Continuing Resolution Coming?

(MoneyWatch)  The United States Congress is supposed to pass the spending bills for each year by the first day of the Fiscal Year. This is the 1st of October. In the last thirty years or so Congress has most often failed to meet this goal. That delay makes it hard for the Departments and Agencies to begin implementing their budgets and spending plan for the year.

What Congress may do is pass a Continuing Resolution that keeps the Government funded. This normally provides a level of funding based on the previous years appropriation. The Resolution can be for a few days, weeks or months. Normally they are for short periods as it is hoped that the budget issues are resolved in a short amount of time.

The first full Obama budget is not hurrying through Congress and it is now being reported that a Continuing Resolution is inevitable. According to the status of the Appropriations Bill at Thomas.Loc.gov, the official Congressional website, the House has approved all twelve bills. The Senate has only approved four and none have entered Conference Committee where the differences are hammered out.

The key Defense bill has not yet reached the floor of the Senate and there is a good chance that there will be a great deal of amendments to it. Many Senators want to try and protect some of the programs recommended for cancellation by Obama and while the votes may not be there this will cause debate and amendment. If the bill is significantly different from that of the House the Conference may last a long time too. Part of the problem is that the Congress is working on other major legislation such as health care and financial industry reform that is causing delays to the normal work of on these bills.

It is much easier too for the Democratic House leadership to get their versions of the bill out as they require a simple majority and they have plenty of votes for that. In the Senate it may end up requiring sixty votes although that normally does not happen. Continuing Resolutions keep the Government going but do not allow the award of any new contracts which means if there is a new defense program it has to wait for the full budget.

This means that if the Navy wanted to award a contract or option to buy two new ships from Northrop Grumman they could not do it early in the year. That delay would affect everything from delivery date to payroll for all of the companies involved. People could not be hired and material ordered which would have a multiple effect across the economy. It is in everyone's best interest to award a contract as early as possible in the year.

In 1993 the Congress refused to pass a budget in defiance of President Clinton which led to most of the Federal Government shutting down for a week. This has also happened at the state level when a budget deal cannot be reached. There is no chance of that happening this year as the Democratic Congress will work something out.