The federal government is on track to reach the $14.3 trillion debt ceiling two weeks from today. The looming August 2 deadline means that most other issues on Capitol Hill are taking a backseat. Even the Fiscal Year 2012 appropriations process is partly on hold as everyone waits to see what deal congressional leaders will make to avoid the projected fallout of defaulting on federal debt. The current fiscal year will end September 30th, but this deadline is not always met by Congress. (Remember the near shutdown before a budget deal was reached in April for the current fiscal year? That was more than 6 months late.)
To date, only five of the twelve annual appropriations bills have been approved by the House and only one has been formally taken up by the Senate. Three bills—dealing with transportation and housing; the State Department and foreign aid; and labor, health and education spending—have not been introduced at all. What these three bills have in common is the likelihood of being targets for major reductions in funding if spending cuts are part of the debt deal.
Negotiations on a variety of proposals for handling our nation’s debt and future budgets are expected to continue right up until the August 2 deadline. Only after a short- or long-term compromise is reached, will we see final agreements on spending for FY 12. In the meantime, if you are confused about the deficit and what it means in terms of national spending, check out Five truths about the deficit and national debt.