On March 17, the House debated and passed the fiscal year 2006 (FY06) budget resolution by a vote of 218–214, one week after the House Budget Committee voted along party lines to report out the resolution. House GOP leaders managed a last-minute compromise with a number of conservative Republican members of the House Study Committee who threatened to vote against the bill in the weeks leading up to the vote — but final passage will still be very difficult. The revolt began with a small group of Republican Study Committee leaders, including Reps. Mike Pence (R-IN), Jeff Flake (R-AZ), and Jeb Hensarling (R-TX), and then grew to include over 40 Republican representatives, including some members of the “Tuesday Group” — a caucus of about 30 centrist House members. While House GOP leaders were eventually able to broker a compromise and pass the budget resolution, the fact that there was dissention from so many conservatives over the budget will likely make negotiations with the Senate during a conference committee particularly precarious. Pence and other conservatives wanted to include a provision requiring a separate floor vote to waive a budget point of order on any appropriations bill that exceeded its spending cap. This would be similar to the procedures used by the Senate. Although GOP leaders argued this provision would tie the leadership’s hands and empower House Democrats, they eventually relented when it became clear they did not have sufficient votes to pass the budget resolution. During the day-long debate on the resolution March 17, the House soundly rejected three alternative budget amendments offered by Budget Committee ranking minority member John Spratt (D-SC), (165-264), Rep. Mel Watt (D-NC), (134-292) and Rep. Jeb Hensarling (R-TX), (102-320). The version eventually passed by the House sets discretionary spending levels at $843 billion for FY06, assumes $68.6 billion in cuts to mandatory programs and $106 billion in unpaid-for tax cuts. The resolution would cut discretionary programs by at least $216 billion over the next five years. This decrease in non-defense discretionary funding will hurt a diverse array of programs, and will impact veteran’s benefits, environmental protection, and education spending particularly hard. President Bush and Republicans in Congress have stated these cuts to mandatory and discretionary spending are necessary to reduce the deficit and have repeatedly claimed this budget would cut the deficit in half by 2009. But under the House’s plan, deficits will actually increase by approximately $126 billion over the next five years, and then explode after 2010. * Source: Center on Budget and Policy Priorities The main reason for this increase in deficits is due to the fact that the House chose to permanently extend the 2001 and 2003 tax cuts at a cost of $106 billion over five years in the budget resolution. Of that amount, $45 billion was set aside under reconciliation instructions – a fast-tracked budget process that protects certain bills affecting mandatory funding levels or tax policies by limiting debate and prohibiting filibusters. Yet after the five-year window, from 2011 to 2015, the cost of those tax cuts explodes to over $1 trillion, according to the Congressional Budget Office. Notably, the House budget resolution proposes cuts in entitlement spending ($68.8 billion) which are much deeper than those proposed by the president in his budget ($51 billion). Although it does not designate specific cuts to programs, the resolution does include instructions to the Energy and Commerce Committee to make reductions of $20 billion over five years to programs under the committee’s jurisdiction. These cuts are expected to come mostly out of the Medicaid program. It is the Medicaid cuts in particular that could create problems during negotiations with the Senate. On March 17, the Senate passed an amendment offered by Sen. Gordon Smith (R-OR) on a vote of 52–48 striking reconciliation instructions that would force cuts in Medicaid. Smith’s amendment reduces the amount of mandatory savings in the Senate budget resolution from $32 billion down to $17 billion. The House resolution proposes cutting $69 billion from mandatory spending — a difference of nearly $50 billion. With GOP leaders in the House having sufficient trouble holding on to support from conservatives (12 Republicans voted against the House resolution because it did not make deep enough spending cuts), it will be very difficult to give much ground to the Senate in compromising on levels to cut mandatory and discretionary spending. House Budget Chairman Jim Nussle (R-IA) believes it will be “very challenging” to find an acceptable compromise between the House and Senate and many members of Congress are predicting it will take involvement from the White House to pass a budget resolution this year. If no agreement is reached in conference, spending levels for FY06 will be set at levels equivalent to FY05, and more importantly, it would remove the possibility of progressing reconciliation bills for spending cuts or tax cuts that would be protected from filibuster in the Senate — a major blow to the Republican agenda.