Congress pivots to full-year funding bills after bipartisan agreement on spending levels

Updated at 3:37pm ET

As Congress finally has a bipartisan agreement on the top spending levels for fiscal 2024, it now turns to the difficult task of crafting individual bills to set line-by-line funding at agencies across government with just 10 days to avoid a partial government shutdown. 

Lawmakers reached a breakthrough over the weekend when House Speaker Mike Johnson, R-La., and Senate Majority Leader Chuck Schumer, D-N.Y., announced a deal on top-line funding levels of $1.66 trillion for the fiscal year that began more than three months ago. The agreement preserved the funding levels President Biden negotiated with since-ousted House Speaker Kevin McCarthy, R-Calif., last year as part of a deal to raise the debt ceiling, though it created new offsets to fund a small chunk of the spending. Overall, defense spending will jump 3% to $886 billion and non-defense spending will stay essentially flat relative to fiscal 2023 at nearly $773 billion. 

Negotiators now have a tight turnaround to pass spending bills before funding expires for some agencies on Jan. 19. Top appropriators in the House and Senate were in talks Tuesday to determine how to divvy up the money, as key lawmakers said at the Capitol they were still awaiting that information so they could begin writing the bills. Already, several senators were discussing the need for another short-term extension and by Tuesday afternoon, Senate Minority Leader Mitch McConnell, R-Ky., said a stopgap measure would "obviously" be necessary. 

The negotiators on the high-level budget deal left out the significant spending cuts that conservative lawmakers had demanded, which the Biden administration had warned would have drastic impacts on agency operations. The statutory spending cap of $1.59 trillion technically remains in place, but Johnson and Schumer agreed to preserve an additional roughly $70 billion in additional funding for domestic agencies.

As part of the deal, the Internal Revenue Service will see $20 billion cut from its Inflation Reduction Act funds in fiscal 2024. Initially, that was intended to be spread out over two years. Lawmakers also identified more than $6 billion in additional unspent COVID-19 relief funds to rescind. 

“When we began negotiations, our goal was to preserve a non-defense funding level of $772 billion, the same level agreed to in our debt ceiling deal last June, and that $772 billion was precisely the number we reached,” Schumer said on the Senate floor on Monday. “Not a nickel—not a nickel—was cut.”

Johnson, however, highlighted the new offsets and the rejection of the $14 billion in additional funds above the Fiscal Responsibility Act’s level that the Senate had added to its spending bills. In a letter to his colleagues, Johnson called the deal "the most favorable budget agreement Republicans have achieved in over a decade." 

Schumer added the deal will protect vital programs for veterans, health care, small businesses and federal law enforcement. He said it was a “huge step towards avoiding a government shutdown,” but drafting and passing the 12 annual appropriations bills that Congress must approve each year would “not be easy.” Democrats will not accept any “poison pill” policy riders in the funding measures, he said, and Republicans would be responsible for “careening towards a shutdown” if they push to do so. 

Johnson, meanwhile, acknowledged the spending deal would “not satisfy everyone” who had pushed for deeper cuts, but would allow Republicans to “fight for the important policy riders” his colleagues included in their initial fiscal 2024 appropriations bills. 

Appropriators now face a tight timeline to determine the amount of money they will allocate to each of the 12 annual bills, draft legislation and move them through both chambers. Under the most recent stopgap continuing resolution, funding for the departments of Transportation, Housing and Urban Development, Energy, Veterans Affairs and Agriculture will run out Jan. 19. The remaining agencies are funded through Feb. 2. 

“We cannot afford to delay further, so I will be working with my colleagues around the clock in the coming days to prevent a needless shutdown and pass bipartisan spending bills free of partisan poison pills that protect key investments and help meet the challenges our constituents are facing,” Sen. Patty Murray, D-Wash., who chairs the Senate Appropriations Committee, said. 

If lawmakers cannot pass funding bills by those deadlines, they may need to approve another stopgap bill to buy themselves more time. Johnson has vowed, however, not to pass any more short-term measures this fiscal year. Murray on Tuesday did not rule out the possibility of needing more time to pass the funding bills, saying she was working with the House to determine the allocations for each of the 12 spending bills. Some Republican senators said on Tuesday more time would almost certainly be necessary, pointing to March as a possible new deadline. 

"I think it's gonna be really difficult to get them done in that shorter the timeframe," said Sen. John Boozman, R-Ark., who sits on the Senate Appropriations Committee. "We're still not really knowing our allocations even now. So I would say probably, March is a fair statement."

Sen. Chris Coons, D-Del., the top appropriator on the panel that funds the State Department, said he had not yet received his allocation. 

"We’re going to try hammer out these bills between now and the 19th," Coons said, adding, "That is a very short timeline."  

If Congress dispensed with the appropriations process altogether and instead opted to pass a full-year CR, a provision of the 2023 debt ceiling law would force devastating, across-the-board cuts that would likely require employee furloughs and significant disruptions to agency operations. 

Avoiding that outcome by passing funding bills will require bipartisan support in both the House and Senate, as conservative lawmakers in both chambers quickly derided the spending caps Johnson negotiated as insufficient. That likely means Johnson will have to depend on Democrats to get any funding bills to President Biden’s desk. 

Murray is working with her counterpart in the House, Rep. Kay Granger, R-Texas, to determine how much funding will go to each appropriations bucket. 

"The longer that takes, the more difficult it's going to be to make the first deadline," said Sen. Susan Collins, the top Republican on the Senate Appropriations Committee. 

McConnell was more direct, saying a CR would be required and it was up to Johnson and Schumer to determine its length. Schumer was less committal, saying only that negotiators were working tirelessly to get the work done as quickly as possible. 

Both the House and Senate appropriations panels have moved fiscal 2024 spending bills, but the committees will now have to adjust those to find mutual agreement and meet the parameters of the new caps. 

The White House praised the budget agreement for sticking to the broad outlines of the Fiscal Responsibility Act and called on congressional Republicans to avoid any tactics that might lead to a further spending impasse. 

They "must do their jobs and stop threatening to shut down the government and fulfill their basic responsibility to fund critical domestic and national security priorities," White House Press Secretary Karine Jean-Pierre said on Monday. "It's time for them to act. And so, that's what we expect."

Another potential hurdle is the ongoing negotiations over immigration policy changes that a bipartisan group of senators is aiming to attach to President Biden’s supplemental funding request to aid foreign allies and boost resources at the border. Some lawmakers have pushed to merge that package with the funding battle, but an agreement does not appear immediately imminent and the issues may remain on separate timelines.

This story has been updated throughout with additional comment from lawmakers.