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Overview, deadlines, and potential issues.

The Administration requested a total of $64 billion in supplemental funding in FY2010 to deploy more U.S. troops for the Afghan War, replenish Disaster Assistance Funds, support recovery and foreign aid funds for Haiti in response to the January 2010 earthquake, enhance border security, and settle two recently decided court cases for American Indians and black farmers. Specifically, the FY2010 supplemental requests include

* $5.1 billion to replenish the U.S. Disaster Relief Fund administered by the Federal Emergency Management Agency;

* $33.0 billion for the Defense Department, primarily to deploy 30,000 more troops to Afghanistan;

* $4.5 billion in foreign assistance for Afghanistan, Iraq, and Pakistan;

* $2.8 billion for Haiti reconstruction and foreign aid in the wake of January's earthquake;

* $13.4 billion to compensate veterans exposed to Agent Orange;

* $243 million for appropriations-related responses to the Deepwater Horizon oil spill;

* $600 million primarily for additional border security personnel; and

* $3.4 billion to settle land trust claims of American Indians in the long-standing Cobell case and $1.2 billion to settle the discrimination claims of 70,000 black farmers in the Pigford II case (see Table 1). (9)

One of the issues arising as the Senate and House consider H.R. 4899 is the effect of this supplemental spending on the federal deficit. In its current version of H.R. 4899, the House he bill offsets $620 million of the $5.7 billion in additional spending. The Senate-passed version of H.R. 4899 includes $300 million in rescissions to offset the $59.3 billion recommended in the bill. All of the funds in the original House-passed version of H.R. 4899 is designated emergency spending. Of the $45.8 billion in discretionary spending in the Senate-reported version, all but $173 million is designated as emergency spending. Emergency spending does not count against the budget caps set in the FY2010 concurrent resolution. If those caps are exceeded, the spending could be subject to a point of order, which would need to be waived for the spending to be approved (see below). (10)

Federal budget rules distinguish between two types of federal spending, discretionary spending (e.g., annual appropriations acts) and direct (or mandatory) (e.g., Medicare) spending. (11) Of the $63.4 billion in the President's supplemental request, $45.4 billion is discretionary spending and $18.1 billion is mandatory or direct spending (see Table 1). The Administration submitted these requests to Congress in supplemental proposals included as part of the Administration's FY2011 budget, and in budget amendments submitted on February 12, 2010, March 24, 2010, and May 12, 2010. (12)

Many see emergency supplemental appropriations as undermining budgetary discipline because funding is not subject to annual caps in budget resolutions on overall discretionary spending that often require trade-offs between different types of spending. Section 403 (f) in S.Con.Res. 13, the FY2010 budget resolution, defines spending as emergency if it is "essential ... sudden ... compelling ... unanticipated," but it is a congressional prerogative to decide where the emergency designation is appropriate. Supplementals are also perceived as receiving less scrutiny than regular appropriations. In the current fiscal environment, some Members are concerned about the impact of this additional spending on the deficit.

Budget Rules and Supplemental Requests (13)

Congress may debate, as it does with any supplemental appropriations request, whether to increase spending above the existing level for FY2010 and, in some cases, levels for subsequent fiscal years. If Congress decides the additional spending is necessary, it must also decide whether the request warrants increasing the budget deficit or whether to offset the additional spending by either cutting federal spending or increasing revenues.

Congress considers all spending or revenue legislation, including supplemental appropriations bills, within rules and procedures that are intended to address these policy options. (14) In particular, Congress will consider this FY2010 supplemental appropriations request within the constraints set by the FY2010 budget resolution (S.Con.Res. 13, H.Rept. 111-89), as well as other budget rules, such as congressional pay-as-you-go rules and the recently enacted Statutory PAYGO Act of 2010 (P.L. 111-139).

Under these budget rules, Congress could exempt all or portions of the spending from these constraints by designating the spending as an emergency (or as being for "overseas deployments or other activities" in the House). (15) Alternatively, under congressional rules, the applicable points of order may be waived or simply not raised during consideration of the supplemental appropriation measure.

