Legislative 101—The Federal Budget

The federal budget is complex and difficult to understand—even for the members of Congress that work on it. This document breaks down “sequestration,” “spending caps deals,” and an off-book Pentagon spending account called “OCO.” (Related: you can read our explainer on the appropriations process—how Congress actually decides how to spend its money—here.)

Sequestration and budget caps

Back in 2011, the Republican-controlled House pushed our government to the brink of defaulting on Treasury’s obligations, which could have caused a global fiasco. In exchange for not forcing us into financial catastrophe, they demanded Congress take two main measures to lower government spending: 1. Form a “supercommittee” to study ways to cut spending and then make recommendations for a vote in Congress and 2. If the supercommittee failed, impose significant spending limits or face automatic, across the board cuts called “sequestration.” The Supercommittee inevitably failed and the new, much lower spending limits were set for each year until 2021 (later extended to 2023). These limits came to be known as the “budget caps.”

“Caps deals”

However: Congress didn’t actually want to follow the rules they wrote for themselves. The new spending limits were so low, and would have required such significant cuts, that not even Republicans pretending to be fiscal disciplinarians wanted to adhere. So starting in 2013, Congress started passing a permission slip for themselves, two years at a time, to exceed the caps. They did this in 2013, 2015, and 2018.

Congress has NOT passed a caps deal for the next two fiscal years, 2020 and 2021. The spending caps set in current law would require drastic cuts to both defense and non-defense spending, almost ensuring that Congress will come up with some way to raise them.

However, Donald Trump’s FY20 budget does NOT raise the spending caps. Instead, it (pretends!) to adhere to them, so that Trump can erroneously brag about his fiscal responsibility. (This, of course, is a complete farce, given that his signature tax law, the Tax Cuts and Jobs Act passed in 2017, added $1.5 trillion to the deficit to pay for tax cuts for millionaires, billionaires, and corporations.)

His budget calls for steep cuts to non-defense funding. But it’s the complete opposite story when it comes to Pentagon spending. He’s recommended enormous increases in the defense budget, getting around the budget caps with an off-book slush fund called “OCO.”

OCO: The “Overseas Contingency Operations” slush fund

Since September 11, the OCO account has contained nearly $2 trillion in spending on overseas activity—nearly 10% of all government spending since then. While some of this spending is necessary to carry out national defense priorities, the gimmicky part of OCO began in earnest when Congress passed the Budget Control Act in 2011 and decided to exempt OCO from the budget caps discussed above.

What does this mean in practice? There’s been enormous “OCO creep” in recent years, as Congress uses OCO more and more to avoid the budget caps and pretend to be fiscally responsible even as they plow billions more into the Pentagon budget using this off-book trick. Of course, there is no such off-book slush fund for domestic spending—only endless wars. Endless funding means endless wars, and Trump is recommending supercharging this funding in his budget this year.

Does the President’s budget matter?

Remember: Congress ultimately decides what the federal government spends money on. The Congressional process to pass yearly appropriations will get underway in March 2019. But for now, there’s no better glimpse into what Trump wants to prioritize—and what he doesn’t want to prioritize.

If you hear cuts are coming to a program you care about, always tell your member of Congress. Tell them often. Members are flooded with appropriations requests from hundreds of interests, so it’s easy for your advocacy to get lost unless you’re persistent. Be as specific as you can about the name of the program and how much funding you’re asking for it. Do this all year.

Lastly, find out if your MoC is on the appropriations subcommittee for your issue, or at least on the full Appropriations Committee. The House Appropriations Committee members can be found here, and here for the Senate. They’re the ones with all the power here. If your MoC isn’t on the committee, that’s okay! You should still focus on your two senators and representative since they can lobby those who are on the committees to make sure your priorities are considered.