What a Continuing Resolution Could Mean for Defense Funding in FY 2025

Congress only has one week remaining to take action on the federal budget before the start of the 2025 fiscal year (FY). A continuing resolution (CR) before the passage of full appropriations later in the year remains the most likely option to prevent a government shutdown on October 1. Below are five questions about a potential CR and its impact on defense spending in FY 2025.

Q1: What’s the current status of FY 2025 appropriations for defense?

A1: The Biden administration submitted its FY 2025 budget to Congress in March, requesting a total of $895 billion in discretionary funding for national defense, including approximately $850 billion for the Department of Defense (DOD). The House passed bills for defense funding in June (including both defense appropriations and military construction-veterans affairs appropriations bills). The Senate has yet to bring funding legislation for defense to the floor for a full vote, although both bills were reported out of committee.

With the start of the fiscal year just a week away, Congress is unlikely to pass full-year appropriations before October 1, and lawmakers are considering passing a CR to extend funding for federal programs at FY 2024 spending levels until after the presidential election. Speaker of the House Mike Johnson initially proposed a six-month CR through March 28, 2025, which would have allowed the incoming administration to potentially propose changes to the FY 2025 budget. However, the bill was rejected by Democrats and different factions of the GOP over the duration of the CR, the inclusion of the SAVE Act, and fiscal hawks’ aversion to CRs in general.

On Sunday, after negotiations with Senate Democrats, Johnson announced that he would bring a shorter, three-month CR through December 20 to the House floor to fund the government at FY 2024 levels without the SAVE Act. The House is expected to vote on the bill in the middle of this week.

Q2: What typically happens to defense appropriations during election years?

A2: Each of the last three fiscal years during which presidential elections occurred (FY 2013, FY 2017, and FY 2021) began under a CR. As Figure 1 shows, the Pentagon operated under a CR until March in FY 2013, May in FY 2017, and December in FY 2021. In the prior three election years (FY 2001, FY 2005, and FY 2009), Congress passed appropriations legislation on time.

FY 2017—when President Trump was elected—marked the longest delay in appropriations since the start of the fiscal year was moved to October 1 in FY 1977. Congress passed three separate CRs in FY 2017, extending funding levels through December, then April, and finally May before full-year appropriations were signed into law.

In FY 2013, the government operated under a single CR—similar to Speaker Johnson’s proposal—between October and March. Congress then passed regular appropriations for defense and four other appropriations bills while the rest of the government remained under a CR through the rest of the fiscal year.

Q3: How does the 2023 Fiscal Responsibility Act factor into FY 2025 appropriations and a potential CR?

A3: In June 2023, Congress passed the Fiscal Responsibility Act (FRA), which suspended the debt ceiling through January 1, 2025, in exchange for establishing limits on discretionary spending for defense and non-defense programs. Figure 2 shows the FRA budget caps for defense relative to the projected base funding levels in the Biden administration’s FY 2024 national defense budget. While the FY 2024 cap was in line with the administration’s FY 2024 requested defense topline, the FY 2025 limit of $895 billion—which the Biden administration’s FY 2025 request is in line with—is $10 billion less than what the administration originally projected it would spend and represents a 1 percent cut from FY 2024 levels when adjusted for inflation. The current “clean CR” under consideration would extend defense programs at FY 2024 funding levels until Congress takes action on regular FY 2025 appropriations.

As an enforcement mechanism to keep discretionary spending within the budget caps, the FRA includes sequestration, which automatically cuts funding back to the cap levels if Congress appropriates above them. However, emergency supplemental funding, such as the April 2024 bill, which provided over $67 billion in additional resources to DOD relating to Ukraine, Israel, and the Indo-Pacific, is exempt from the spending limits.

An additional clause in the FRA holds that if the government fails to pass all 12 regular appropriations bills by April 30—meaning that any part of the government continues to operate under a CR—then spending levels will automatically be adjusted to FY 2023 levels minus 1 percent. For defense programs in FY 2025, this would entail a cut of 5 percent across the board and a reduction of over $45 billion in the national defense topline.

Q4: How would a CR impact defense programs in FY 2025?

A4: Given the frequency with which the Pentagon begins the fiscal year under a stopgap funding extension, short-term CRs of 2–3 months may not cause major disruptions to the execution of defense programs. However, longer CRs that extend into the new calendar year can significantly disrupt programs that are forced to operate with spending levels lower than or higher than what they had projected. Moreover, the military services cannot fund “new start” programs or increase production rates under a CR. In a letter to congressional appropriators, Secretary of the Air Force Frank Kendall outlined that the 6-month CR originally proposed by Speaker Johnson would prevent production increases for munitions stockpiles and reduce aircraft mission capable rates. Once regular appropriations have been passed after a long-term CR, DOD programs still face “serious execution problems,” as they have limited time to negotiate contracts and efficiently spend operating funds before they expire at the end of the fiscal year on September 30.

Q5: What other factors could impact defense spending under a continuing resolution?

A5: Congress will ultimately punt on passing FY 2025 appropriations until after the November elections. However, if it passes a CR that extends funding at current levels into the new calendar year, Congress will also have to address a range of other fiscal issues, which could be intertwined in negotiations over the defense budget. On January 1, 2025, the debt ceiling suspended by the FRA is reimposed, and the Department of the Treasury will be forced to take “extraordinary measures” to fund the government until Congress takes action. Tax cuts passed under the Trump administration will also expire at the end of 2025 and add another source of debate on the Hill. Delaying the passage of FY 2025 appropriations into the new year risks linking them with other fiscal issues, posing a challenge to their timely passage prior to the April 30 sequestration deadline.

Seamus P. Daniels is a fellow for Defense Budget Analysis in the International Security Program at the Center for Strategic and International Studies in Washington, D.C.