spending by 5%, while removing long-standing policy restrictions dealing with abortion and contraception, labor organizing, and tax enforcement. Democrats also proposed to defund Trump-era policies like the southern border wall. Republicans rejected these proposals. The impasse dragged until today when negotiators finally agreed on revised spending increases for defense and domestic spending.
With one big sticking point resolved, many others lay ahead. A new omnibus funding bill will need support from most House members, plus all Senate Democrats and at least ten Senate Republicans to become law. But, it’s not yet clear how today’s new agreement handles disputed policy riders or dozens of other controversies across $1.5 trillion in annual funding priorities. These details could still derail a new omnibus. The clock is ticking: the latest extension runs out on March 11. Michael Best Strategies will track and report to clients as a new FY 2022 omnibus develops. Please contact your servicing team with any questions.
