AS NEW FY CLOSES IN, UNCERTAINTY RULES

All that is really known about the start of the 2016 Fiscal Year is that it will start with a Continuing Resolution.  How long it lasts, or even whether the year will start on time, remains unknown despite the fact that less than 2 weeks remain to get these, and other, answers.  Congress watchers (and Allen Federal) agree:  the key to whether a CR passes on time and whether or not there is a shutdown lies in the House of Representatives.  Whether and how House Republican leadership can manage the conservative faction of the party will be the most telling signs of where we’re headed.  Among the many issues to be resolved are whether spending caps will be eased to avoid an FY’16 sequestration and how DOD overseas contingency funding will be handled.  If the leadership can find answers to these issues, and keep rank and file members in line, the best guess is a CR of 1-2 months in duration.  After that, the future again becomes cloudy as Congress will likely face a vote on increasing the debt ceiling.  The good news is that it is highly unlikely that the Department of Defense will be funded for the entirety of FY’16 by a CR.  This one will likely come down to the wire.