The Democratic-led House Budget Committee released April 2 a new bill that would lift the spending caps for both defense and non-defense funding for the next two fiscal years.

The Investing for the People Act of 2019, introduced by House Budget Committee Chair John Yarmuth (D-Ky.), seeks to avoid the “draconian cuts” imposed by the 2011 Budget Control Act, which is scheduled to remain in place through 2021. The bill – which was co-sponsored by House Appropriations Committee Chair Nita Lowey (D-N.Y.) – sets the defense cap for 2020 at $664 billion – a 2.6 percent increase over the enacted 2019 cap of $576 billion – and $680 billion for 2021.

The bill would support a $733 billion defense budget in FY ’20, to include $69 billion in overseas contingency operations (OCO) funding, and $749 billion total for FY ’21, including the same amount of OCO funding.

Aerial of the Pentagon, the Department of Defense headquarters in Arlington, Virginia, near Washington DC, with I-395 freeway on the left, and the Air Force Memorial up middle.

As the bill seeks to “adhere to the principle of parity,” non-defense discretionary spending is capped at $631 billion – a 5.7 percent increase over the 2019 cap – and $646 billion in 2021.

The legislation also includes up to $8 billion per year for “non-defense [OCO] activities that do not count against the cap.” This line seeks to prevent “abuse of the OCO designation by limiting defense OCO for 2020 and 2021 to no more than this year’s level of $69 billion.”

The House Budget Committee states that this proposed bill would provide “stability and predictability to federal funding” and ensure “a timely and orderly appropriations process.”

“As we have learned too many times in the past, governance by continuing resolution inhibits military readiness, hinders efficient agency planning, and undermines investment by local government and the private sector.”

The Tuesday statement criticizes the Trump administration’s proposed FY 2020 budget for reducing non-defense discretionary spending to “the destructively low cap set by the BCA while increasing defense spending through a dishonest budget gimmick to get around the cap,” referring to the $164 billion in OCO funding that was included in this year’s budget request.

The House Budget Committee calls for the bipartisan agreement to be passed as soon as possible so that the House Appropriations Committee can craft its own legislation with clearly stated topline spending levels. “Delaying this inevitable and necessary decision will only create chaos in the appropriations process at the final hour,” it said.

It remains to be seen whether the proposed legislation will receive more broad support on the Hill. House Armed Services Committee Chair Adam Smith (D-Wash.) has long said that reaching a new deal for budget caps is one of his top priorities this fiscal year; he has also supported a $733 billion topline for defense spending in FY 2020. The Pentagon’s proposed FY ‘20 budget proposal currently stands at $750 billion, with $746 billion allocated for FY ’21 according to DoD budget documents.

Source: House Budget Committee

Analysts have forecast that it is likely fiscal year 2020 will begin with a continuing resolution. The question remains whether a budget agreement can be reached in time to raise the caps in late 2019 or if there is “a protracted messy stand-off” leading to one or more shutdowns, Byron Callan of Capital Alpha Partners, said in a Tuesday email to investors.

“A CR that lasts until December, then a budget deal along the lines of the House plan is probably fine for defense sentiment, but something more protracted and messier would be negative,” he said in the email.

The non-partisan Committee for a Responsible Federal Budget based in Washington, D.C., on Tuesday criticized the proposed Investing for the People Act for potentially adding trillions of dollars to the federal debt if it is not paid for.

“Congress must not repeat the mistakes made with last year’s debt-busting Bipartisan Budget Act by extending huge unpaid-for spending hikes. Nor should they consider any effort to circumvent the caps by classifying ordinary expenditures as war spending as proposed in the President’s budget,” the committee said in an emailed statement.