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Backed by leaders in both parties, the fiscal 2002 spending supplemental appears to be headed toward a quick compromise in conference. The Senate-passed version would cost $31.5 billion, approximately $4.4 billion more than the House-passed version. Regardless of the final cost, the supplemental will include $1 billion to cover the Pell grant shortfall.

Appropriators are expected to split the difference between the two versions and then send the conference report to both chambers for final passage before the July 4 recess. The President has indicated that he would veto the $31.5 billion Senate version, but has yet to take a position on the anticipated conference bill. Many observers believe the supplemental fight will mirror the appropriations endgame – with the Senate coming in with a higher amount than the House, the chambers splitting the difference in conference, and the President ultimately deciding whether he will sign an amount greater than his budget number.

Absent an agreed–upon budget plan, the supplemental is an attractive vehicle to set a discretionary spending ceiling for 2003 that would force an agreement at the beginning of the appropriations process rather than at the end. However, it is still unclear whether the supplemental spending bill will include a debt limit increase or set a discretionary spending ceiling for 2003.

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