APPROPRIATIONS OUTLOOK CLOUDY
Pre-Thanksgiving optimism has given way to December political reality as Congress grapples with whether to pass an omnibus FY’23 appropriations package this calendar year or next. While leaders on both sides had expressed a desire to reach a deal this year before the break, agreeing to a top-line number that would then allow allocations across all measures has proven difficult. “The top line is really important,” said Senate Defense Appropriations Subcommittee Chair Jon Tester (D-MT.) in a recent media report. “And make no mistake about it – they’re working on the bills, but the top line is where the rubber hits the road.” It appears as if Senate Democrats are doing most of the work on that project and, while they may attempt to get a measure through without Republican support, Senate rules may make that difficult. There is also pressure from some House Republicans to wait until January when the new Congress will be in and can weigh in on the measure. Leaders have already indicated that the recent practice of allowing domestic spending to rise in exchange for defense increases may no longer be on the table as a Republican-controlled House will seek to reign in overall government spending. House Republicans also point to the significant increase in domestic spending included in measures such as the Inflation Reduction Act. There is still a good possibility that a final spending package could get done before Christmas. Even then, however, leaders already agree that a short-term CR to keep the government funded past December 16th will be required. Whether that will be a week, a month, or more remains to be seen. Contractors should continue to watch this space closely.