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Four Things To Know About The Next Big Budget Battle

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Now that the sequester has taken effect, there's a new phrase that keeps popping up in Washington: the "continuing resolution." If Congress doesn't pass a continuing resolution by March 27, the government will run out of money and will likely shut down. Here's a list of four things you might want to know about how a continuing resolution works and how it might soften the blow of the sequester.

1. Exactly what is a "continuing resolution"?

The continuing resolution, or CR for short, is legislation that basically allows Congress to just carry over the previous fiscal year's budget into the next one. In other words, it permits Congress to maintain roughly the same budget priorities and budget levels over the subsequent year. A CR can last for any length of time, whatever Congress wants — a few weeks, six months, a year, anything.

2. Why would Congress want to pass a CR in the first place?

Let's back up a little bit. Every year, Congress has to set funding levels for agencies and departments. According to the Constitution, Congress is supposed to do this through appropriations bills. But when Congress can't agree on what those appropriations should look like, they punt, by passing a continuing resolution. Or, they can pass individual appropriations bills for some departments and use a CR for the rest of the departments if they can't hammer out those particular budgets. Often Congress just passes a CR to buy itself more time.

And if lawmakers can't even pass a CR before government funding runs out, the government could simply shut down.

3. Is there a real threat of a government shutdown in this case?

Both House Speaker John Boehner and President Obama seem to agree — they're not interested in that particular game of chicken. The last time the government shut down was in 1995 and 1996, during the Clinton presidency. Republicans paid a political price for that.

Actually, lawmakers in Washington are used to passing continuing resolutions. Over the past 40 years, the CR has been the standard way of doing business on Capitol Hill. Going through the full, traditional appropriations process is a now very rare event in Washington.

4. So how does the continuing resolution interact with the sequester?

Oh, right, there's the sequester. Because a sequester is in effect, figuring out what a budget will look like under a continuing resolution is going to be messier. As budget expert Stan Collender of Qorvis Communications put it, "What's going to happen in March is a new definition of the phrase 'March Madness.' It will have less to do with college basketball and a lot to do with craziness in Washington on budget-related issues."

Collender says because the continuing resolution is legislation that's coming after the sequester, it could theoretically cancel or modify the sequester — if Congress and the White House can agree on something. Because a CR is "must-pass" legislation, it offers Congress and the White House another opportunity to take a look at funding for fiscal year 2013, which ends Sept. 30, and possibly figure out a way to replace the sequester.

The House has just taken the first stab at a CR. The chairman of the House Appropriations Committee has introduced a bill that keeps the sequester in place but reallocates funding within the departments of Defense and Veterans Affairs, to help cushion the impact of the cuts. It's a way for Chairman Hal Rogers, R-Ky., to determine budget priorities rather than letting the White House do it.

But actually reversing the sequester will take a lot more than letting some departments reallocate money. It will likely include a mix of tax overhaul and cuts to entitlements, such as Medicare and Social Security. That fight could take a long time.

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