The CRomnibus Piñata: Unwanted Gifts for the Nonprofit Sector in the Spending Bill

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December 11, 2014; The Hill

Saturday night, the Senate passed the CRomnibus, ending the latest chapter in Congress’s continuing nightmare of budgetary dysfunction. The CRomnibus—half “omnibus,” half “continuing resolution”—is a government spending bill for the entire federal government except for the Department of Homeland Security, which would be kept alive only until the end of February of 2015, at which time Congress will revisit DHS spending on the president’s executive orders on immigration. The Senate succeeded despite a last-minute effort by Ted Cruz (R-TX) and Mike Lee (R-UT) to block the administration’s immigration plans right away instead of waiting until February, ticking off those of the Senate’s Republican leadership who simply wanted to have a Monday morning vote and then skedaddle out of town. With the Cruz-compelled Saturday session, Senator Harry Reid got to introduce a number of long-delayed presidential appointments that will potentially get up or down votes on Monday, votes that the Republicans under Mitch McConnell had hoped to avoid.

Nonprofit leadership groups, focused on the extension of charitable giving incentives or on the possibility of making some incentives permanent, haven’t been very vocal about elements of the CRomnibus that directly and indirectly affect nonprofits. They should have been, because this spending bill is hardly just a continuation of past years’ spending practices. Rather, it is loaded with budgetary and programmatic changes that will alter the policy landscape for nonprofits, including these:

  • IRS budget: The bill cuts $345.6 million from the already severely underfunded IRS, ostensibly as a backhanded way of undermining the Affordable Care Act by making the IRS’s role in health insurance reform more difficult to carry out. However, the aim of budget-cutting Republicans against the Service may have been broader than merely healthcare, cutting the budget of the IRS as punishment for its role in delaying the approvals of 501(c)(4) Tea Party-linked organizations. Senator Ron Johnson (R-WI) described the budget cut as reflecting the “need to push back on the regulatory overreach of this administration.” In fact, the language of the bill includes specific prohibitions against the IRS for “target[ing] citizens…for exercising any right guaranteed under the First Amendment” and “target[ing] groups for regulatory scrutiny based on their ideological beliefs.” Although the bill doesn’t directly try to terminate the ACA, it does not include additional money for the Centers for Medicaid and Medicare Services, the primary unit of the Department of Health and Human Services charged with implementing the ACA, and actually cuts $10 million from the budget of the Independent Payment Advisory Board, made famous by Sarah Palin in her hyperbolic description of it as the “death panel.”
  • D.C. marijuana: The District of Columbia legalized by a referendum vote last month the growing and use of small amounts of marijuana, but the legislation, reflecting the still-colonial treatment of the voters of the nation’s capital, bans the use of federal and local funds in the implementation of the marijuana policy. The District’s marijuana legalization may actually be self-implementing, making the Congressional action moot (at least, that is Delegate Eleanor Holmes Norton’s view), but to us, it looks like it limits or eliminates the district’s ability to tax or regulate marijuana use. Whatever the actual impact, the idea that Congress would implement an effort to override the decision of D.C. voters is fundamentally anti-democratic. The bill also continues the policy of prohibiting D.C. from using federal and local funds to pay for abortions.
  • Pell Grants: The relative silence about the cut of $300 million in Pell Grants in order to increase the amount of money available for paying companies to collect federal education loans on behalf of the Department of Education has been surprising. The Washington Post reported that the cut was crafted by Senate Democrats, perhaps emboldened to fund the student loan collectors because the Pell Grants program is currently running a surplus. However, cutting Pell Grants, designed for low-income students, in the wake of President Obama’s recent support for increasing them against Rep. Paul Ryan’s proposal to cut the maximum grant size, may be a bad sign for higher education policy.
  • Campaign finance: If the Bipartisan Campaign Reform Act (known commonly as McCain-Feingold) weren’t already dead and buried due to the Citizens United and McCutcheon decisions, the CRomnibus bill inserts another nail in the coffin by increasing the number of entities that could be created by the national political parties for receiving donations and increasing the maximum possible donation level. The result is an individual’s potential maximum annual donation to a national political party would increase from $97,200 to $777,000. This provision, tucked into the bill only a few pages from the end of the 1,603-page document, has no one in Congress claiming responsibility for its inclusion, but defenders suggest it will strengthen political party mechanisms against the power of independent third-party campaign entities such as PACs and 501(c)(4)s. Will it really reverse the flow of money out of third-party political entities back to the parties or simply unleash even more money from the wealthy to warp the contours of American democracy?
  • Race to the Top: Although most federal K-12 education funding programs, including Head Start and Early Head Start, will receive a small increase in their funding levels going forward, one program in particular takes a big hit. The Race to the Top, the Obama/Duncan program with significant philanthropic support that emphasized teacher evaluations, the Common Core, and charter schools, was zeroed out for FY2015. While the “race” seems to have staggered over its finish line and collapsed without much support from either party, the CRomnibus does provide two important educational resources through the Department of Health and Human Services—$80 million for a program of health and educational services for young migrants and $14 million to help school districts that with new immigrant students.
  • Environment: The number of provisions that weaken the nation’s environmental commitments is significant. The budget of the Environmental Protection Agency takes a $60 million cut in the bill, which amounts to a reduction in the EPA’s budget by roughly one-fifth since the Republicans took control of the House of Representatives as of Fiscal Year 2010. Additional environmental provisions in the bill prevent U.S. contributions to the Green Climate Fund, an international fund to help poor nations deal with the impacts of climate change, give the Ex-Im Bank and OPIC the go-ahead to finance coal-fired energy plants overseas (contradicting the Ex-Im Bank’s own financing standards), and prohibit federal funds from being used to regulate the use of lead in ammunition and fishing. Perhaps the good news on the environment is that the CRomnibus didn’t eliminate the EPA altogether.
  • Food: Thanks to this budget deal, the nation even regresses on food policy. Americans already eat huge amounts of starchy food, which led the Department of Agriculture to exclude white potatoes from the foods that could be purchased in the supplemental nutrition program for Women, Infants and Children (WIC). Due to Senator Susan Collins (R-ME) and Rep. Mike Simpson (R-ID), representing states that generate large crops of potatoes, the Agriculture rule has been reversed. School lunch standards were also altered in the bill: The CRomnibus put a halt to the nation’s plans for lowering over time the limits on sodium. In addition, it allowed school districts to bypass the rule that was supposed to start this year that required that 100 percent of schools’ use of grains be whole grain, up from 50 percent the preceding year. The reason for the new allowance for some schools to stick to 50 percent whole grain is expense, not science or health.
  • Humanitarian aid: Amidst the xenophobia of American politics in which advocates of humanitarian aid are often lonely voices, the spending bill offers a mixed bag of necessary funding and missing items. Although President Obama had requested $6.2 billion to fight Ebola, the bill provides only $5.4 billion (treated as exempt from the budget limits agreed to by Congress and the White House last December), of which $2.5 billion goes to HHS for helping U.S. hospitals gear up for Ebola patients and for monitoring flight passengers from the affected West African countries. As the Arab Spring becomes only a distant memory, the CRomnibus’s funding for the now military-led Egypt makes the point clear, providing Egypt with $1.3 billion in military aid and only $150 million in economic aid. In the wake of news that the United Nations has cut food assistance to Syrian refugees due to a UN budget crisis and Jordan has terminated providing free healthcare for Syrian refugees in Jordanian facilities, there is some money in the budget for Jordan for $1 billion in military and economic aid with additional funding for refugee assistance. For Palestinians who have seen much of Gaza turn to rubble in the recent war with Israel, the spending bill gives Israel $3.1 billion in overall aid plus $619 million in military aid. The latter includes $175 for Israel’s Iron Dome missile defense program, for which Congress already allocated $225 million only a few months earlier. Palestinians don’t get much in this legislation other than a warning that a new Gaza war may be in the offing.

