Tax Debate Could Delay Defense Budget Deal.

Author:Harper, Jon
Position:Budget Matters
 
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Efforts to overhaul the tax code could dominate lawmakers' time in the coming weeks. Wrangling over this divisive issue may prevent Congress from reaching an agreement on defense appropriations before the December deadline, analysts said.

Since Oct. 1, the Defense Department and other federal agencies have been funded on a continuing resolution after Congress failed to pass annual appropriations bills before the start of the fiscal year.

Continuing resolutions, also known as CRs, freeze most defense expenditures at the previous fiscal year's level. They also prevent the Pentagon from starting new programs or increasing production rates for procurement projects.

"Long-term CRs impact the readiness of our forces and their equipment at a time when security threats are extraordinarily high," Defense Secretary Jim Mattis wrote in a letter to lawmakers in September before the latest continuing resolution went into effect. "The longer the CR, the greater the consequences for our force."

The current one would provide about $547 billion--not including $83 billion in overseas contingency operations funds--for defense in 2018 if it remained in place for the entire fiscal year, according to analysis by the Center for Strategic and International Studies.

If lawmakers can't pass new annual appropriations before the continuing resolution expires Dec. 8, they will be forced to pass another CR or face a government shutdown. Analysts are doubtful as President Donald Trump pressures Congress to act on his tax plan.

"They're highly unlikely to move before the CR expires, especially when they are under the gun to at least attempt tax reform by the end of the year," said Mackenzie Eaglen, a defense budget expert at the American Enterprise Institute.

Katherine Blakeley, a research fellow at the Center for Strategic and Budgetary Assessments, said there is "a lot of appetite" on Capitol Hill to pass defense spending legislation before the winter recess. But that doesn't mean it will happen.

"Right now... they're focused on figuring out the parameters of tax reform. So much as people might like to get a full-year defense bill settled in December...

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