S.Con.Res. 13—FY 2010 Budget Resolution CONFERENCE REPORT

Compared to the House-passed budget resolution, the conference report includes some difference with regard to budget process provisions, reserve funds, and differences with regard to the levels of proposed tax collections, spending, and deficits.  However, as with the House-passed budget resolution, the conference report assumes a massive tax increase ($423 billion compared to $574 billion in the House-passed budget resolution), proposes the six largest deficits in U.S. history, and includes reconciliation instructions for liberal priorities.

Proposed Revenues, Spending, and Deficits: The Democrat budget resolution proposes the six largest nominal deficits in U.S. history.  The lowest deficit proposed by the budget resolution—the $523 billion deficit in FY 2014—is $64 billion or 13.9% greater than the highest deficit in U.S. history (last year’s $459 billion deficit).   Below is the proposed revenue, spending, and the consequent deficits by year.

Tax Increases: S.Con.Res. 13 proposes total tax collections equal to $14.2 trillion over five years.  Compared to a baseline that assumes the extension of the 2001 and 2003 tax cuts and the “AMT patch,” the budget resolution assumes a five-year tax increase of $423 billion.  The Democrat budget resolution assumes that much of this tax relief will expire.

Discretionary Spending Level: The budget resolution sets a 302(a) discretionary spending allocation equal of $1.083 trillion for FY 2010 regular appropriations (excluding emergency spending), a 7.2% increase compared to FY 2010.

Policies Not Included in Budget Resolution:

“Making Work Pay” Tax Credit: The resolution’s revenue numbers assumes that it will not be allowed to continue (as per the President’s budget), but will instead expire at the end of 2010.

Troubled Asset Relief Program (TARP):  Unlike the President’s budget, which requests $247 billion for additional financial bailouts, the budget resolution assumes no additional funding for this program.

Federal Debt: Over five years, the budget resolution would increase the debt to $17.0 trillion—an increase of $5.2 trillion compared to the level on January 20, 2009.

Possible Conservative Concerns:

Reconciliation Instructions to “Fast Track” Liberal Priorities: The budget resolution would allow reconciliation (as long as a deficit target of $1 billion is met) for legislation under the jurisdiction of the Education and Labor Committee, the Energy and Commerce Committee, and the Ways and Means Committee.  The Majority will say that this is intended for health care reform and education reform.   However, any legislation that meets this deficit target that falls under one of these committees (such as “cap and tax”) would be eligible for reconciliation protection.

Unprecedented Borrowing: The budget resolution would increase the national debt to $17.0 trillion in five years, an increase of $5.2 trillion or 48% since January 20, 2009.  But this increase is actually understated in two respects since the Democrat budget resolution hides what its policies would lead to over the full ten-year budget window.  The budget resolution proposes what would be the six largest deficits in U.S. history.

Historic Spending Levels: The Democrat budget resolution proposes federal spending equal to 27.6% of GDP in 2009 and 24.8% of GDP in 2010.  These are the highest spending levels in U.S. history, except for World War II.

Higher Taxes: The Democrat budget resolution increases taxes by $423 billion over five years.

PASSED 233-193

Published in: on April 29, 2009 at 3:38 pm  Leave a Comment  

Thursday, April 2: H.Con.Res. 85 – The Concurrent Resolution on the Budget for FY 2010 & Amendments

Congressional Progressive Caucus Substitute:

FAILED 84-348

  • REP. LYNN WOOLSEY, D-Calif., will offer a substitute on behalf of the Congressional Progressive Caucus that calls for at least $991 billion in domestic, non-defense discretionary spending in FY 2010, $469 billion more than the president’s request. The substitute calls for $479 billion for national defense spending, $83 billion less than the president’s request and the resolution. The substitute establishes spending and revenue figures for 10 fiscal years, covering the period of FY 2010 through FY 2019, rather than the five-year period through FY 2014 covered by the resolution. The substitute projects a 58% reduction in the deficit by FY 2012. The measure also assumes ending the U.S. occupation of Iraq no later than 2011.

