Congress Panels Pass Budget Resolutions

Both the House and Senate Budget Committees passed their respective budget resolutions (BR) yesterday, taking an important step in the Congressional fiscal year 2009 (FY09) appropriations cycle. The Senate committee approved the BR on a 12-10 party-line vote, while the House committee passed its measure by a vote of 22-16. The Senate budget would allow $18 billion above the President’s request for the twelve appropriations bills for FY09, and the House budget would top the Administration’s request by $22 billion.

The House and Senate bills differ over paying for a way to fix the alternative minimum tax (AMT), which, if left unchecked, could cost middle class Americans millions. House Democrats want offsets for the cost of a one-year patch, but the Senate BR assumes there will be no offset. Both the House and Senate budget plans show surpluses in fiscal 2012 and fiscal 2013, but Senate Democrats plan to offer an amendment on the floor next week that would dedicate that surplus to covering the costs of extending tax cuts targeted to the middle class. At the same time, Senate leaders are assuming that the 2001 and 2003 tax cuts will expire in 2010, which the Congressional Budget Office (CBO) estimates would increase government revenue by $683 billion over five years.

The House BR allows for a $7.1 billion increase over the President’s request and about 9% over FY08 for “function 500” spending, which covers the Departments of Labor, Health and Human Services and Education. The Senate BR allows for $5.4 billion over the President’s request and an 8% increase over fiscal year 2008 levels. However, the BR is a non-binding resolution that sets spending caps for appropriators. As such, the levels in the BR do not necessarily reflect what will appear in final appropriations bills. If last year’s budget battle is any indication, the caps may become irrelevant, depending on how Congress decides to approach White House concerns.

While the Senate budget resolution does not include reconciliation instructions, the House budget proposal would include the AMT patch in reconciliation. The House measure also includes instructions for the Ways and Means Committee to produce a bill that would reduce mandatory spending by $750 million over six years, which could be used to move pending Medicare legislation. Sen. Judd Gregg (R-NH), the ranking member of the Senate Budget Committee, failed to add an amendment in the Senate that would require a reconciliation package that would produce net savings equal to 0.5% of total mandatory spending in the budget, or about $30 billion over five years.

The House is scheduled to debate the BR on the floor next week. The Senate may also bring its bill to the floor, depending on the schedule set by Majority Leader Harry Reid (D-NV). Congress begins its Spring recess next weekend, giving both chambers one week to pass their respective bills and negotiate a joint BR, giving appropriators final spending caps for the remainder of the session. Yet, since Congress usually aims to have a finished BR by mid-April, Democrats may take advantage of the recess to ensure full party support before bringing a final joint BR to each chamber for a final vote.

Resources:
David Clarke and Liriel Higa, “Tax Cuts Front and Center in Senate Budget Committee’s Debate,” CQ Today, March 6, 2008.
Author: SAS