Where Does the Higher Spending in the Omnibus Go?

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March 19 - 23, 2018

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Where Does the Higher Spending in the Omnibus Go?

Policymakers recently announced an omnibus appropriations bill to fund the government for the remaining six months of Fiscal Year 2018. The bill funds ordinary defense and non-defense spending at $1.208 trillion, which is $143 billion higher than the levels set by the Budget Control Act (BCA) sequester-level caps and $52 billion above the original BCA caps.

Not surprisingly, the deal also relies on a number of gimmicks and workarounds to spend in excess of these caps – the details of which we’ll discuss in future analysis.

Appropriations bills are broken into 12 subcommittees, each dealing with a different part of the budget. The below chart illustrates the proposed spending levels and changes from last year.

Read the blog.

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Rising Rates Could Further Balloon Interest Spending

The Federal Open Market Committee announced its decision to further raise the federal funds rate by 0.25 percentage points to 1.5-1.75 percent. As interest rates rise, whether due to Federal Reserve action or other changes in the economy, they will have a significant effect on the budget.
We recently estimated that under current projections, rising debt and interest rates will lead the federal government to spend $6.8 trillion on interest costs over the next decade. If interest rates end up just 1 percentage point higher than projected, interest costs would increase by a further $2 trillion. If interest rates return to their pre-recession levels, costs could rise by $3.4 trillion. These added costs would increase debt to 107 or 112 percent of GDP under current law in 2028.

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