GOP says Inflation Reduction Act should be factored into spending fight

Republicans have a new argument this year in the end of 2023 partisan clashes over government funding: Domestic spending should be reduced because of the sweeping tax and climate legislation Democrats moved through Congress earlier this year in party-line votes.

Republicans have been ramping up calls for spending reductions outside of defense while specifically pressing for the domestic spending Democrats have passed without GOP support in reconciliation bills over the past two years to be considered in talks.

One of those bills was this year’s $740 billion Inflation Reduction Act, which Democrats and experts estimate would lead to more than $200 billion in deficit reduction over the next decade. The other was the American Rescue Plan, a $1.9 trillion coronavirus relief package President Biden signed into law last year.

“The reconciliation bills spent a ton on domestic,” Sen. Lindsey Graham (D-S.C.), who serves on the appropriations committee, told The Hill. “So, that has to be factored in and in terms of more domestic spending.” 

“The defense needs are real. There won’t be an omnibus unless you have a generous defense number,” he said, “and, given the multiple trillions of dollars that were spent and reconciliation bills on domestic programs far beyond just COVID, it will be difficult to get a one for one.”

Sen. Joni Ernst (R-Iowa) also said she would “rather not see parity” when it comes to increases for defense and nondefense levels.

“I think that’s an issue for me, and probably for others that believe in fiscal responsibility, too,” she added. “The way our nation is laid out with our Constitution is that number one, we’re here as a federal government to protect the United States, and that’s through national defense. That should be our priority.”

Year-end spending fights typically pit Republicans fighting for more defense spending against Democrats fighting for more domestic spending.

But this year’s fight has a slightly different dimension because of the reconciliation packages.

Democrats are insisting that attention also be paid to shoring up funding for areas outside of defense operations.

“We want to be secure nationally, and that’s defense, but we want to be secure with regard to education with regard to health, transportation, etc.,” Rep. Rosa DeLauro (D-Conn.), the House Appropriations Committee chairwoman, said Friday. “These are the pieces that strengthen the economy and the domestic economy.”

“There has to be real strength on both sides, and I recognize that inflation exists,” she also said, adding that “inflation exists on the defense side,” as well. 

In recent days, top Democrats have warned that Congress could be headed for a full-year continuing resolution (CR), which would keep government funding at the fiscal 2022 spending levels, if lawmakers fail to finalize a bipartisan agreement on how to fund the government this month.

This would also prevent lawmakers from putting their own touches on what spending to emphasize in the coming year.

“If Republicans won’t come to the table and negotiate, we could go to a one-year CR if that’s what they want to do,” DeLauro told The Hill on Thursday.

The warning arrived shortly after Speaker Nancy Pelosi (D-Calif.) also warned of a year-long CR following a meeting at the White House with President Biden, along with Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Kevin McCarthy (R-Calif.).

The idea has already sparked pushback from Republicans, who cite concerns for defense and national security.

“The tension here, in my judgment, is between adequate defense funding and a recognition that the United States Congress has to do its part in controlling inflation,” Sen. John Kennedy (R-La.), who serves on the Senate appropriations panel, told The Hill on Thursday. He added that he thinks lawmakers’ two choices are “between an omnibus and a short-term CR to allow the new House majority to weigh in on a budget.”

Sen. Ted Cruz (R-Texas) also called the option of a full-year continuing resolution “a terrible idea,” while instead pushing for a short-term stopgap funding bill that would keep the government running “until early next year.”

Republicans pushing to delay a government spending decision to at least January want to do so to get more leverage in the talks from a GOP House. Republicans will take the majority in that chamber next month.

Many also believe, however, that divisions within the party will make it very hard for the House to agree to spending bills in a GOP chamber.

Some Republicans say the strategy of punting spending decisions to January could hurt funding for key GOP priorities such as defense. Some have also cited the coming retirements of Senate Appropriations Chairman Patrick Leahy (D-Vt.) and Sen. Richard Shelby (Ala.), a top GOP negotiator, as reasons for appropriators to finish their work this year to provide a fresh start for the next Congress.

Shelby said this week that he and Leahy have begun working out the top-line figures for the overall package — a sign seen as encouraging in terms of how the talks are progressing.

“If people are making offers, that’s better than not talking,” Sen. Jon Tester (D-Mont.) said of the development. “it means you got a point you can negotiate off of. So, that’s a good sign.”

Congress has just two weeks to pass legislation to keep the government funded or risk a shutdown. Negotiators on both sides speculate Congress is on track to needing at least one short-term measure to prevent a shutdown on Dec. 17.

That measure could last through Dec. 23 to buy time for spending talks. It would also put pressure on lawmakers to reach a deal if they want to get home for the holidays.

Politico reported on Wednesday that House and Senate negotiators agreed on a budget top line of $847 billion for national defense as part of the National Defense Authorization Act (NDAA) for fiscal 2023. 

The topline has gotten backing from some GOP appropriators, but it has also seen resistance on the Democratic side. It’s unclear how close the defense topline appropriators potentially decide on this month will be to the reported NDAA amount.

Sens. James Inhofe (R-Okla.) and Jack Reed (D-R.I.) declined comment on the report in remarks to reporters this week. Shelby also wouldn’t comment on how wide the gap would be between both figures on Thursday, as negotiations continue.

“We’re having serious discussions,” Shelby told reporters of ongoing talks to cinch an omnibus deal at the time.

“There are a lot of people on both sides of the aisle that see this is the right thing to do to get it done, and if we can keep going down that road, we will get there,” he said.

Mike Lillis contributed.