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Week Ending April 29, 2005
House Concurrent Resolution 95 (Conference Report) establishing the FY 2006 Budget.
BRIEF
Most data released by Congress identifies three areas of financial significance in this year’s budget: $105.7 billion in tax cuts over the next five years, $10 billion in cuts to Medicaid growth over the next ten years and a freeze or only minor increases in domestic programs over the next five years as a way of reducing the deficit. Spending for Medicaid will increase yearly as per the budget but the amount of increase will be $10 billion less than expected. The expected cuts could be specifically for investment dividend and capital gains tax revenue.
MANDATORY SPENDING
Mandatory programs in particular, of which Medicaid is one, would see a spending increase but only by one tenth of one percent for 2006. Earlier the Senate refused to include Medicaid cuts that the House had passed but compromised to allow the cuts in the final budget. The President requested up to $51 billion in cuts to mandatory (entitlement) programs, but Congress set the limit at $35 billion.
REVENUE
Revenue is projected for 2006 at $2.2 trillion ($370 billion less than proposed spending) and $12.4 trillion through 2010 ($1.5 trillion less than proposed spending) Revenues from taxes is reduced by in $17.8 billion in 2006 and $105.7 billion through 2010
A good bit of the budget that applies to increasing revenues remain to be addressed. About $70 billion of the tax cuts are yet to be created or perpetuated by a Congress that must also adhere to a unique wrinkle requiring them to locate $2.4 billion in revenue from energy resources. Opponents see that provision as obvious support for drilling in the Alaskan National Wildlife Reserve where oil interests have been trying to get to the estimated $10 billion barrels of oil and natural gas deposits.
DEFICIT REDUCTION
The Conference Report retains the planned deficit reduction to $210 billion by 2010 but most who are familiar with federal budgets recognize that too many variables can alter, positively or negatively, budget projections past four years and sometimes fewer years. Resolution supporters are quick to note that the projected $521 billion deficit for this year actually turned out to be around $411 billion. The calculations are held as evidence that deficit reduction is already underway.
Deficit reduction according to Budget Committee data will be accomplished in several ways: By not raising taxes; by reduction required spending for domestic programs by .8%; by reducing the growth of mandatory (entitlement) spending from 5.7 percent to 5.6 percent over five years. Actual increases can vary each year. $1.6 trillion will be spent on mandatory programs to represent a 7 percent increase over last year’s spending.
The President has held that there is need to reorganize or eliminate government programs that perform poorly or not at all. Which programs will be cut is also up to Congress to decide. The budget passed by the House contained directions from the House Budget Committee defining to the dollar the amounts that legislators should cut and from what departments or programs.
PUBLIC DEBT
Public debt, that debt the public is responsible for paying back to those individuals and countries holding the US debt, will continue to rise from the current established ceiling of $7,962,000,000,000 to $11,105,000,000,000 by 2010. (Congress will soon raise the debt limit to which it can spend to $8,645,000,000,000.) Although the budget aims to reduce the deficit it does not pretend to eliminate it therefore the public debt will increase yearly.
DEFENSE AND FUTURE SPENDING FOR THE WAR ON TERRORISM
The Conference Report adheres to the President’s request for a 4.8 percent increase in defense spending to total $419.5 billion and a 2.3 percent increase for Homeland Security spending to $32.5 billion. The budget, unlike the President’s budget that did not include amounts for the Middle East wars, includes the soon to be passed $81.5 billion supplemental for 2005 spending ‘shortfalls’ and an additional $50 billion for the expected war supplemental to be requested this fiscal year. (Ending September 30, 2005).
EMERGENCY SPENDING
The budget addresses emergency spending and defines that as – “any provision is an emergency requirement if the situation addressed by such provision is:
(A) necessary, essential, or vital (not merely useful or beneficial);
(B) sudden, quickly coming into being, and not building up over time;
(C) an urgent, pressing, and compelling need requiring immediate action;
(D) unforeseen, unpredictable, and unanticipated; and
(E) not permanent, temporary in nature.”
The recent $81.5 billion supplemental included funds for the Middle East Wars because they are not considered permanent.
RESERVE FUNDS
Reserve funds can be established for legislation forthcoming that would address asbestos lawsuit settlement, importing prescription drugs, child health insurance (SCHIP), health insurance for the uninsured and Pell Grants providing none of the spending increases the public debt.
