CHN: Budget Conference Agreement Clears House Floor, But Stalls in Senate

By a surprisingly close vote of 216 to 213, the House approved a final fiscal year 2005 budget resolution late on Wednesday, May 19. The vote came nearly two months after the House and Senate approved separate budget resolutions and after negotiators struggled to find compromise. Despite the House adoption, continued opposition to the deal by key Senate moderates forced the Senate leadership to postpone the budget vote until after the Memorial Day recess.

The one-year budget plan opens the door for billions in new tax cuts now and in future years that will deepen the deficit and threaten human needs programs. It also cuts the “income-security” portion of the budget by $3.1 billion in FY 2005, or 6.3 percent below current service levels (including housing, child care, and nutritional assistance for women, infants and children). If all the programs in the income security category were cut proportionally, Section 8 housing would receive about $1.3 billion less than the amount needed to maintain current services and about 200,000 families would lose their vouchers, according to the Democratic Caucus of the House Budget Committee.

Because the House opposed Senate provisions restricting both tax cuts and spending increases from increasing the deficit, negotiators drafted a plan that would apply loophole-riddled restrictions for one year only. For weeks, four Senate Republicans have resisted the pressure of their party leadership by insisting the final budget resolution include a real “pay-as-you-go” rule requiring Congress to pay for any new tax cuts or new spending by offsetting revenue increases or spending cuts. The conference agreement includes a weak pay-as-you-go rule expiring next April 15 and exempts nearly $28 billion in tax cuts from being subject to it. This renders the rule toothless and advocates point out that no budget resolution would be more fiscally prudent than this one. Without a new budget resolution, the Senate will operate under existing rules requiring 60 votes to enact additional tax cuts. The new resolution allows $28 billion in FY 2005 tax cuts to be voted under reconciliation instructions that only require 51 votes to pass.

The four holdout Senators are Olympia Snowe (R-ME), Susan Collins (R-ME), John McCain (R-AZ), and Lincoln Chafee (R-RI). These Senators have continued to stand by their principles in public statements opposing the budget deal. They and other Senators will be under great pressure to vote for the budget as the leadership scrambles for a winning margin by their return from the Memorial Day recess on June 1.

In part due to the pressure of advocates, the agreement does not include reconciliation rules forcing cuts to Medicaid or other entitlement programs as included in the original House budget resolution. (These rules require committees with jurisdiction to make cuts; if they do not, the Budget Committee will.) Nevertheless, the incomplete five-year outline in the resolution passed by the House assumes net cuts of $1.6 billion in health entitlement programs, according to the analysts for the Democrats on the House Budget Committee, most of which would have to come out of Medicaid.

The conference agreement allows for $821 billion in discretionary spending in fiscal year 2005 for programs that must be appropriated each year, as in the House budget resolution. The Senate budget resolution included $819 billion in discretionary spending, but for technical reasons included a separate $821 billion cap. In addition to the $3.1 billion in cuts to programs in the income security section, the budget under funds education by nearly $9 billion less than the amount promised under the No Child Left Behind Act.

For More Information
S Con Res 95 Conference Report

Budget and Appropriations
Policy Analyses and Research