Senate and House Budget Committees will start formulating their budget resolutions for FY 2016. The budget resolutions are merely spending blueprints and are not law. However, the budget resolution does establish top line spending limits for all discretionary spending. With strict budget caps in place due to the 2011 Budget Control Act (BCA) there is little wiggle room to expect the overall spending cap limit for FY 2016 will exceed the $1.02 spending level set in FY 2015. Committee members may address sequestration by trying to lift the budget caps for either/both defense and domestic discretionary programs.

There have been some reports of a deficit neutral reserve fund being established to appease deficit hawks in the Senate to allow increases in defense spending – but not necessarily corresponding increases in domestic discretionary spending. It is not clear if any attempt to raising spending caps in the budget resolution would work in the Senate, and the House budget resolution might be more problematic. Some Senators, including John McCain (R-AZ) have already stated they will not support a budget resolution that does not increase defense spending.

But, as mentioned above, a budget resolution is not law and no matter what the outcome the spending caps remain unless changed by new law. Appropriators will begin looking at programs and agencies within their subcommittee’s jurisdiction following any budget action. If the budget resolution increases defense spending at the expense of domestic discretionary programs – in order to keep within the expected $1.02 trillion discretionary budget, appropriators will have a very difficult time passing their spending bills.