SOCIAL SECURITY
Social Security reform was addressed in a cursory way as the “Sense of the Senate” suggesting that any “reform must protect current and near retirees from any changes to Social Security benefits; reduce the pressure on future taxpayers and on other budgetary priorities; provide benefit levels that adequately reflect individual contributions to the Social Security system; and preserve and strengthen the safety for vulnerable populations including the disabled and survivors.”
Vote: The Budget Conference Report Passed the House 214 to 211 (RC 149) after an effort to table the resolution failed (RC147). The Resolution passed the Senate 52 to 47 (RV 114) both votes on April 28, 2005.
Cost to the taxpayers: $2.56 trillion for 2006 and $13.9 trillion through 2010.
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MORE INFORMATION
Government FUNCTION Required to Cut Spending.
SUMMARY OF DOLLAR AMOUNTS (Budget Committee)
Categories of Government FUNCTION Required by the Budget to Cut Spending
THE HOUSE OF REPRESENTATIVES
AGRICULTURE
House Committee on Agriculture shall reduce the level of direct spending for that committee by $173,000,000 in outlays for fiscal year 2006 and $3,000,000,000 in outlays for the period of fiscal years 2006 through 2010.
EDUCATION AND THE WORKFORCE
The House Committee on Education and the Workforce shall reduce the level of direct spending for that committee by $992,000,000 in outlays for fiscal years 2005 and 2006 and $12,651,000,000 in outlays for the period of fiscal years 2005 through 2010.
ENERGY AND COMMERCE
The House Committee on Energy and Commerce shall reduce the level of direct spending for that committee by $2,000,000 in outlays for fiscal year 2006 and $14,734,000,000 in
outlays for the period of fiscal years 2006 through 10 2010.
FINANCIAL SERVICES.
The House Committee on Financial Services shall reduce the level of direct spending for that committee by $30,000,000 in outlays for fiscal year 2006 and $470,000,000 in outlays for the period of fiscal years 2006 through 2010.
THE JUDICIARY.
House Committee on the Judiciary shall reduce the level of direct spending for that
committee by $60,000,000 in outlays for fiscal year 2006 and $300,000,000 in outlays for the period of fiscal years 2006 through 2010.
COMMITTEE ON RESOURCES.
The House Committee on Resources shall reduce the level of direct spending for that committee by $2,400,000,000 in outlays for the period of fiscal years 2006 through 2010.
TRANSPORTATION AND INFRASTRUCTURE
The House Committee on Transportation and Infrastructure shall reduce the level of direct spending for that committee by $12,000,000 in outlays for fiscal year 2006 and $103,000,000 in outlays for the period of fiscal years 2006 through 2010.
COMMITTEE ON WAYS AND MEANS.
The House Committee on Ways and Means shall report changes in laws within its jurisdiction sufficient to reduce the deficit by $250,000,000 for fiscal year 2006 and $1,000,000,000 for the period of fiscal years 2006 through 2010.
SUBMISSION PROVIDING FOR CHANGES IN REVENUE
The House Committee on Ways and Means shall report to the House a reconciliation bill not later than September 23, 2005, that consists of changes in laws within its jurisdiction sufficient to reduce revenues by not more than $11,000,000,000 for fiscal year 2006 and by not more than $70,000,000,000 for the period of fiscal years 2006 through 2010.
INCREASE IN STATUTORY DEBT LIMIT
The Committee on Ways and Means shall report to the House a reconciliation bill not later than September 30, 2005, that consists solely of changes in laws within its
jurisdiction to increase the statutory debt limit by $781,000,000,000.
THE SENATE.
SPENDING RECONCILIATION INSTRUCTIONS.
by September 16, 2005, the committees named in this section shall submit their recommendations to the Committee on the Budget. After receiving those recommendations, the Committee on the Budget shall report to the Senate a reconciliation bill carrying out all such recommendations without any substantive revision.
COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY.
The Senate Committee on Agriculture, Nutrition, and Forestry shall report changes
to reduce outlays by $173,000,000 in fiscal year 2006, and $3,000,000,000 for the period of fiscal years 2006 through 2010.