  • The progressive substitute accommodates $300 billion in additional economic stimulus spending, including increased federal assistance for unemployment insurance, food stamps, Federal Medical Assistance Percentage payments to states, and housing assistance.

  • The substitute assumes the redeployment of U.S. military personnel and military contractors from Iraq by the end of FY 2010, which its sponsors say would produce savings of at least $130 billion in FY 2010. It assumes savings of at least $60 billion a year over the next ten years by not funding various weapons systems and programs, including the F/A-22 fighter plane, Virginia-class submarine, and other Cold War-era programs. It also assumes that the Defense Department will implement Government Accountability Office recommendations for combating waste, fraud, and abuse.

  • The substitute assumes the repeal of the 2001 and 2003 tax cuts for the top 1% of taxpayers, which is expected to generate at least $244 billion in revenue. It also assumes the elimination of certain corporate-tax provisions that encourage corporations to move jobs overseas, the elimination of tax deferral for American-owned foreign corporations, and certain tax incentives for the oil and gas industry. It assumes the extension of energy-related tax credits that provide incentives for production and investment in renewable and alternative energy. The measure imposes a 0.25% tax on all stock and futures trading to help fund the bailout of the financial system; and reduces executive pay by eliminating tax deductibility of any executive compensation that is more than 25 times that of a company’s lowest paid employee.

  • The substitute assumes increased funding for efforts to cut poverty by 50% in ten years, including programs to assist victims of Hurricane Katrina, anti-hunger programs, affordable housing programs, and child care programs. It assumes increased spending on infrastructure, including transportation projects, as well as global warming efforts, elementary and secondary education programs, special education programs, and job training programs. It calls for increased spending on international diplomatic, education, and HIV/AIDS eradication initiatives. The substitute assumes funding for the State Children’s Health Insurance Program (SCHIP) that would cover all eligible children. It also calls for increased spending on veterans health care, including mental health care, and it assumes increased funding for the Community Development Block Grant program and Social Services Block Grants.

  • Finally, the measure provides upwards of $120 billion a year to ensure that every single American will have affordable, high quality health care coverage; and includes funds to pay for comprehensive immigration reform legislation.

  • Unlike the resolution, the progressive substitute does not include reconciliation instructions.

Republican Study Committee (RSC) Substitute:

FAILED 111-322

REPS. JIM JORDAN, R-Ohio, TOM PRICE, R-Ga., and MIKE PENCE, R-Ind., will offer a substitute on behalf of the Republican Study Committee (RSC) that sets spending levels, revenue levels, and deficit levels at lower amounts than what is projected by the Congressional Budget Office baseline or what is proposed in the president’s budget request. The substitute provides for total spending (outlays) of $2.6 trillion in FY 2010, $692 billion for defense, and imposes a freeze on non-defense discretionary spending.

  • The substitute assumes a reduction of $31 billion in federal revenues for FY 2010 and an on-budget $952 billion deficit for FY 2010, compared with a $1.3 trillion on-budget deficit in the resolution.

Reconciliation

  • The substitute directs six House committees to report “reconciliation” legislation by July 13 that would reduce spending or deficits over five years. It requires a $10.2 billion spending reduction by the Agriculture Committee, an $8.3 billion reduction by the Education and Labor Committee, a $241.9 billion reduction by the Energy and Commerce Committee, a $1.7 billion reduction by the Oversight and Government Reform Committee, a $4.9 billion reduction by the Natural Resources Committee, and a $214.8 billion deficit reduction by the Ways and Means Committee.

  • The substitute includes a special rule that would allow the Budget Committee to take into account deficit-reducing legislation enacted after the adoption of the substitute, and make applicable adjustments to reconciliation instructions. It also directs the Ways and Means Committee to report a reconciliation bill no later than June 8 that would reduce revenues by $1.2 trillion for FY 2009 to FY 2014.

