House Budget Resolution

Tax Cuts

No House Budget Vote Yet

As of May 5^th, the House of Representatives still hasn’t brought its budget resolution to the floor. Republican leaders continue to negotiate with moderate Republicans who are demanding increases in domestic discretionary spending (for health, education, and human services) and conservatives who want to change the rules that govern the budget process (see budget process “reforms” below).  News of a potential deal recently surfaced that would involve shifting roughly $4 billion from defense and international aid accounts to the labor, education, health and human services appropriations bill, but key moderate leaders appear to be holding out for the full $7.2 billion they requested earlier in the year.  Even this larger increase, however, will only bring funding back to FY2005 levels without adjusting for inflation.

Majority Leader Boehner has indicated that there will be a vote on the budget before the Memorial Day recess and it is possible that there will be enough votes to pass it.  However, it remains unlikely that the House and Senate will be able to negotiate a compromise between their competing budget resolutions (see the previous budget update for information on the Senate budget resolution).  This does not mean that the annual spending bills will not move forward, it just ensures that the appropriations process will again be contentious and will likely involve additional cuts.

What’s In the House Budget Resolution?

The House budget resolution closely follows the President’s FY2007 budget proposal and includes deep cuts to a variety of domestic social programs.  Like the President’s budget the pretense for the budget cuts is “deficit reduction,” but the resolution also calls for additional tax breaks that erase any “savings” the budget cuts achieve.  According to calculations from the Center on Budget and Policy Priorities, the House budget includes $228 billion in tax cuts and significant increases in military spending that will increase deficits by a quarter of a trillion dollars over the next five years—over what they would be if current policies remained in effect.

Overall, the House budget resolution:

• Cuts over $10 billion from the level of funding needed to keep domestic discretionary programs operating at current levels (which have already been reduced from previous years).  These cuts include deep reductions in the Social Services, Community Development, and Community Services Block Grants, child care assistance, job training, and environmental programs, and the largest dollar cut to federal education funding in the 27-year history of the Education Department.
• It is nearly $12 billion below the Senate funding level.  The Senate added funding to bring discretionary programs back to their FY2005 levels.
• Domestic discretionary funding is slightly higher than what was proposed by the President because the House Budget Committee shifted roughly $2 billion from international programs to domestic programs (i.e. foreign assistance is cut by $2 billion). The overall discretionary cap matches the President’s at $873 billion ($463 billion of this is for the Pentagon)

Thus, the House budget plan assumes most of the cuts proposed in the President’s budget and provides less foreign humanitarian assistance than requested by the President.  Defense funding in the House budget resolution is currently equal to that requested by the President and makes up over 50% of discretionary spending even before accounting for the costs of on-going military operations in Iraq and Afghanistan. 

The House budget resolution also calls for an additional $7 billion in cuts to mandatory programs – some $4 billion of which could come from the committee that oversees programs such as Supplemental Security Income, the Earned Income Tax Credit, and other programs benefiting low-income families and individuals that were targeted in last year’s budget reconciliation process.  In addition, the House budget fails to include funding requested by the President to extend Transitional Medicaid Assistance (a program that allows families moving off of welfare to keep Medicaid coverage for up to a year) and to fill a shortfall in funding for the State Children’s Health Insurance Program (SCHIP).  If additional money is not provided for SCHIP, the actuary at the Department of Health and Human Services has estimated that enrollment could fall by 500,000 in FY2007.

For more details on the House budget, please visit the Coalition on Human Needs or the Center on Budget and Policy Priorities.

What Happens If the House Doesn’t Pass A Budget?

Even if the House isn’t able to pass a budget resolution, Congress can still move ahead with all of the annual spending bills.  Advocates will be paying close attention to funding levels and working to prevent cuts in human needs programs.  Given the higher funding levels proposed by the Senate, every spending bill will likely be very contentious and the budget process will likely carry over past the fall elections.  The good news is that no overall budget agreement means that Congress cannot pass more fast-track tax cuts or entitlement cuts like those included in the FY2006 budget (budget reconciliation).