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
The Senate Committee on Banking, Housing, and Urban Affairs shall report
changes in laws to reduce outlays by $30,000,000 in fiscal year 2006, and $470,000,000 for the period of fiscal years 2006 through 2010.
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION.
The Senate Committee on Commerce, Science, and Transportation shall report
changes in laws within its jurisdiction sufficient to reduce outlays by $10,000,000 in fiscal year 2006, and $4,810,000,000 for the period of fiscal years 2006 through 2010.
COMMITTEE ON ENERGY AND NATURAL RESOURCES.
The Senate Committee on Energy and Natural Resources shall report changes in laws with-in its jurisdiction sufficient to reduce outlays by $2,400,000,000 for the period of fiscal years 2006 through 2010.
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS.
The Senate Committee on Environment and Public Works shall report changes in laws within its jurisdiction sufficient to reduce outlays by $4,000,000 in fiscal year 2006, and $27,000,000 for the period of fiscal years 2006 through 2010.
COMMITTEE ON FINANCE.
The Senate Committee on Finance shall report changes in laws within its jurisdiction sufficient to reduce outlays by $10,000,000,000 for the period of fiscal years 2006 through 2010
COMMITTEE ON HEALTH, EDUCATION, LABOR, AND PENSIONS.
The Senate Committee on Health, Education, Labor, and Pensions shall report changes in laws within its jurisdiction sufficient to reduce outlays by $1,242,000,000 in fiscal years
2005 and 2006, and $13,651,000,000 for the period of fiscal years 2005 through 2010.
COMMITTEE ON THE JUDICIARY.
The Senate Committee on the Judiciary shall report changes in laws within its jurisdiction sufficient to reduce outlays by $60,000,000 in fiscal year 2006, and $300,000,000 for the period of fiscal years 2006 through 2010.
REVENUE RECONCILIATION INSTRUCTIONS.
The Committee on Finance shall report to the Senate a reconciliation bill not later than September 23, 2005 that consists of changes in laws within its jurisdiction sufficient to reduce the total level of revenues by not more than: $11,000,000,000 for fiscal year 2006, and $70,000,000,000 for the period of fiscal years 2006 through 2010.
INCREASE IN STATUTORY DEBT LIMIT.
The Committee on Finance shall report to the Senate a reconciliation bill not later than September 30, 2005, that consists solely of changes in laws within its jurisdiction to increase the statutory debt limit by $781,000,000,000.
SUMMARY OF DOLLAR AMOUNTS
SUMMARY
Total Spending Fiscal Year 2006 . . . . . . . . . . . . . . . . . . . . . . . . . $2.56 trillion
2006-10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $13.88 trillion
Discretionary Spending
Total . . . . . . . . . . . . . . . . . . . . $843 billiona in fiscal year 2006 (increase of 2.1%)
- Department of Defense . . . . . . . . . . . . . . . . $419.5 billion (increase of 4.8%)
- Homeland Security . . . . . . . . . . . . . . . . . . . . $32.5 billion (increase of 2.3%)
- All Other Discretionary . . . . . . . . . . . . . . . . $391.1 billion (decrease of 0.8%)
Overseas Contingency Operations
- Conference agreement includes $50 billion toward a fiscal year 2006
supplemental for operations in the Global War Against Terrorism
Mandatory Spending (outlays)
Fiscal Year 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.6 trillion
2006-10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $9.1 trillion
Mandatory Savings
(Reconciled)b
Fiscal Year 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -$1.5 billion
2006-10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -$34.7 billion
Revenue Fiscal Year 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$2.2 trillion
2006-10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12.4 trillion
Tax Reductionc Fiscal Year 2006 . . . . . . . . . . . . . . . . . . . . . . . . . -$17.8 billion
2006-10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -$105.7 billion
Reconciled Tax Reduction
Fiscal Year 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -$11.0 billion
2006-10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -$70.0 billion
Deficit Reduction 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $382.7 billion (3.0% of GDP)
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210.9 billion (1.3% of GDP)
a Not including $50 billion toward an expected fiscal year 2006 supplemental.
b The minus signs indicate reductions in spending from current-law projections.
c The minus signs indicate reductions in revenue from current-law projections.
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No reproduction or distribution without written permission from TheWeekInCongress.com.