May 14, 2007

House Passes Revised Supplemental;
President Promises Another Veto;
Action Moves to Senate

Budget Committees Nearing Completion of
FY 2008 Budget Resolution Conference Report

BUDGET PROCESS STEP-BY-STEP™

Note: A complete calendar of milestones in this year's budget process is available to subscribers in “Budget Calendar".

May 14 (week of): Following House action on FY 2007 supplemental funding last week, this week the Senate is likely to act on a revised FY 2007 War Supplemental.

Also, early this week, House and Senate Budget Chairmen John Spratt and Kent Conrad are aiming to complete action on the FY 2008 Budget Resolution Conference Report. Following adoption of the Budget Resolution by the House and Senate, the Budget Committees will make their official 302(a) allocations to the Appropriations Committees, and to authorizing committees that have “direct spending” (entitlement or other mandatory) programs in their jurisdiction.

Context: After the 302(a) Committee allocations have been issued, Appropriations Chairmen David Obey and Robert C. Byrd can complete negotiations with their subcommittee chairs on subdividing the discretionary total among the 12 appropriations subcommittees. This is a key decision-making point in the budget process, because it prioritizes available discretionary funds among the 12 regular appropriations bills.

(The total allocations to the House and Senate Appropriations Committees are known as 302(a) allocations, and the sub-allocations to the subcommittees are known as 302(b) allocations, reflecting the sections of the Budget Act that lay out the allocation process.)

May 15: House to begin two days of Floor action the FY 2008 Defense Authorization Bill.

Context: The defense authorization bill is far more detailed than most authorization bills. While it does not provide funding (which is the function of the DOD appropriations bill), the DOD authorizations bill sets limits on funding and the terms of funding for many defense line-item programs. For many years, there has been a jurisdictional struggle between the defense authorizers and appropriators over who has “the last word” on defense funding, which in many cases comes down to which bill is enacted later in time.

May 21 (week of): House tentatively scheduled to begin Floor consideration of appropriations bills. (Under the Budget Act, the House may begin work on Appropriations Bills after May 15, even if a Budget Resolution Conference Report has not yet been adopted.)

May 25: Congressional leaders aiming to complete action on FY 2007 War Supplemental prior to the Memorial Day Recess.

THE WAR SUPPLEMENTAL

Last Thursday, May 10, the House passed a short-term FY 2007 war supplemental by a vote of 221-205.

Unlike the previous version vetoed by the President (H.R. 1591), the new supplemental bills would:

(1) provide supplemental war funding only through July (rather than September 30), and require a further vote in July (following submission of an Administration progress report on meeting benchmarks) to release the remaining supplemental funding (H.R. 2206);

and

(2) provided agriculture disaster ($3.5 b), wildfire suppression ($500 m), rural schools ($425 m), and Pacific Salmon provisions ($60 m) in a separate bill (H.R. 2207) to demonstrate strong, bipartisan backing for the agriculture disaster provisions.

After the separate votes on the two bills, the House rolled the two bills back into a single bill for transmittal to the Senate.

The provisions for international assistance ($6.2 b), military construction ($1.7 b), veterans' medical care ($1.8 b), BRAC $3.1 b), homeland security ($2.25 b), Katrina recovery $6.8 b), pandemic flu ($663 m), LIHEAP ($400 m), SCHIP ($396 m), minimum wage/small business tax relief, and precluding closure of Walter Reed were in HR 2206.

Prior to last week's votes, the House had defeated 171-255 a bill by Rep. Jim McGovern (D-MA) that would have required a withdrawal of U.S troops from Iraq beginning within 90 days, to be completed within 180 days.

The Senate will take up the Supplemental bill this week and with Congress recessing for Memorial Day the end of next week, Senate and conference action will be the context within which a compromise measure with the White House will be negotiated.

Expect a compromise with the White House that provides funds through the end of the fiscal year, but requires periodic and specific reporting on benchmarks with Congress re-visiting troop redeployment in September if benchmarks fail to be met (through the FY 2008 DOD Appropriations bill).

Also expect Democrats to call the President's bluff on domestic funding in the supplemental; it is unlikely the President will veto war funding over the domestic provisions.

House Appropriations Committee Summary of the two bills.

President Bush promised to veto both bills:

The HR 2206 veto threat opposes the partial funding for Iraq operations and the fast-track procedure the bill would establish for a vote on withdrawal in late July.

The HR 2207 veto threat opposes the agricultural disaster funds as “unjustified and not appropriate for an emergency spending bill,” although it passed the House with a 302-120 veto-proof margin.

Technical Explanation and Revenue Estimates for the Small Business and Work Opportunity Tax Act (included in H.R. 1591, to accompany the minimum wage increase).

FY 2008 BUDGET RESOLUTION

Link to Revised WBR Table Comparing President's Budget, S.Con.Res. 21 and H.Con.Res. 99

A conference agreement on the FY 2008 Budget Resolution is expected to be announced early this week.

Last week, OMB Director Portman sent a veto threat to Budget Chairmen Kent Conrad and John Spratt, and Ranking Republicans Paul Ryan and Judd Gregg, stating that he “will recommend the President veto any appropriations bill that exceeds (the President's) request until Congress demonstrates a sustainable path that keeps discretionary spending within the President's topline of $933 billion.”

In response, Senate Budget Chairman Conrad issued the following statement: “After racking up more than $3 trillion of new debt under its watch, the Bush administration now pretends to be fiscally disciplined by threatening to veto appropriations bills because they include investments in priorities like education and veterans' health care. That is as cynical as it is shortsighted...It is time for the administration to work with Congress instead of stubbornly insisting on everything being done its way.”

Context: The Budget Resolution, as a concurrent resolution of Congress is not a law and is not presented to the President for signature; it becomes Congress' operating internal budgetary framework upon adoption of the Budget Resolution conference report by the House and Senate. Therefore, the President cannot veto the Congress' topline discretionary number (the Senate non-war discretionary number is $949 billion and the House number is $956 billion as displayed in the comparison table above). However, based on the Portman letter we can expect a long fall of continuing resolutions as the President and Congress struggle over the size of the 12 annual appropriations bills.

OMB Letter to Spratt

WBR will send out a Budget Alert to all subscribers explaining and analyzing provisions of the Budget Resolution Conference Report as soon as details are released. (Web subscribers will be able to access the budget alert via your WBR username and password.)

Link to H.Con.Res. 99

Link to S.Con.Res. 21

Link to WBR Revenue Chart

WORTH READING

CBO: SCHIP --The State Children's Health Insurance Program (a key domestic priority this year is reauthorization of the program). May 2007. Link

GAO: Stabilizing and Rebuilding Iraq : Coalition Support and International Donor Commitments. May 9 2007 Abstract  -   Highlights  -  PDF    

House Budget Committee: Chairman Spratt's Opening Statement at Budget Conference , May 10, 2007. Link