Mandatory Spending and Advance Appropriations

  • The substitute calls on all House committees to identify savings, no later than June 15, amounting to 1% of total mandatory spending under their jurisdictions from activities that are determined to be wasteful, unnecessary, or lower-priority. It limits advance appropriations for FY 2011 and FY 2012 to $23.6 billion, compared with $28.9 billion in the resolution.

  • The substitute directs the Joint Committee on Taxation, when calculating federal revenues, to take into account the impact of proposed revenue changes on gross domestic product, total domestic employment, gross private domestic investment, the general price index, interest rates, and other economic variables, as well as the impact the economic variables have on federal revenue.

Direct Spending and Earmark Restrictions

  • The substitute assumes that the House would not take up any direct spending legislation that would increase the deficit or reduce the surplus for either the first five fiscal years covered by the substitute, or the following five years. The requirement would not apply to legislation preserving Social Security or to legislation that would cause a net increase in aggregate direct spending of less than $100 million, and it could be waived under a three-fifths vote in the House.

  • The substitute calls for the establishment of a Joint Select Committee on Earmark Reform to conduct a full study of practices regarding earmarks in authorization, appropriation, tax, and tariff measures, as well as the efficacy of earmark restrictions or transparency requirements. It requires a moratorium on earmarks until the committee submits its report.

Congressional Black Caucus Substitute:

FAILED 113-318-1

REPS. BARBARA LEE, D-Calif., and Robert C. Scott, D-Va., will offer a substitute on behalf of the Congressional Black Caucus (CBC) that calls for $3.02 trillion in outlays and $1.72 trillion in revenues in FY 2010, resulting in a deficit of $1.3 trillion in FY 2010.

  • According to a summary that the CBC provided to the Rules Committee, the substitute immediately eliminates tax cuts for the “wealthiest Americans” contained in major Bush administration tax laws enacted in 2001 and 2003. It also provides a 0.565% surtax on adjustable gross income exceeding $500,000 for individuals ($1 million for joint filers). It directs the increased revenues from “rolling back” the tax cuts and the surtax toward education, health care, job training, international aid, justice, transportation, and veterans programs.

  • The CBC substitute finds that the Government Accountability Office (GAO) made 2,864 recommendations to the Defense Department between 2001 and 2007 that GAO estimated could cut department costs. It finds that the department has implemented 1,389 of the recommendations, saving $63.7 billion.

  • The CBC substitute assumes that the Defense Department will use $300 million to implement the remaining 1,260 GAO recommendations (not counting 215 that have been closed), and states that the department should submit a report to Congress within 90 days describing how each recommendation will be implemented, or why any recommendation cannot be implemented.

Republican Substitute:

FAILED 137-293

REP. PAUL D. RYAN, R-Wis., will offer a substitute on behalf of the Republican Conference that calls for $3.28 trillion in outlays in FY 2010, and $2.29 trillion in revenue, for a deficit of $993 billion. It projects a deficit of $529 billion by FY 2014, and $593 billion by FY 2019. The substitute calls for $539 billion in non-defense discretionary funds. Its total for defense spending in FY 2010 is $690 billion (including funds for operations in Iraq and Afghanistan), $5 billion more than requested by the president and contained in the resolution.

Taxes

  • The Republican substitute assumes that the 2001 and 2003 tax cuts will be extended beyond their scheduled expiration at the end of 2010 — including the estate-tax provisions, the child-tax credit, the “marriage penalty” provisions, and the current marginal income tax rates.

  • The substitute also assumes that the alternative minimum tax (AMT) will be “patched” indefinitely, and therefore would not affect additional taxpayers. It also assumes a change in the tax code in which only two tax rates would be applicable to different incomes — a 10% tax on adjusted gross income up to $100,000 for joint filers and $50,000 for single filers, and a 25% tax on income above these amounts. These tax brackets would be adjusted annually by a cost-of-living adjustment as measured by the consumer price index. It also assumes the reduction of the corporate tax rate to 25% from 35%.