Much of the public discussion of opposition to the CRomnibus has focused on Senator Elizabeth Warren’s (D-MA) almost daily criticism of the legislation for its provision that changes an important element of the Dodd-Frank banking reform agenda. Essentially, the language rolls back a Dodd-Frank restriction that had removed banks’ very risky trades in derivatives from insurance coverage under the FDIC. It seems to have been common knowledge that this provision was actually written by lobbyists for Citibank, though inserted in the bill by Kansas Republican Congressman Kevin Yoder. In other words, the American taxpayer will be back on the hook to cover for the banks’ risky investments that not all that long ago brought the nation to the brink of economic collapse. This may have been the CRomnibus provision that got the most attention from the press, particularly when Rep. Nancy Pelosi (D-CA), the ultimate Obama loyalist, split with the president and joined the Warren camp in opposition: “We say to Wall Street, ‘You can engage in risky activity with your derivatives, and the FDIC will insure your action.’ That’s just plain wrong. With this bill now we are saying the exposure, the recourse is with the U.S. taxpayer. Just plain wrong.”

However, less reported elements of the CRomnibus, particularly the devastating cut to the IRS budget, hit the nonprofit sector smack in the face. With the vote on the bill, the nation has avoided a temporary shutdown, but to do so, Congress accepted a spending bill with a piñata full of unwanted holiday gifts that will last the whole year—until next year when Congress gets to do this all over again.—Rick Cohen