Republicans in government are hard at work refashioning federal spending through three major efforts, proceeding along parallel tracks. They may seem to be all the same story — and they do relate to each other — but they each have their own goals, deadlines and constraints. Here, a guide to all three.
Effort 1: Avoiding a shutdown
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Potential changes: The bill would fund a portion of the budget — hundreds of billions of dollars — for the rest of the fiscal year.
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Deadline: Saturday at 12:01 a.m.
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Status: The bill passed the house Tuesday and is headed to the Senate.
If Congress doesn’t pass a bill to fund ongoing government programs by the end of Friday, there could be a shutdown.
Congress is supposed to pass yearlong spending bills before a fiscal year begins, through a process known as regular appropriations. That process often breaks down, so Congress frequently passes shorter-term spending bills every few months instead to keep the government funded. The latest such “continuing resolution” expires this week, and a new one, which would fund the government through the end of the fiscal year on Sept. 30, is on the table.
The appropriations process deals with only a portion of all federal spending — often called discretionary. It doesn’t affect “mandatory” programs like Social Security, which pay out benefits on a kind of autopilot, based on a formula. The resolution is also subject to a filibuster in the Senate, which means that at least seven Democrats will need to vote for it even if every Senate Republican supports it.
The current bill mostly allows the government to spend the same amount on most government agencies it has been spending all year, with a few key exceptions, including cuts to programs earmarked by lawmakers for their home districts, and an increase in military spending. Compared with last year’s funding, it reduces the amount allowed by around $7 billion — roughly 0.1 percent of the estimated $7 trillion in annual government spending.
Effort 2: Passing Trump’s agenda in one big bill
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Potential changes: Trillions of dollars in changes to both tax revenue and spending, over 10 years.
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Deadline: Oct. 1, or the process must start over.
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Status: The budget resolution passed the House. The timing of next steps is unclear.
The House adopted a budget outline for what the government should spend and raise over the next decade. That budget is the very first part of a process that could help Republicans cut taxes and reshape large government programs. Republicans have chosen this route, known as reconciliation, so they can pass their policies without needing any Democratic votes in the Senate.
The reconciliation process still has many steps left to go. Republicans in the Senate would need to adopt a matching budget resolution, and many have expressed reservations about the House approach (the Senate has passed its own, smaller budget plan). Then both chambers will have to write and pass legislation that carries out the cuts and increases in spending outlined in the budget.
By design, budget reconciliation mostly addresses the parts of federal spending that are not part of the appropriations process. This includes mandatory programs like Medicare, Medicaid, food assistance, student loans and farm aid that get automatically funded unless Congress makes changes to their structure.
The budget adopted by the House would also allow tax cuts of around $4.5 trillion over a decade, partly offset by around $2 trillion in spending reductions. It also includes a few spending increases, for the military and border security. The combination could increase deficits by an estimated $3.4 trillion, including interest on federal debt.
Because the budget process affects a decade at a time, the numbers above are 10-year changes. That’s part of why they are so much larger than the numbers used to describe the continuing resolution, which covers only about half a year’s worth of spending.
Effort 3: Using Elon Musk’s team to cut the budget
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Potential changes: The stated goal is to cut around 15 percent of next year’s budget.
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Deadline: That fiscal year ends in October 2027.
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Status: The cuts from Mr. Musk’s team are continuing, with new layoffs and contract cancellations announced this week.
Mr. Musk, the billionaire entrepreneur, is leading his own effort to trim government spending, and it’s unclear exactly how it will come to intersect with the work of Congress. He has pledged to use a team called the Department of Government Efficiency to reduce federal spending by $1 trillion in the next fiscal year, an ambitious target that would be hard to achieve without legislation.
So far, Mr. Musk’s team has been directing agencies to fire workers and cancel government contracts, grants and leases. The majority of those changes affect the discretionary part of the budget — the smaller portion of government spending that Congress is also trying to address this week.
Mr. Musk and Congress seem to be clashing. The current continuing resolution mostly leaves agencies funded at their current level, and does not take account of the changes by Mr. Musk’s group. But there has been some discussion about codifying some of Mr. Musk’s cuts using a process called rescission.
The effort by his team has also mostly ignored the military, which makes up more than half of discretionary spending.
Some of the group’s changes could affect federal revenues, too. His team is enacting large staff reductions at the Internal Revenue Service, which collects taxes and investigates tax fraud. The Congressional Budget Office has estimated that a smaller I.R.S. staff generally means fewer taxes are collected.
P.S. Don’t forget about the debt limit
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Potential changes: Without legislation, the U.S. could fail to pay its obligations and default.
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Deadline: Sometime this summer.
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Status: The Treasury Department is already using “extraordinary measures” to prevent a default for as long as possible.
As federal debt rises, Congress has to periodically pass legislation that allows the Treasury Department to keep issuing bonds. It’s unclear when the country will run out of options to prevent a default, but many budget experts believe it will be as soon as this summer.
If Congress fails to increase the debt limit, the country will begin defaulting on its debt, an action likely to have negative and cascading consequences for the U.S. economy. Payments to Social Security beneficiaries, medical providers and government workers could stop.
House Republicans have folded this increase in borrowing authority into their big budget bill. But if the reconciliation process isn’t finished in time, Congress may have to pass an increase to the debt limit some other way.