Reconciliation

  • The Republican substitute directs 10 House committees to report “reconciliation” legislation by July 29 that would reduce mandatory spending by a total of $1.38 trillion over 10 years. It instructs the Energy and Commerce Committee to reduce direct spending by $666.1 billion, requires the Ways and Means Committee to reduce mandatory spending by $605 billion, and requires the Agriculture Committee to reduce direct spending by $38.5 billion. In addition, the measure requires a $22.7 billion reduction by the Education and Labor Committee, a $28.4 billion reduction by the Financial Services Committee, a $1.8 billion reduction by the Foreign Affairs Committee, a $4.3 billion reduction by the Judiciary Committee, a $2 billion reduction by the Natural Resources Committee, and a $1.7 billion reduction by the Transportation and Infrastructure Committee. The substitute makes no assumptions about how such savings would occur.

Earmark Moratorium

  • The substitute places a moratorium on earmarks, barring House consideration of any bill, joint resolution, or conference report that includes a congressional earmark, limited tax benefit, or limited trade benefit, as defined in House rules. The moratorium would be in place until a commission reports proposed changes. Savings from this plan would be used to reduce taxes.

Discretionary Spending

  • The Republican substitute freezes non-defense discretionary spending in FY 2010 through FY 2014 (excluding funds for veterans’ programs), but would provide for increases in FY 2015 through FY 2019. Like the resolution reported by the Budget Committee, the substitute provides the level of funding for operations in Afghanistan and Iraq requested by the administration, assuming $130 billion for such operations in FY 2010, and $50 billion each year thereafter. According to a release by Budget Committee Republicans, the measure also assumes the repeal of provisions in the economic stimulus package, excluding unemployment insurance.

Other Provisions

  • According to a release by the Budget Committee Republicans, the substitute applies the House pay-as-you-go (PAYGO) rule only to mandatory spending measures, and prohibits the use of tax increases to offset the cost of mandatory spending increases.

  • The Republican substitute requires the House to take a separate vote on legislation to increase the public debt limit. (Under the so-called Gephardt rule, a joint resolution to increase the public debt limit is automatically passed by the House upon House and Senate adoption of a conference report on a budget resolution, but the substitute instead requires a vote on a separate measure in order to increase the debt limit.)

  • The substitute requires roll call votes for any measure that authorizes or provides budget authority of at least $50 million, and it bars the Speaker from entertaining an unanimous consent request or motion to suspend the requirement. It creates a point of order against House consideration of a conference report or unreported measure unless a cost estimate has been printed in the Congressional Record at least one day prior to its consideration.

  • The Republican substitute also establishes a point of order against consideration of conference reports or bills that have not been reported by the appropriate committees of jurisdiction, unless those measure are accompanied by a Congressional Budget Office cost estimate.

H.Con.Res. 85—FY 2010 Budget Resolution (Democrat Budget):

PASSED 233-196

The budget resolution would allow reconciliation (as long as a deficit target of $1 billion is met) for legislation under the jurisdiction of the Education and Labor Committee, the Energy and Commerce Committee, and the Ways and Means Committee. The Majority will say that this is intended for health care reform and education reform. However, any legislation that meets this deficit target that falls under one of these committees (such as “cap and tax”) would be eligible for reconciliation protection.

Unprecedented Borrowing:

The budget resolution would increase the national debt to $17.1 trillion in five years, an increase of $5.3 trillion or 49% since January 20, 2009. But this increase is actually understated in two respects. First, the Democrat budget resolution hides what its policies would lead to over the full ten-year budget window. Second, the Democrat budget resolution does not “budget” for several items that are likely to either reduce revenue or increase spending (such as the “AMT patch”). The budget resolution proposes what would be the six largest deficits in U.S. history.

Historic Spending Levels:

The Democrat budget resolution proposes federal spending equal to 27.6% of GDP in 2009 and 24.8% of GDP in 2010. These are the highest spending levels in U.S. history, except for World War II.

Higher Taxes:

The Democrat budget resolution increases taxes by $574 billion over five years.

Published in: on April 2, 2009 at 7:18 pm  Comments (1)