President Donald Trump’s Office of Management and Budget is set to release a “skinny budget” Thursday morning, outlining spending and tax policies for fiscal year 2018, which starts in October. The budget will reportedly feature a hike in defense spending, paid for by slashing the State Department, the Environmental Protection Agency, foreign aid, and many domestic spending programs.
That’s big news — but it doesn’t mean those changes are necessarily going to happen. The president’s budget is not law, and it is not actually implemented government policy. It is an opening volley in a months-long decision-making process established by the Congressional Budget Act of 1974, in which the House and Senate set spending levels for the various government agencies.
To make matters more confusing, the procedure laid out in that law isn’t always followed in practice, and is often circumvented by last-minute deals hashed out in Congress.
The short version is that the defense hikes and non-defense cuts that Trump is proposing haven’t been enacted yet, and likely won’t be enacted for months. To pass, they’d need to get at least 60 votes in the Senate, meaning at least eight Democrats would have to vote for the budget cuts or at least refuse to filibuster. That’s not particularly likely to happen.
But the president’s budget still sets the terms of the debate, and even if it is not passed intact, Trump’s opening bid could shape the spending policy to which Congress ultimately assents.
Trump’s budget is just a prelude to Congress’s budget resolution
The formal budget process is kicked off by the president's budget request — the document of Trump's that leaked on Monday. Such a request is technically supposed to be released the first Monday in February, but most administrations miss that deadline.
The main purpose of the budget request is to formally lay out the administration’s stance on fiscal policy. It details specific policy changes the administration wants, how much those changes will affect spending and tax revenue over the next 10 years, and how individual agencies will be affected along the way.
For example, President Obama's last budget called for $312 billion in new infrastructure spending, $150 billion for universal pre-K and child care, and $60 billion to expand access to community colleges, paid for (and then some) by cuts in prescription drug spending, a cap on the value of tax deductions, new taxes on investment income, and more. The budget gave relatively precise estimates for how much each of these proposals was expected to cost or raise, respectively, and estimates of how this would affect the overall trajectory of the deficit (down) and spending and revenue levels (both up).
But you’ll notice that Obama did not actually get $312 billion in infrastructure spending, or a cap on tax deduction, or a tax increase on capital gains. That's because the budget request is only the first step in the process, and all the most consequential decisions are made by Congress.
The second step is for the Senate and House budget committees to propose, pass, and then reconcile resolutions laying out detailed spending and revenue plans for the coming fiscal year. These resolutions often incorporate ideas from the president’s budget, particularly when the president’s party controls one or both houses of Congress, but they don’t need to.
When Paul Ryan was chair of the House Budget Committee, his plans incorporated little if anything from Obama’s budgets. If House budget chair Diane Black and Senate chair Mike Enzi have significant disagreements with Trump’s budget priorities, or enough members of their committees do, then the resolutions they each pass through committee could differ sharply from Trump’s plan.
Once Black’s and Enzi’s committees have passed resolutions, the full House and Senate have to pass them as well, and then the two bodies have to reconcile whatever differences exist between them. Then, finally, a reconciled joint House-Senate budget resolution can be passed by both houses. Notably, budget resolutions can’t be filibustered, and because they’re concurrent resolutions rather than laws, they don’t require the president’s signature either.
But the flip side of not needing the president’s signature is that budget resolutions don’t have the force of law, even when they’re passed. What they do have is influence over congressional rules and procedures. They can include “reconciliation instructions” telling relevant committees to change laws so as to bring programs like Social Security, Medicare, and the Affordable Care Act subsidies in line with the goals of the budget. Legislation that is passed through this process isn’t subject to a filibuster, which is why lots of big bills like the Bush tax cuts, welfare reform, and a supplemental bill to the Affordable Care Act got passed this way.
But the budget resolutions also give members of Congress the power to raise "points of order" to block any legislation that violates the budget resolution. This doesn't really matter in the House, because points of order can be waived by a simple majority vote. If you have the votes to pass a tax or spending change that violates the budget resolution, you have the votes to waive the point of order, making it a very minor roadblock.
But in the Senate, waiving a point of order requires 60 votes. That makes it a lot harder to pass bills that violate the pre-agreed-upon budget outline.
Things more often than not don’t go according to plan
What’s supposed to happen then is that the appropriations committees in each house pass specific spending bills authorizing money for various discretionary activities, including defense and any non-defense spending that doesn’t go to “mandatory” programs such as Social Security or food stamps. Those bills are more specific but align with the spending numbers specified in the budget resolution.
In practice, Congress doesn’t do this process the way it’s “supposed” to be done. When there’s split control of the House and Senate, budget resolutions often aren’t passed at all, and spending policy is made either through “continuing resolutions” — bills that specify that spending will keep chugging along as it had been before with zero changes — or bipartisan accords hashed out at the last minute, like the late 2013 deal between Paul Ryan and Senate Budget Chair Patty Murray.
Even when there’s unified control of government, the process often operates at a delay of weeks or months, either due to disagreements between the branches or because Congress has been tied up in other business. One significant factor, however, is that while budget resolutions can pass by a simple majority vote — as can “budget reconciliation” bills — appropriations bills, last-minute spending deals, and continuing resolutions are ordinary legislation that’s subject to a filibuster.
Complicating factors is the Budget Control Act of 2011, which was passed in the aftermath of that year’s debt ceiling showdown between President Obama and House Speaker John Boehner. That includes legal “caps” on spending, for both defense and non-defense programs. Any spending above the level specified in the caps triggers sequestration, an across-the-board cut in all programs’ funding.
From what’s been released so far, it appears that Trump wants to blow past the defense cap to the tune of $54 billion, and pay for it by spending $54 billion less than the cap for non-defense. Ed Lorenzen, a budget process expert and senior adviser to the Committee for a Responsible Federal Budget, explains that would require a legal change to the cap.
“Legislation changing the caps to either replace separate caps on defense and non-defense with a single cap on total discretionary spending (a.k.a. knocking down firewalls), or increasing the defense cap and reducing the non-defense discretionary cap below sequester levels, would require separate legislation through regular legislative process subject to 60 votes,” Lorenzen says.
That means that any change to the caps would require at least eight Democrats in the Senate to agree to the change in caps, or at least agree not to filibuster it. Then eight Democrats would have to vote for the actual appropriations bills that violate the caps, including ones that underfund non-defense programs, or at least not filibuster those bills.
Filibustering spending bills is one thing; they’re “must-pass” legislation, and if Democrats don’t fall in line they’d ultimately shut down the federal government. But blocking changes in caps is another thing entirely, and it’s hard to imagine Republicans whipping enough Democratic votes to pass caps that dramatically slash domestic spending.
One way to get around this problem is to use the “OCO” loophole — “overseas contingency operations” spending, or war spending, isn’t subject to caps, and so boosting it can be a way to funnel more money to defense without running afoul of the Budget Control Act. Then Republicans would still have to pass filibusterable legislation cutting domestic spending, but they wouldn’t have to change caps as well.
The upshot: this is the beginning of the budget fight, not the end
So when you see headlines about how Trump is set to dramatically slash the foreign aid budget, or cut the EPA, etc., it’s important to bear in mind that he hasn’t done that yet. Indeed, he doesn’t have the power to do that. Congress does, and in this case, Democrats in the Senate will have a significant voice.
But that doesn’t mean Trump’s plans aren’t important. They are an important signal to Congress of what the administration wants in spending bills, and given that Trump is an infamously mercurial actor with veto power, you can bet that congressional power brokers will take that message very, very seriously. Trump’s budget is the first step in the budget fight, but it sets the tone for all the rest.