After spending several weeks negotiating the differences between House and Senate versions of the congressional budget resolution, which sets limits on the spending and tax legislation that Congress will consider this year, both chambers finally came to an agreement on April 28. The final version caps discretionary spending at $843 billion and calls for $106 billion in tax cuts over the next five years, but fails to include $5.4 billion for education programs that passed with bipartisan support in the Senate. The $843 billion spending cap corresponds to the president’s cap in his proposed budget.
“The essence of this budget comes down to whether we’re going to stick our children and grandchildren with a government they can’t afford,” said Senate Budget Committee Chairman Judd Gregg (R-NH). “This budget takes a modest but important first step toward entitlement reform, cuts the short-term deficit in half, puts important tools in place so Congress can enforce spending discipline, and improves transparency and good budget practices.”
Democrats were quick to counter Gregg’s assertion that the budget would cut the deficit, noting that while the budget calls for $106 billion in tax cuts over the next five years, it would trim mandatory spending programs by just $34.7 billion during the same period. They added that future budget projections did not include expenses such as long-term costs for the Iraq war and technical modifications to the tax code.
“Sad to say, the country would be better off with no budget plan than with this one,” said Robert Greenstein, executive director of the Center on Budget and Policy Priorities. “Without it, deficits would be lower, and cuts in programs for the needy wouldn’t be imposed to pay for more tax cuts for the wealthiest.”
According to CQ Weekly, in order to meet the limits established in the budget resolution, Congress will have to cut spending outside of defense and homeland security by 1 percent in fiscal 2006 and freeze programs for the next four years thereafter. The pressure to keep these programs frozen-including popular programs in education, veterans, transportation, and the environment-will only get stronger as agencies struggle to keep up with inflation and population growth.
In addition to cuts to discretionary spending, the budget resolution also calls for an additional $34.7 billion in cuts to mandatory programs in fiscal 2006 and a total of $212 billion over the five-year life of the budget. While the budget cannot order cuts to specific programs, the largest program reductions are likely to come from Medicaid ($10 billion), the Pension Benefit Guaranty Corporation ($6.6 billion), student loan programs ($4.7 billion), and programs under the agriculture committees ($3 billion).
Like the budget for an individual family, the congressional budget resolution serves as a spending blueprint for Congress that tracks expenses (government spending) versus income (tax revenue). While the budget resolution does not actually allocate money to programs-that task is left to the Appropriations Committee-Congress cannot exceed the cap it sets on discretionary spending ($843 billion).
Last week, in the next step in the budget process, Appropriations Committee Chairman Jerry Lewis (R-CA) divvied up the $843 billion among ten subcommittees. Under his allocation, the House Labor, HHS, and Education Appropriations subcommittee would receive $142.51 billion, $924 million above the president’s request but $163 million less than last year. Chairman Lewis is determined to complete action on all eleven appropriations bills by the July 4 recess, with a markup of the House Labor, HHS, and Education appropriations bill expected to occur in the first half of June.