Continuing Resolutions Could Extend Well into 2022

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The clock is ticking in the final days of September and once again the federal government is set to start a new fiscal year under a continuing resolution — or a government shutdown — because Congress failed to pass a full-year appropriations bill by Oct. 1. However, this time around, the CRs may last much longer than usual, Hill observers are warning.

Continuing resolutions are problematic for federal agencies like the Defense Department as well as contractors because they generally freeze spending levels and prevent new-start programs. Last year, the final appropriations bill for fiscal year 2021 was passed about three months late. For 2022, the delay could be much longer, said Mackenzie Eaglen, a defense budget expert at the American Enterprise Institute and a former Hill staffer.

“I’m even more pessimistic about the length of a CR now for a variety of reasons,” she told National Defense in late August when it was apparent lawmakers wouldn’t pass a final appropriations bill before Oct. 1. “Odds grow by the week that the CR will be longer than half a year. No real talks have started between the two parties on any sort of overall federal spending deal for defense and non-defense discretionary” programs.

“Debt bombs” like the trillions of dollars in new non-defense spending proposed by Democrats will exacerbate the political divide between the two parties, she said.

“But the biggest reason the CR could last a long time is that a spending freeze through a continuing resolution is more palatable to many conservatives than a budget deal since it avoids additional non-defense double digit increases and prevents many divestments and retirements of equipment, which is politically popular,” she added.

John Lucio, a staffer for the Senate Appropriations defense subcommittee, said “the signals are there” indicating the government could be in for a long CR.

Unlike in recent years, there is no previously agreed upon topline for defense. Additionally, the principle of “parity” — whereby Democrats’ insistence on increases in non-defense spending are accompanied by similar boosts in defense spending to meet Republican demands — will be difficult to achieve after the Biden administration proposed a whopping 16 percent bump in funding for non-military agencies in 2022, Lucio said during a panel at the Navy League’s Sea-Air-Space conference.

Meanwhile, a lack of a future years defense program from the Biden administration, combined with politically fraught Pentagon proposals to cut legacy equipment, are also complicating the budget picture, he noted.

“Shaking the magic eight-ball, I … would say that maybe early spring, mid-spring, maybe a year-long [CR] isn’t really out of the question,” Lucio said.

“Anything can happen, but … it may be an extended period of time,” he added. “Logic would say that that’s probably where we’re headed.”

In July, Sen. Kirsten Gillibrand, D-N.Y., told reporters she anticipated the final 2022 National Defense Authorization Act and appropriations bills wouldn’t be wrapped up until December. Congressional Democrats recently proposed a continuing resolution that would run through Dec. 3. Lawmakers could pass additional CRs to avoid a government shutdown if there is still no agreement on full-year appropriations bills.

Rear Adm. John Gumbleton, deputy assistant secretary of the Navy for budget, noted that Pentagon officials have come to expect three-month CRs, and often plan to have to wait until the second or third quarter of each new fiscal year to issue new contracts.

“Three months we’re kind of used to, unfortunately,” he said at the Sea-Air-Space conference. “A year-long CR is the worst possible scenario [and] a six-month CR is not good,” he added.

As an example of the negative consequences, Gumbleton said a full year of continuing resolutions would prevent the Navy and Marine Corps from spending nearly $8 billion on planned buys of new equipment, $2.5 billion on operations and maintenance activities, and $2 billion on personnel.

The standoff between Democrats and Republicans over raising the debt ceiling has complicated efforts to pass a continuing resolution and raised the prospect of a temporary government shutdown beginning Oct. 1. However, Speaker of the House Rep. Nancy Pelosi, D-Calif., has said lawmakers will find a way to avoid that scenario.

Topics: Budget