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By Nick Wakeman

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Nick Wakeman

Does the death of sequestration just delay the pain?

Congressional leaders and the White House have reached a budget deal that raises spending by $320 billion over the next two fiscal years and pushes out worries about the debt ceiling until after the 2020 elections.

But wait, there's more: the deal also effectively kills the 2011 Budget Control Act.

That law with its automatic spending cuts known as sequestration is set to expire in 2021.

BCA was never a popular law and was first passed and signed into law during the Obama administration. Since 2014, Congress and the White House under then-President Obama and now Trump have reached budget agreements that suspended implementation of BCA cuts.

The spending increases in this agreement covers both defense and civilian.

Of course, there are hurdles ahead. Congress must pass the agreement and the president still needs to sign it. The goal is to get the House to pass the measure before the end of the week and the start of their six-week summer recess. The Senate is staying in Washington another week, so they would need to pass it before the end of next week.

Congress still needs to pass appropriation bills to fill in the details of the agreement. They will have a month to do that if they want to get everything done before the end of the fiscal year.

So, we’re likely to see a continuing resolution because it is hard to see Congress working all that out quickly. The appropriations bills also will give an opportunity for those who disagree with the agreement to get their last shots in.

From industry’s perspective, the numbers are good -- more defense spending and more civilian spending. In the coverage, I’ve seen there have talks about $77 billion in cuts. But the Washington Post described the cuts as “accounting changes that probably wouldn’t constrain any future spending.”

The budget also sets the ground work for two more years of growth as agencies have more visibility into their budgets and can plan accordingly.

We could still see a government shutdown. We had one after all at the start of fiscal year 2019 and a budget agreement was in place then.

But I’m not sure anyone in Congress or the White House has the stomach for that again. There will be some fiery speeches but enough Republicans and Democrats will vote for it.

The bigger question is whether this agreement is the right thing.

Yes, we had to get the debt ceiling raised but there is nothing in this bill that gives any long-term concerns to ballooning deficits and debt. President Trump has said he’ll focus on cuts after his re-election.

Likely whoever wins in 2020 will need to do that. As many critics have pointed out, these budgets just aren’t sustainable.

Pick your cliche, but the chickens are going to come home to roost. We can be smart about it and start planning how to bring spending and revenues more in line with each other. Or we can just let it all collapse like a house of cards.

So enjoy the promise of this budget deal but one way or another, there will be pain in our future.

Posted by Nick Wakeman on Jul 23, 2019 at 10:48 AM

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