While an emergency designation would exempt spending from these budget rules, the emergency designation itself could be subject to a point of order. (16) This applicable point of order may be waived in both houses. In the House, it can be waived by a special rule reported by the House Rules Committee and agreed to by the House, and in the Senate, by waiver motion, which requires a three-fifths affirmative vote of Senators (60 votes if there is no more than one vacancy in the Senate).

Potential Deadlines

The Senate passed H.R. 4899 on May 27, 2010, before the Memorial Day recess. The House markup of its own version of the bill that could be substituted as an amendment on the floor to the Senate version was scheduled on May 27, 2010, but cancelled. A new date has not yet been announced. According to press reports, the delay may reflect concerns among some Members about the additional $31 billion in spending proposed in the House Appropriations Committee press release including funds to prevent layoffs of teachers and law enforcement officers and reductions in Pell grants for students, some of which was funded in last year's American Recovery and Reinvestment Act. (17)

The Coast Guard, the Defense Department, State Department, Federal Emergency Management Agency, and plaintiffs in the Cobell and Pigford II cases have all cited deadlines for when the supplemental funding would be needed, although there appears to be some flexibility in the dates.

Dedicated Funds for Coast Guard Oil Spill Response Activities Could Run Out in Mid-June

In a June 4, 2010, letter to congressional leaders, Admiral Thad Allen, National Incident Commander for the Deepwater Horizon oil spill, and Department of Homeland Security Secretary Janet Napolitano urged Congress to act on the Administration's proposal to raise the cap on funds that can be drawn from the Oil Spill Liability Trust Fund for these response activities. They stated that "at the current pace of BP/Deepwater Horizon response operations, funding available in the Emergency Fund [from the Oil Spill Liability Trust Fund] will be insufficient to sustain Federal response operations within two weeks." (18) This letter suggests that the Coast Guard could reach the current $150 million annual cap on the amount that can be drawn from the Oil Spill Liability Trust Fund by June 18, 2010. If the Coast Guard were not able to tap other funding sources (such as its regular operating account) to finance its oil spill response activities, additional monies from the trust fund would not be available until October 1, 2010. Concerned about the letter, the House and Senate passed S. 3473 on June 9 and June 20, 2010, raising the $150 annual cap on funds that can be drawn from the trust to fund oil spill activities to $1 billion specifically for the Deepwater Horizon Spill. Funds can be withdrawn in $100 million increments and are to be reported to Congress within seven days. (19)

Defense Department Deadline Could Be End of July 2010

The Department of Defense (DOD) received $129.6 billion, 80% of its total FY2010 war funding in bridge funds included in its regular appropriations acts enacted last December (P.L. 111-118 and P.L. 111-117), almost double the 45% received in the bridge the previous year. Secretary of Defense Gates recently reiterated that DOD would need the additional $33 billion for the 30,000 troops deploying to Afghanistan by Memorial Day, the same date cited in previous years when the funding available was substantially lower. (20)

In February testimony, the Secretary of the Army, the department facing the greatest need for war funding, testified that the timeframe for the Army "in which we can comfortably fund this [war funding] would be at the end of June, beginning of July." (21) Based on CRS calculations using DOD data, the Army, Navy and USMC could, if necessary, cover both its regular base activities and war operations through July 2010 based on war obligations to date and the current request, and even later if funds were temporarily transferred from other appropriation accounts using currently available authority. (22)

In June 16, 2010, testimony, Secretary of Defense Gates cited his concern about the "lack of progress on the supplemental," and urged passage by the July 4 recess, suggesting that
   the money that we have in the overseas contingency fund for the
   Navy and the Marine Corps will begin to run out in July. We will
   then turn to O&M money in the base budget for them, causing us to
   disrupt other programs. The Army comes along a little behind that
   ... we begin to have to do disruptive planning and disruptive
   actions beginning in July We could reach a pointing August, in
   early to mid-August, where we actually could be in a position where
   the money that we have available to us in the base budget runs out
   and we could have a situation where we are furloughing civilians
   and where we have active duty military we cannot pay. (23)

