The process of funding the government—including the Department of Labor (DOL), the Department of Health and Human Services (HHS), the Treasury, and other agencies dealing with issues important to insurance and financial advisors—will be fraught this summer. Despite enactment last month of the Fiscal Responsibility Act (FRA), which set discretionary spending targets, the debate over spending levels continues to rage. And there’s no consensus in sight.
Currently, the FRA spending targets mean significant cuts for all agencies (except the Veterans Administration and Defense). However, conservative House Republicans are insisting on—and leadership has agreed to—cuts even deeper than those contained in the FRA. The FRA authorizes $1.59 trillion in discretionary spending for fiscal year (FY) 2024. But the House bills will slash $119 billion from that total. The House appropriators also plan an additional $115 billion in rescissions of already-authorized spending. Thus, most agencies’ budgets will take big hits in the House versions of the annual appropriations bills.
Both the House and Senate will cut spending—for example, the House bill will cut Labor-HHS-Education spending by 29.1 percent, while the Senate will reduce those agencies’ budgets by 5.9 percent. These cuts will likely impact the regulatory activity of Treasury (think SECURE 2.0 guidance), DOL (fiduciary rule, worker classification/independent contractor rules, for example), HHS (health insurance rules), and others.
Plus, the struggle to divvy up a substantially smaller federal revenue pie will likely pull in issues related to tax—whether they be policy-based changes, extensions of current tax policy, or an effort to meet spending needs with new tax revenue.
Prospects: The government funding process is expected to last all summer and into the fall, and to be even more difficult than usual. Not only is the best-case scenario likely to result in painful budget cuts, but the even steeper cuts also envisioned by House conservatives will make enacting legislation a very heavy lift. However, failure to enact government funding legislation would trigger (under the terms of the FRA, which is now the law) across-the-board one percent cuts which would impact Defense and the VA, something even the most ardent of conservatives want to avoid. Most Hill insiders are predicting a government shutdown between October 1, the start of the new fiscal year, and January 1, when the automatic cuts would be triggered if government funding legislation is not in place by then. A continuing resolution extending current fiscal year spending levels through December (or another date) is also a possibility.
NAIFA Staff Contacts: Diane Boyle – Senior Vice President – Government Relations, at dboyle@naifa.org; Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org; or Michael Hedge – Senior Director – Government Relations, at mhedge@naifa.org.