The agreement in principle reached over the weekend between the White House and House Speaker Kevin McCarthy, R-Calif., to increase the national debt limit through early 2025 would leave Federal civilian agencies living on smaller-than-proposed budgets for the next two years, with spending priorities for IT-related categories like modernization and cybersecurity under pressure along with other agency spending accounts.

That’s one logical takeaway from an eventual approval of the debt ceiling deal by Congress. Another is that with two years of annual appropriations, cycles to go between now and 2025, it’s still too early to predict how the Biden administration would react to nondefense spending caps in particular agency spending accounts like IT and cybersecurity.

Following news of this weekend’s agreement in principle, however, several government IT experts warned in comments to MeriTalk about the potential downsides of tamping down agency tech and security spending in the coming years to get under spending caps that any debt ceiling agreement may create.

Terms of the Deal

According to figures released by the White House and Speaker McCarthy, the agreement in principle would leave the Federal civilian side of the government with a roughly flat discretionary spending budget for fiscal year 2024, compared to the FY2023 level of about $772 billion. The Biden administration’s FY2024 budget proposal released earlier this year – considered a wish list more so than a hard expectation – envisions a seven percent year-over-year non-defense spending increase, to $841 billion.

The proposed debt ceiling agreement also would limit increases in non-defense Federal discretionary spending to one percent in FY2025.

The proposed agreement offers a rosier scenario for defense spending in FY2024, permitting an increase of about 3.3 percent, to $886 billion, according to text of the Fiscal Responsibility Act of 2023 made public over the weekend. That total would encompass national defense spending including for the Defense Department, and national security programs operated by the Department of Energy.

The agreement in principle requires approval this week from both the House and Senate in advance of a projected June 5 deadline for when the Federal government would reach its currently authorized debt limit.

President Biden said on May 27 that the agreement in principle “is an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone.” He continued: “the agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing.”

“I strongly urge both chambers to pass the agreement right away,” the President said.

During a background briefing on May 28, White House officials cast the terms of the agreement as much better than those offered earlier by House Republicans, including what the White House said included a “22 percent cut to non-defense discretionary priorities and 10 years of caps.”

The terms of the debt ceiling agreement call for “roughly what would have happened to non-defense spending if we hadn’t had a budget agreement this year and instead had enacted a full-year continuing resolution,” one official said.

“The agreed-upon levels really do reflect what the administration had successfully negotiated at the end of last calendar year, with two years already of bipartisan appropriations increases that have taken non-defense spending up over this two-year period by about 16 percent,” a White House official said.

 IRS Funding 

The only Federal agency making headline news in the debt ceiling agreement’s announcement was the Internal Revenue Service (IRS). Terms of the agreement call for Congress to trim $20 billion from the ten-year $80 billion funding boost that the IRS received last year to pursue modernization of the agency’s operations – including IT functions.

Asked what impact that move would have on IRS plans to modernize the agency over the next couple of years, White House officials did not offer anything in the way of firm figures but said the agency appears to have room to continue pursuing its modernization plan in the shorter term, given that last year’s approval of new funding carries a ten-year term.

“The IRS funding was 10-year funding, and it’s not as if you’re taking 2024 or 2025 money from the IRS — we don’t believe in the near term that anything will need to change,” one official said on May 28. “Obviously, that’s something that will play out over the next year or two.”

 “We think the IRS will continue to be able to effectuate its plans in the near term, and then there may be a need to come back to Congress and ask for additional funding,” the official said.

What the Experts Say

“Although it’s hard to predict exactly what the debt ceiling negotiations will mean for Federal IT and cybersecurity, it’s very clear that agencies’ investment management prioritization and cyber risk management practices will be put to the test as they modernize and secure critical federal operations,” said Dave Powner, who now heads MITRE Corp.’s Center for Data-Driven Policy and formerly was director of IT issues at the Government Accountability Office (GAO).

“Capping future year budgets forces agencies to make decisions between funding short-term mission needs and investing in modern, nimble, resilient cloud-based enterprises,” said Ross Nodurft, executive director at the Alliance for Digital Innovation.

“Cutting investments in enterprise information technology to pay for other expenses has long-term consequences and builds on the legacy technological debt that we are trying to resolve today,” he continued. “As Congress wrestles with the details of how any agreement is implemented, IT modernization and investments in cybersecurity should be taken off the table as a billpayer.”

Matthew Cornelius, who until earlier this month was the senior professional staff member for Senate Homeland Security and Governmental Affairs Committee Chairman Gary Peters, D-Mich., pointed to a couple of specific tech and security-related funding clawbacks in the debt ceiling agreement in principle, and also talked about the need for sustained funding to move government IT capabilities forward.

“It’s disappointing and counterproductive to see clawbacks at CISA and in GSA’s Federal Citizen Services Fund,” Cornelius said, referencing funding streams that the General Services Administration received through the 2020 CARES Act, and that the Cybersecurity and Infrastructure Security Agency got through the American Rescue Plan approved by Congress in 2021.

“Those were direct cuts to critical IT and cyber funding allocations that have proven to directly improve the lives of the American people,” he said.

On the IRS front, Cornelius called the proposed IRS funding cuts “just a handshake, with only a very minor cut (barely $1 billion) in immediate rescissions.” He added, “the real negotiation will happen over IRS funds in the forthcoming appropriations process.”

“That said, it’s awful to see Republicans more interested in letting rich people cheat on their taxes than on supporting [IRS] Commissioner Werfel’s very clear and compelling vision for increased enforcement, reducing burden, and improving taxpayer services made possible” by the 2022 Inflation Reduction Act, Cornelius said.

More broadly, he said, “we all know that one of the first budget items to get cut when resources are limited are critical IT modernization and cybersecurity projects. I hope as the funding negotiations for the upcoming year unfold that Congress comes to its senses and boosts tech funding.”

“It doesn’t matter if you’re a Republican and want the government to do three things, or a Democrat and want it to do 3,000 things, whatever the government does it should do well and citizens should feel effectively served,” Cornelius said. “IT funding is absolutely essential to delivering on the programs and service taxpayers deserve.”

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John Curran
John Curran
John Curran is MeriTalk's Managing Editor covering the intersection of government and technology.