Based on the April 2010 DOD Cost of War report, the latest currently available, each of the services had substantial funds still available in their War Bridge Operation and Maintenance accounts--$1.4 billion for the Marine Corps, $1.9 billion for the Navy, and $19.6 billion for the Army, and $2.6 billion for the Air Force. (24) Assuming that monthly spending increases by 20% from the April 2010 level as additional troops arrive in theater, the Marine Corps and Navy could rely on already appropriated war bridge funds into mid-July, as Secretary Gates suggested, the Army could last through much of August, and the Air Force could last until about July 2010.

Since 2004, however, the services have tapped funding from their base budget that would be needed at the end of the fiscal year to fund war funding while awaiting passage of supplementals, at which point, funds are restored to the base budget accounts. Using base budget funding to finance or "cash-flow" war funding temporarily, and assuming the services need all funding requested in the supplemental, each of the services could last through the end of July and into August and still longer if funds were transferred from other accounts, which DOD has done in previous years when necessary. (25)

FEMA Limits Disaster Assistance to Extend Deadline

To make the Disaster Relief Fund last longer, the Federal Emergency Management Agency (FEMA) has limited the release of funds for claims, delayed interagency reimbursements, and recovered funds from previous years. Nevertheless, in May 2010, FEMA estimated that the Disaster Relief Fund would become insolvent the end of June assuming average monthly spending of $350 million and the current balance of $600 million. (26)

As of June 7, 2010, however, FEMA has a balance of $952 million in the Disaster Relief Fund (DRF) including recoveries of funds from previous years. These funds may be available in part because FEMA earlier adopted a policy to pay only for those projects necessary to meet immediate needs or respond to life-threatening situations in order to ensure that funds would meet the most urgent needs. If FEMA spent at its normal rate of about $350 million a month, these funds would last another three months or through August 2010. At the moment, FEMA has a backlog of $1.4 billion in projects awaiting payment for existing or approved infrastructure and mitigation projects across the nation but these projects do not meet the policy's immediate needs criteria.

State Department Disaster Funding May Run Low by June

The State Department reports that in order to respond to future humanitarian crises, these resources would need to be replenished by June 1, 2010. If not replenished, U.S. capacity to respond to other emergencies could be curtailed.

Deadline for Funding Court Settlements Uncertain

Congress did not enact the $1.15 billion appropriation by the mid-April 2010 deadline to settle the Pigford II court case to recompense black farmers. Although the claimants could theoretically void the settlement, plaintiffs are unlikely to exercise that right knowing that the settlement is clearly a priority of both the U.S. Department of Agriculture and the White House.

The latest deadline for Congress to approve the settlement of the Cobell suit for government mismanagement of funds and lands held in trust for individual American Indians is July 9, 2010. While deadlines have been extended several times by mutual agreement, it is not clear whether another extension will be accepted by the parties or the presiding judge.

Potential Issues: Emergency Designations, Timelines and Effectiveness

Members of Congress may raise several types of issues about these FY2010 Supplemental requests including whether

* a timeline to evaluate the Afghan War would be appropriate, the plans to accelerate training of Afghan security forces are achievable, and all of DOD's request qualifies as emergency war costs;

* DOD's ramp-up in basing requests signifies a permanent presence;

* additional foreign aid for Afghanistan and Iraq is likely to be effective and well-spent;

* the amount for FEMA disaster relief is justified;

* Haiti relief funding is adequate or appropriately shared; and

* the Haiti aid request is appropriately targeted; and

* some of the supplemental funding qualifies as emergency spending.
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Title Annotation:FY2010 Supplemental for Wars, Disaster Assistance, Haiti Relief, and Other Programs
Publication:Congressional Research Service (CRS) Reports and Issue Briefs
Article Type:Report
Geographic Code:1USA
Date:Jun 1, 2010
Previous Article:Highlights of congressional action.
Next Article:FY2010 supplemental request for u.s. disaster assistance.

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