The Nickel Report

President Trump released his budget request for fiscal year 2018 on March 16. The budget blueprint, or “skinny budget” as it is being called, holds fairly flat the federal spending for programs other than entitlements. It requests a significant increase in defense spending that is offset by cuts to nondefense discretionary spending.

The Environmental Protection Agency (EPA) faces drastic cuts, equaling nearly a third of its budget. This would bring the EPA’s total budget to levels not seen since 1990.

The Department of Energy (DOE) fared better, with a proposed 6 percent decrease in funding mostly aimed at Obama-era clean energy policies and programs. Office of Management and Budget Director Mick Mulvaney emphasized the President’s broad outline approach, stating:

Ordinarily, a president’s budget will come in and say, "You are going to spend this amount of money and you are going to take the reductions over there." That’s not how this president works.

While the President’s budget request sets the tone for the budgeting process, the power of the purse remains with Congress. All spending bills must originate in the United States House of Representatives before being sent to the Senate and ultimately to the President’s desk.  Federal spending is a two part process. House and Senate Budget Committees first work to establish an overall budget, which outlines the funding available for each of the 12 separate appropriations bills into which federal spending is divided. The Appropriations Committees then allocate funding within the amounts authorized.

Expect significant differences between what the President has proposed and what Congress authorizes and appropriates. The President’s budget proposes the most sweeping spending changes in Washington since at least the 2011 budget deal that instituted automatic budget cuts to discretionary and defense spending known as sequestration. Such dramatic changes do not occur without significant negotiation and bargaining.

Congress already has signaled that there will be changes. Senator Lamar Alexander, Chairman of the Energy and Water Development Subcommittee, said on Thursday:

The president has suggested a budget, but, under the Constitution, Congress passes appropriations bills.

The budget proposal reveals battle lines within Republican ranks that we have expected to become clear for some time – a generally civil but serious division over the role for government programs in influencing commercial activities. In the DOE budget proposal, for example, programs such as the Advanced Research Projects Agency-Energy (ARPA-E) are zeroed out. The agency’s website says “We’re investing in the best people, the best small companies, and the best ideas to bring entirely new energy technologies to market.” Some argue government has no role in such a task. Others argue that in the face of global competition where foreign governments fund U.S. competitors in like manner, the U.S. can’t afford not to play this role.

Clearly both viewpoints are represented in the Administration and on Capitol Hill. Now is the time for private parties who want to preserve specific programs to engage.