House Republicans Near Deal to Significantly Boost Defense Spending

By Kristina Peterson and Richard Rubin Features Dow Jones Newswires

House Republicans are nearing a deal on overall spending levels for fiscal year 2018 that would boost military spending well above the limit imposed by current law.

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For the fiscal year that begins in October, House Republicans are coalescing around setting base military spending at $621.5 billion, surpassing the $549 billion limit under current law, in a budget resolution that could be released and adopted by the House Budget Committee later this week, according to House GOP aides. House Republicans are likely to set nonmilitary spending at $511 billion, which is below the limit of $516 billion under current law.

"This is so important for our country," House Budget Committee Chairwoman Diane Black (R., Tenn.,) said last week. "We've got to make sure that we have a fiscally sound country moving forward and at the same time, strengthening our military and getting to where we can do tax reform."

The budget resolution, a largely symbolic document, carries unusual importance this year, because Republicans plan to use it to help pass an overhaul of the tax code without Democratic support. The budget resolution will lay out the measuring sticks and revenue targets for the tax plan, which top Republicans are trying to write now. If the House and Senate both adopt the same budget, that unlocks the so-called reconciliation procedures that can allow a subsequent tax bill to pass on a party-line vote.

While the spending levels House Republicans are mapping out are likely to change during the course of negotiations over the summer and early fall, other directions included in the budget resolution could eventually become law. Although the budget can get adopted on a party-line basis, actual spending bills will require Democratic support.

For instance, Republicans are planning to include instructions to shave off at least $200 billion over a decade from mandatory spending, the money the federal government automatically spends for the major safety-net programs such as Medicare, Medicaid and food stamps.

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Legislation tied to the budget process can pass both chambers of Congress under a special process known as reconciliation. That enables certain measures to pass with just a simple majority in the Senate, where 60 votes are usually needed to clear procedural hurdles. Republicans hold 52 of the Senate's 100 seats.

The spending levels close to finalization in the House would be used for two things: the budget resolution that maps out the GOP's fiscal plan for the next decade and the establishment of the amount of money to be divvied up in detailed spending bills, which provide the money to run government agencies in fiscal year 2018. Congress must pass those spending bills, in some form, before current funding expires on Oct. 1. Unlike the budget resolution, which doesn't require a presidential signature, spending bills go to the White House and need 60 votes in the Senate. As a result, Democrats' support will be needed to pass spending legislation.

It would take a bipartisan agreement to alter the spending limits established in 2011 as part of a deal to raise the debt limit. Negotiations between leaders of both parties are expected to ramp up later this summer.

House Republicans have acknowledged that the spending levels they set in the House GOP budget are unlikely to represent the final outcome. Democrats are willing to boost military spending, but only if matched by an increase in nonmilitary spending.

"We must provide equal relief for both defense and non-defense programs that power our local economies," Senate Minority Leader Chuck Schumer (D., N.Y.), Sen. Patrick Leahy of Vermont, the top Democrat on the Senate Appropriations Committee, and Sens. Dick Durbin of Illinois, Patty Murray of Washington and Debbie Stabenow of Michigan, all members of Democratic leadership, wrote to Senate GOP leaders in a letter Monday. The Democrats also objected to funding Mr. Trump's proposed wall along the border with Mexico.

Many Republicans said last week they wanted to crystallize their priorities, including boosts to military spending and trims elsewhere in the budget, ahead of bipartisan negotiations with Democrats later this year. Others said they would rather begin the talks with Democrats sooner than later.

"We will once again spend a lot of time and energy on the first launch knowing damn well that the final bill will be at a number higher than what we're discussing here today" on nondefense spending, said Rep. Charlie Dent (R., Pa.), a key centrist who has been urging GOP leaders to begin discussions with Democrats. "There will be a negotiation. It's just a matter of when," he said. "Everybody knows it."

Defense hawks had hoped to include even more military spending, around $640 billion, so the $621.5 billion marks something of a compromise with those concerned about the impact on the federal budget deficit. In his budget released earlier this year, President Donald Trump proposed setting military spending at $603 billion plus an additional $65 billion in defense emergency war spending, which isn't subject to the caps established in the 2011 deal.

House Republicans are expected to boost defense emergency war spending by $75 billion, according to House GOP aides.

"There is a clear realization we have been neglecting defense," Rep. Mario Diaz-Balart (R., Fla.), a member of the House Budget Committee, said Friday.

Write to Kristina Peterson at kristina.peterson@wsj.com and Richard Rubin at richard.rubin@wsj.com

(END) Dow Jones Newswires

June 26, 2017 17:23 ET (21:23 GMT)