House Budget Committee "Balanced" Budget Resolution for FY 2003
by Guest Blogger, 3/18/2002
The budget resolution that the House Budget Committee marked up and passed by a party line vote (23-18) on March 13, is expected to head to the Floor for debate this week. The budget resolution is not a law, but is a broad outline for spending and tax cuts for FY 2003, which begins on October 1, 2002 and runs through September 31, 2003.
The House budget resolution provides for $2.1 trillion in spending. Predictably, defense appropriation spending gets a dramatic increase of 13+ percent from last year, for a total of $394 billion. (The budget resolution is not named "The Wartime Budget to Secure America’s Future" for nothing.) The other part of discretionary spending -- non-defense spending -- will be increased by only 1.3 percent from last year, less than the cost of inflation, for a total of $366 billion. Many programs received no increase at all, but are "level-funded." Because the costs of services will not keep up with inflation, this will mean cuts in everything from energy to the environment to social services and child care funding.
The resolution allows for $4.4 billion in tax cuts for FY 2003 and $27.8 billion in tax cuts over the next five years. No reconciliation instructions are included, so these tax cuts are "optional."
The Budget Committee took great pains to pass a (semi-)"balanced" budget, in an attempt to deflect criticism that the Bush tax cut, passed in May 2001, will force the budget into deficit. This "balancing" was only achieved through:
- Using Office of Management and Budget (OMB) baseline figures rather than Congressional Budget Office (CBO) figures, since CBO shows a baseline surplus of only $6 billion while OMB shows a baseline surplus of $41 billion. Virtually the entire difference between the two comes from an OMB assumption that federal revenues under current law will be substantially higher than CBO believes.
- Counting as available over $200 billion in Social Security (off-budget) revenues, and playing down the fact that Social Security Trust Funds will be used to pay for the budget, and not for debt reduction.
- Not really counting the $43 billion economic stimulus package passed in early March, since it results from the September 11 attacks (even though $34.5 billion of that bill paid for tax cuts to businesses and only $8.5 billion went to the unemployment extension).
- Only crafting a five-year budget resolution rather than the usual ten-year, thus avoiding having to talk about future budget deficits.
The bill fails to address needs for more spending, including:
- It allows for only $5 billion each year in FY 2003 and 2004 (but magically up to $350 billion over ten years) for a Medicare prescription drug benefit. There can be no meaningful prescription drug benefit legislated during the next two years, since there is not nearly enough money. There is no indication where the $350 billion ten-year total will be found suddenly after the next two years.
- It does not allow for the cost of what will be a necessary adjustment to the individual alternative minimum tax. For more information, see OMB Watch's AMT Primer.
- It is unlikely that domestic discretionary spending can be appropriated at levels less than those of FY 2002, and it is hardly in the interest of true domestic security that education, research and development, job training, community revitalization, and other domestic discretionary programs be reduced.
- Small business advocates, a powerful lobby, are upset that a provision to allow them to write off up to $40,000 in office machinery and equipment in one year (instead of the current limit of $24,000), was not included in the Economic Stimulus Package and they, too, will probably be placated.
The Senate Budget Committee will likely mark up its budget resolution this week, but it is not likely to be debated by the full Senate until after Congress returns from its spring recess -- the week of April 8. The real difficulty will be to get House and Senate agreement on a budget resolution -- a feat that many feel will be impossible. If no joint budget resolution is accomplished, the House and Senate can still proceed, but it is likely to be very difficult to get a conference agreement on the appropriations bills, which is necessary. In other words, we can anticipate a contentious appropriations season.