Spending Deal Reach However Work Remains Before First Potential Shutdown
On Sunday, January 7, 2024, congressional leaders announced that a bipartisan spending deal was reached, potentially avoiding a partial government shutdown in the coming weeks. Currently, the federal government is operating under two continuing resolutions (CRs) passed last December to temporarily fund agencies. The spending deal announced totals $1.66 trillion for the remainder of FY24 ($866.3 billion in defense spending, $772.7 billion in domestic discretionary spending), it rescinds approximately $6.1 billion in COVID-19 emergency spending authority and accelerates cuts from the $80 billion in new funding the Internal Revenue Service was supposed to get under the Inflation Reduction Act. Although the topline numbers have been agreed to, lawmakers have very little time to pass the legislation codifying the deal before the first CR expires on January 19.
If the spending bills are passed, some of the more drastic spending cuts to meet spending limits included in the Fiscal Responsibility Act (FRA) that passed Congress in 2023 could be avoided. As noted, the agreement only marks a first step in the overall path needed to fund the federal government for the rest of FY24. But if the deal falls through and Congress needs to rely on additional CRs, here is a brief explainer by the Congressional Budget Office (CBO) on how the FRA spending limits might be implemented.