House & Senate Budget Committees Reach Agreement on FY 2016 Budget – First Budget in Six Years

Rep Tom Price

U.S. House Budget Committee Chairman Tom Price (R-GA)

U.S. House and Senate Budget Committees have reached an agreement on the first congressional budget resolution since 2009. For the past few weeks members to a Conference Committee have been ironing out differences in budget resolutions adopted in each legislative chamber.

The U.S. House of Representatives adopted H Con Res 27, a budget resolution that would provide for $2.937 trillion in new budget authority in FY 2016.  It recommends $5.5 trillion in spending reductions over the next 10 years, including a repeal of the 2010 health care law (PL 111-148 and PL 111-152). Spending reductions are also proposed for Medicare and Medicaid and another round of changes for programs including Supplemental Nutrition Assistance Programs (SNAP).

The House budget resolution for FY 2016 complies with sequestration that reduces defense and non-defense to levels set in the Budget Control Act of 2011.  For the next ten years the House proposed budget resolution would increase defense caps of $387 billion.  Non-defense program caps would be reduced by $759 billion.  The House also allows $96 billion for FY 2016 in uncapped war-related spending beyond the sequester levels without requiring offsets.  The House budget resolution instructs 13 congressional committees to achieve the spending reductions.

Mike_Enzi,_official_portrait,_111th_Congress

U.S. Senator Mike Enzi (R-WY), Chairman, U.S. Senate Budget Committee

The Senate Budget Resolution, S Con Res 11 would cut spending by $5.1 trillion over 10 years.  The resolution complies with the spending caps in the Budget Control Act of 2011 and  holds discretionary funding to those capped levels.  It also provides $58 billion for Overseas Contingency Operations (OCO), the same level as the President’s budget request.  During budget committee mark up an amendment was adopted to add an additional $38 billion to the OCO for FY 2016.  OCO funding would be exempt from the spending caps.  The Senate resolution cuts non-defense discretionary spending by $236 billion over 10 years.

The Senate budget resolution includes reconciliation instructions to two congressional committees: 1. Finance Committee and 2. Health, Education, Labor, and Pensions (HELP) Committee to achieve spending reductions of at least $1 billion over FY2016-FY2025. Both the Senate Finance and HELP Committees have jurisdiction over the 2010 health care law.

A major sticking point for conferees was how to use reconciliation procedures as they try and balance revenues and spending within the confines of the policies contained in the budget resolution.

Budget negotiators agreed to use reconciliation for limited savings by repealing much of the 2010 health care law. Reconciliation instructions will be issued to each chamber’s committees of jurisdiction including; the Senate Finance and Health, Education, Labor and Pensions (HELP) committees and the House Ways and Means, Education and the Workforce and Energy and Commerce committees.  Each committee will be instructed to craft legislation that reduces the deficit by at least $1 billion over 10 years.  The congressional committees must submit legislation to the House and Senate Budget Committees by July 24.

The Supreme Court is expected to rule on King vs. Burwell in June.  With Republicans anticipating the ruling will disallow the federal government to pay for federal subsidies, another viable option is to use reconciliation to pass a GOP transition plan in response to a major portion of the health care law being struck down.

Earlier this month the Congressional Budget Office (CBO) announced to policymakers in Washington that the three-year span of shrinking annual U.S. budget deficits ended.   For the first half of the U.S. fiscal year (through March 2015), the annual deficit was $430 billion, that’s $17 billion higher than the previous period last year.   CBO estimates the FY 2015 deficit would be $486 billion, about $3 billion larger than the deficit in FY 2014.  Without changes to current law, CBO projects the U.S. deficit to increase to $1 trillion over the next decade.

The Center for Budget and Policy Priorities (CBPP) estimates the U.S. budget deficit for FY 2015 at $500 billion based on the data from the first six months.  But, more importantly, CBPP also points out that the data indicates the reason for the growing deficit has less to do with an economic slowdown and more to do with the retirement of the baby boom generation.



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