March 20, 2007

Full Senate to Consider $2.9 Trillion Budget Plan;
House to Consider $124 Billion FY'07 Supplemental

HOUSE APPROPRIATIONS REPORTS $124 BILLION FY'07 SUPPLEMENTAL:
Iraq Timeline Provisions Make Enactment Unlikely

This week—most likely Thursday—the full House will take up a $124 billion FY'07 Supplemental Appropriations Bill including: $103.7 billion for Iraq and Afghanistan war costs and other costs related to the Global War on Terror; $6.3 billion for Hurricane Katrina and Gulf Coast relief; $3.5 billion for military and veterans health care; $3.1 billion for Base Realignment and Closure; $2.5 billion for Homeland Security; $3.7 billion for agriculture disaster (drought) relief; $500 million for wildfire suppression; $400 million for Low Income Home Energy Assistance; $1 billion for Pandemic (avian) flu vaccines; and $750 million in emergency SCHIP (State Children's Health Insurance Program) funds. AN UPDATED SUMMARY CHART IS NOW AVAILABLE FROM WBR.

• It is unclear whether House Democrats can muster the votes to pass the bill with its current language requiring withdrawal of U.S. troops from Iraq by August 2008.

• If the bill passes the House, the Iraq language may de-rail the bill in the Senate due to a Senate Republican filibuster or the inability of Democrats to hold 50 votes to pass the bill.

• If the bill reaches the President's desk in its current form, the White House has stated unequivocally that the President will veto the bill due to the current Iraq language. (The White House also promises a veto based on the bill's “excessive and extraneous non-emergency spending.”)

• Therefore, expect a protracted process of negotiation prior to enactment of the '07 Supplemental.

• The House-reported bill also requires that the military adhere to its standard unit readiness and length of deployment standards absent a presidential waiver—which is another complicating provision for the Administration. The bill also prohibits establishment of any permanent bases in Iraq.

• The bill does not include controversial language that would have attempted to bar the President from military action in Iran without congressional approval.

• The bill includes the minimum wage (H.R. 2) / small business tax relief (H.R. 976) provisions passed previously by the House in separate measures.

• The bill also includes a provision to keep open the Walter Reed Army Medical Center; and clarifies that the Federal government cannot preempt more stringent State/local chemical security laws.

Appropriations Committee Summary

Statement by Ranking Republican Jerry Lewis

Statement of Administration Policy

SENATE TO CONSIDER $2.9 TRILLION BUDGET PLAN

Today (Tuesday) the full Senate takes up the Budget Committee-reported Budget Resolution for Fiscal Years 2008-2012 (S.Con.Res. 21). In general, the Budget Committee plan, drafted by Chairman Conrad:

• fully funds the President's defense request;

• provides Alternative Minimum Tax (AMT) relief for '07 and '08;

• would allow the 2001 and 2003 tax cuts to expire at the end of 2010, unless spending cuts or tax increases are identified to pay for extending the tax cuts;

• calls for increased revenues by closing the “tax gap,” and shutting down tax shelters and offshore tax havens (but does not issue Reconciliation instructions to the Finance Committee to mandate the additional revenues);

• would use the additional revenues to increase non-defense discretionary spending levels above the President's request as well as achieve a $132 billion budget surplus (counting Social Security surpluses) in 2012;

• rejects the Medicare reforms proposed by the President, instead calling for $15 billion in savings from reducing Medicare overpayments to providers (but does not mandate the savings through Reconciliation);

• would establish discretionary spending caps for fiscal years '07 and '08, allowing for upward adjustments: (1) to address deficiencies at Walter Reed; and (2) for programmatic enforcement activities that will generate savings (disability reviews, tax enforcement, and combating Medicare and unemployment insurance fraud);

• would re-establish PAYGO budgeting to require that any new tax cuts or increases in entitlement spending be paid for by offsetting savings elsewhere in the budget;

• would establish a far-reaching “Social Security First” point of order that would prohibit consideration of legislation that would increase the non-Social Security deficit in any year, unless Social Security reforms have been enacted that ensure the long-term solvency of the program;

Context: The effect of this is to require 60 votes to pass any tax or entitlement legislation that would increase the deficit in any future fiscal year. The “Social Security First” policy was put forward by the Clinton Administration in order to dedicate projected budget surpluses to Social Security Solvency rather than tax cuts. Some may argue this new point of order has taken that policy out of context and created a “super-PAYGO” requirement.

• extends the 60-vote waiver requirements for Budget Act points of order through 2017;

• makes heavy use of unfunded “reserve funds” to accommodate a wide range of new programs, all of which are contingent on the committees of jurisdiction identifying spending cuts or revenue increases to pay for the initiatives; and

• does not include any Budget Reconciliation instructions.

  Passage of the Budget Resolution is by no means certain. Democrats have a slim 1-vote majority in the Senate. Chairman Conrad needs to hold the votes of conservative Democrats concerned about expiration of the tax cuts and liberal Democrats concerned about the “reserve funds” that make policy priorities contingent on offsetting tax increases or spending cuts.

  See our Budget Resolution Summary Table and Budget Backgrounder on Reserve Funds

S.Con.Res. 21, The Concurrent Resolution on the Budget 

Budget Committee Summary Materials

GOP March 15 Op-ed

BUDGET PROCESS: STEP-BY-STEP™

'07 WAR SUPPLEMENTAL:

• March 22: House Floor action on FY 2007 Supplemental.

Context : House Democratic leaders need time to secure the 218 votes necessary to pass the bill—a heavy lift, given the controversial August 2008 Iraq redeployment deadline.
• March 22: Senate Appropriations Committee mark-up of FY 2007 Supplemental, 2pm SD-106.

• Week of March 26: Possible Senate Floor action on FY 2007 Supplemental.

'08 BUDGET RESOLUTION:

• March 20-23: Senate Floor action on FY 2008 Budget Resolution.

  Context: Because Senate Floor debate is limited (50 hours), the Budget Resolution cannot be filibustered. Amendments must be germane, and debate on amendments is generally limited to 2 hours (1 hour for 2nd degree amendments, i.e., amendments to amendments). Because the 50 hour limit applies to debate, but not to the offering of amendments, the Senate typically has a vote-a-rama at the end of the 50 hours with a long series of votes, often consuming hours.

• March 21 (tentative): House Budget Committee mark-up of FY 2008 Budget Resolution.

• Week of March 26: House Floor debate on FY 2008 Budget Resolution.

BUDGET BACKGROUNDER: WHAT IS A RESERVE FUND?

CHARTS

FY 2007 Supplemental: President's Revised Request vs. Committee-Reported Bill

Budget Resolution Summary Table