Federal Budget

• House, Senate Pass Irresponsible FY06 Budget Resolutions
• Smith, Kennedy Amendments Could Doom Budget Resolution
• Despite Compromise, House Conservatives Could Threaten Budget Resolution
• Bush Pushes Private Accounts as Public Support Drops
• Bush, Congress Hide True Costs of Permanent Tax Cuts

Yesterday the House and Senate passed their respective budget resolutions for FY 2006. Both votes were very close with the House passing their resolution 218 - 214, and the Senate passing theirs 51 - 49. One main difference between the two resolutions that could cause problems in conference pertain to cuts in entitlement spending. The House budget resolution includes very steep cuts to medicaid, while the Senate version does not. Yesterday Senators passed an amendment offered by Gordon Smith (R-OR) to strip the budget of Medicaid cuts and instead create a one-year commission to recommend changes in the program. The amendment passed 52 - 48. While the President's budget proposal laid out $51 billion worth of cuts to entitlement programs, the House proposal upped that amount, calling for $69 billion in spending reductions on entitlements. The Senate bill included $17 billion in entitlement reductions after $14 billion in cuts to Medicaid were removed by Gordon's amendment. When Congress returns from recess in two weeks the two chambers will conference to square their budget proposals. Two major issues of contention will be their differing levels of entitlement cuts, as well as the fact that the Senate raised the level of discretionary spending for FY06 by $5.4 billion -- to $848.8 billion. These differences, coupled with the fact that the House already had to pacify unhappy conservatives to get enough votes to pass the budget, means there is a chance no resolution will be passed this year. To read more click here and here.

The budget resolutions currently under consideration in the House and Senate are in line with the President's priorities and propose cuts to Medicaid as well as the extension of tax cuts. The budget resolutions propose to cut funding for Medicaid by approximately $15 billion over five years, and in the same breath propose costs of $23 billion to extend dividend and capital gains tax breaks. As the Center for American Progress notes, "The Medicaid cuts would have important implications for states’ budgets and for health care for the poor. At the same time, the budgets under consideration contains tens of billions of dollars in new tax cuts, which would overwhelmingly benefit those best able to make the sacrifices necessary to reduce the deficit." The Center has compiled state-by-state data which shows how the proposed Medicaid cuts would affect individual states. To contrast these cuts, the Center also has data showing the magnitude of the proposed tax cuts in each state. The report can be read here.