Senate Committee Adopts $2.9 Billion Budget Resolution; Floor Action Ahead

On March 15, the Senate Budget Committee approved a $2.9 billion budget resolution for Fiscal Year 2008 on a 12-11 party-line vote. The full Senate is expected to take up the measure on March 20, with 50 hours of debate, votes on numerous amendments, and a final vote scheduled before the end of the week. The House Budget Committee is set to mark up its own budget resolution, with floor action likely the week of March 26. (Click here for links to resolution summary and details.) The blueprint, produced by Senate Budget Committee Chair Kent Conrad (D-ND), projects a $132 billion budget surplus by 2012, without any specified tax increases. It calls for $948 billion in discretionary spending, exceeding the FY 2008 $930 billion budget cap President Bush proposed in February, with most of the increase going toward education, veterans, and community policing programs. Conrad's plan also provides a boost of $50 billion over the next five years in mandatory spending for SCHIP, the state children's health insurance program. In the past, Bush has threatened to veto any budget ultimately passed by Congress that exceeds his discretionary spending cap. The budget resolution is a "concurrent congressional resolution," not an ordinary bill, and it does not go to the president for signature or veto. But it sets firm budget targets and limits for 19 broad spending and revenue estimates over the next five years. Since Conrad adds three percent (a mere one percent over what is needed to maintain the current level of domestic program services) in spending to Bush's cap, he may be steering Congress toward an eventual presidential veto. The plan also restores a key procedural requirement to congressional budget-making: a pay-as-you-go (PAYGO) rule, meaning that legislation with provisions hiking mandatory spending or cutting taxes must include offsets to pay for those provisions and make the bill revenue neutral. Unlike the PAYGO rule adopted by the House earlier this year, however, Conrad's version of it would not permit Congress to count latter-year savings as offsets for earlier deficit spending. So, for example, Conrad's PAYGO rule would not allow delaying the implementation of the painful offsets required to prevent middle-class exposure to the alternative minimum tax (AMT) — cost: upward of $50 billion a year — to say nothing of AMT repeal — cost: roughly $1 trillion over ten years. Similarly, the resolution calls for extending Bush's tax cuts beyond their 2010 expiration only if they are paid for by spending cuts or by revenue from other sources, which some in Congress interpret as forcing Congress into "the largest tax increase ever," to quote Senate Finance Committee ranking member Charles Grassley (R-IA). GOP reaction to the budget resolution has been uniformly negative, with most criticism directed at the assumptions, projections, and mechanisms used to arrive at its projected five-year surplus, as well as at the 22 reserve funds in the Committee's final version. In fact, Conrad's plan uses almost identical assumptions and projections in the president's proposal in the areas of war spending and the AMT, so many of the criticisms echo those from Democrats when Bush issued his budget in February. The use of reserve funds in the budget resolution is commonplace; they have been used since 1983 to direct specified or unspecified amounts of spending that an authorizing committee may later approve. The New York Times described them last week as "not funds in any normal sense, [but] a statement of intentions by lawmakers to raise the necessary money, through either spending cuts or tax increases, by the time it would be necessary to spend it." But GOP eyebrows were raised when fund after fund was added to the resolution, 22 such funds in all — twice the previous record — specifying $70 billion in potential spending over five years. Senate Budget Committee ranking member Judd Gregg (R-NH) estimates (BNA, [subscription]) the aggregate spending amounts outlined in the 22 funds over and above the specific $70 billion at "closer to about $200 billion." The days ahead are critical ones for the FY 2008 budget resolution. House Budget Committee Chair John Spratt (D-SC) has said little about the chairman's mark he will release on March 21, except that it will include the House version of the PAYGO rule. Meanwhile, the Conrad resolution goes to the Senate floor, where it requires only a majority vote to pass — one of the few pieces of legislation that cannot be filibustered in the Senate. On the other hand, this makes it easier to amend, and long days and nights are expected as the GOP tries to tack on tax cuts or other damaging amendments, while Democrats, with no votes to spare, seek to hold their 51 members solidly together against such amendments and keep Conrad's plan intact.
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