On January 23, on a vote of 69-29, the Senate passed H.J. Res. 2, a $390 billion omnibus appropriations bill in an effort to begin bringing the FY 2003 appropriations season to a close. Since Congress was unable to resolve its budgeting differences last fall during its election fervor, this bill combines into one large bill the 11 appropriations bills that were not completed before Congress adjourned in December. (The timeline for this appropriations bill was so rushed, in fact, that Senate and House Republicans agreed to completely bypass the House, which has the authority to originate all spending bills, and allow the Senate to begin action on the omnibus spending bill.)

The bill holds to the President’s non-defense discretionary spending limit for the year, at great cost to many programs. In order to meet the $390 billion target – several billion dollars lower than the spending limit proposed by Senate Democrats controlling the Finance Committee last fall – Senate Republicans imposed an initial 1.6 percent across-the-board spending cut. As individual Senators secured support for their amendments funding specific programs, Senate Republicans responded by increasing the total amount of across-the-board cuts. Programs that did receive additional funds – or had their funds restored over the President’s proposed cuts – include the low-income heating program LIHEAP, at $300 million, $5 billion in additional funds for the states, and the exempting of Head Start from the bill’s across-the-board spending cuts. After these and other funds were approved, the final across-the-board cut came to 2.9 percent. Additional accounting measures, such as calculating some of the funds as being FY 2004 expenditures, were also employed to ensure that the President’s spending limit was maintained, at least on paper, if not in reality.

The Senate bill now moves to a final round of debate and amending in conference with select House members later this week. Some are concerned that the conference process may result in the elimination of some of the individual program increases secured during the Senate debate as House conferees try to limit the across-the-board cuts that have the effect of removing House appropriators’ roles in budget making. (One possible limit to further cuts is that the bill must return to the nearly evenly divided Senate for one final vote.) Regardless of the actual process in the coming weeks, one thing seems certain: programs that have received cuts (nearly all programs outside of defense and “homeland security”) over the last 2 years will likely see additional cuts for what remains of FY 2003.

Looking Ahead to FY 2004
Congressional Republicans initially planned to have a completed FY 2003 omnibus appropriations bill completed by the President’s State of the Union address January 28. Negotiations in the House-Senate conference are now expected to last well into February. Despite these delays, the Senate vote came not a day to soon, as the President will be releasing his FY 2004 budget plan on February 3 to kick off the next round of Congressional budget negotiations.

Programs bracing for impending cuts for the current fiscal year now must look ahead to additional cuts in FY 2004, according to White House Office of Management and Budget director Mitch Daniels. Daniels announced last week that the country’s entire discretionary budget – that is, all that government does outside of certain mandated spending such as Social Security and Medicare – would receive an overall 4 percent increase in FY 2004. Though this increase is already less than half of the Bush Administration’s 9 percent increase last year, the real danger lies in what went unsaid in Daniels’ announcement. Because the 4 percent increase reflects the average increase across nearly all government programs, including areas receiving very large increases – such as defense and homeland security – many programs will likely receive a much smaller increase, possibly less than the rate of inflation, and still others will sustain real cuts in their FY 2004 spending levels. (Though, interestingly enough, homeland security did not receive nearly as much FY 2003 funding as was expected. This may put even more pressure on FY 2004 appropriations at both the state and national levels -- see related article.) Programs that serve the needs of low-income people will likely see additional cuts as the demand for these programs increases while the economy’s recovery reaches the unemployed slowly.

The President and his budget director have done much to underscore the need for restraint in spending. They argue that the country cannot afford to do much in the face of a war with Iraq and growing budget deficits. This rhetoric of restraint and tough choices is belied, however, by their $674 billion tax cut proposal, which wastes what they describe as limited resources on those who need it least. The country is fortunate that the President’s budget is only a starting point for Members of Congress, which means that the miserly 4 percent nominal increase and real cuts for many human services programs could be just a distant memory when the FY 2004 budget process draws to a close later this year – though with Republican members of Congress dutifully holding to the President’s spending limits, this seems like a long shot.

For a look at what a coalition of diverse nonprofit advocacy and human services organizations is doing to ensure that the President does not waste $674 billion on tax cuts for the wealthy while low- and middle-income workers and states suffer, see the Statement of Principles from Fair Taxes for All.