The House and Senate return this week from their respective July Fourth breaks with fights over agency funding levels for fiscal year 2024 coming to the forefront. The task of crafting spending bills has become even more challenging because of the deal to suspend the debt ceiling, negotiated by President Joe Biden and House Speaker Kevin McCarthy (R-CA), which became law in May.  

That agreement caps nondefense discretionary spending at 2023 levels, ensuring that disagreements over program funding levels will be even more heated and could take longer to resolve. But a key provision of the deal also imposes an end-of-year deadline for Congress to pass all 12 appropriations bills, or else a mandatory 1% across-the-board cut in federal programs would take effect. 

Even though the Congressional Budget Act of 1974 envisions deadlines for the appropriations process so that upcoming fiscal year funding bills are completed before the end of the current fiscal year, Congress has rarely met those deadlines. Instead, continuing resolutions are often passed to extend funding temporarily, sometimes into the following year, avoiding a government shutdown until agreement is reached.  

The debt limit deal’s mandatory 1% cut is intended to put pressure on members of Congress to not drag out negotiations until the end of the year, when more priorities are likely to be included in a larger, omnibus budget package. Congress can still supersede the deadlines in the debt limit deal by passing amending legislation, but fiscal conservatives in the House would be expected to oppose such a move, complicating McCarthy’s path toward passing funding legislation.