CHN: Bush Budget Dead Before Arrival?
Senate Sets New Course as Detailed Plan Sent to Hill
As expected, a detailed version of President Bush’s $1.96 trillion budget was submitted to Congress on April 9, several days after the Senate had passed its budget resolution and both chambers of Congress had left for a two week recess. Initially, administration strategists had hoped that delaying the submission of the detailed plan would make it easier for Congress to pass a broad budget outline that mirrored the president’s proposals. Doing so, it was thought, would allow the administration to trumpet its tax cut without shedding too much light on politically unpalatable spending cuts. It didn’t work out that way.
While the House passed its version of the budget resolution (H. Con. Res. 83) relatively easily on March 28, the sailing was not quite as smooth in the Senate. In the end, the Senate adopted its budget resolution by a vote of 65-35 on April 6, but only after reducing the administration’s $1.62+ trillion ten year tax cut to $1.18 trillion and adjusting the administration’s proposed spending levels.
The president’s initial February 28 budget outline and more detailed April 9 plan both proposed limiting overall discretionary spending in FY 2002 to $661 billion, about four percent more than the current fiscal year. Discretionary spending accounts for roughly a third of all federal spending and covers all programs other than entitlements like Social Security, Medicare, and Medicaid. In recent years, discretionary spending has been divided roughly evenly between defense and non-defense programs.
The House-passed budget resolution tracked the administration’s $661 billion request, providing $335.7 billion for nondefense programs and $324.9 billion for defense. While the overall House number represented a four percent increase in nominal terms, an analysis by the Center on Budget and Policy Priorities indicates that adjusting the increase for inflation and population changes produces a cut in nondefense programs of roughly $15 billion, or about 4.7 percent.
The Senate was somewhat more generous than the administration or the House. It increased the overall discretionary figure to $678 billion, an increase of seven percent. Information about how the Senate divided this total between defense and nondefense programs was not available at press time.
Decisions on how these overall allotments will be divided among specific programs must wait until later this year, when the House and Senate pass appropriations legislation. The administration’s priorities for such spending, however, were laid out in its April 9 budget. Details from that budget of interest to human needs advocates include:
Department of Agriculture: The president’s budget cuts core discretionary budget authority for the Agriculture Department from $19.3 billion to $17.9 billion, a cut of 9.3 percent. The budget indicates, however, that funding for most nutrition programs will be maintained or expanded. The Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) is allocated $4.137 billion, up from $4.052 billion in the current year, an increase the administration says is sufficient to serve 7.25 million individuals and thereby maintain current program levels. The Emergency Food Assistance Program (TEFAP) is maintained at $100 million, its current funding level. Child nutrition programs receive a modest boost, from $9.542 billion to $10.089 billion.
Department of Education: The Department of Education does better in the president’s budget than many other agencies. Overall, discretionary spending budget authority is increased from $42.1 billion to $44.5 billion, including adjustments for advance appropriations in 1999-2001, and from $39.9 billion to $44.5 billion without such adjustments. The budget increases spending for Title I education programs for at-risk youth by $459 million to $9.061 billion, and increases funding for the primary federal special education program, IDEA Part B grants to states, by $1 billion to $7.3 billion.
Department of Health and Human Services (HHS): The budget increases discretionary budget authority for HHS from $53.9 billion to $56.7 billion overall. Excluding spending for the National Institutes of Health, which receives a $2.8 billion spending boost, spending is held nearly steady — increasing from $33.5 billion to $33.6 billion, a cut after accounting for inflation. The budget describes a number of Department-related initiatives, including:
Child Care: The president’s budget increases funding for the Child Care and Development Block Grant to $2.2 billion, an increase of $200 million, but creates a $400 million set aside from that amount for a new after-school program.
Disability Initiative: The budget plan includes the president’s $1.025 billion, five year initiative for people with disabilities. The proposal, called the New Freedom Initiative, will provide low-interest loans for assistive technology that makes work more accessible, including wheelchairs, telecommuting equipment, and text telephones for the hearing-impaired. The proposal will also help cover the cost of housing loans.
Head Start: The president modestly increases the Head Start budget, from $6.2 billion to $6.325 billion. The budget also indicates that the administration will transfer Head Start to the Department of Education and refocus its efforts to emphasize pre-reading and numeracy skills.
Safe and Stable Families: The budget plan provides $505 million for the Safe and Stable Families program, a $200 million increase over FY 2001.
Social Services Block Grant (Title XX): The budget cuts spending for SSBG from $1.725 billion to $1.7 billion and will allow a reduction in the transferability of TANF funds to SSBG from 10 percent to 4.25 percent, something that concerns SSBG advocates.
Department of Housing and Urban Development (HUD): While tables in the April 9 budget indicate that HUD discretionary budget authority will grow from $28.5 billion to $30.4 billion, tables in the February 28 outline indicate the budget actually cuts discretionary budget authority from $35.3 billion to $34.1 billion, once adjustments are made for advanced appropriations and other technical changes — a cut of 3.4 percent. According to the budget, the president’s plan will still provide funding sufficient for 34,000 incremental Section 8 housing vouchers and to renew all expiring rental subsidy contracts. The Public Housing Operating program receives a $143 million funding boost, but the Public Housing Capital program is cut by $707 million, from $3 billion to $2.293 billion in FY 2002. The $310 million Public Housing Drug Elimination program is eliminated and the Community Development Block Grant (CDBG) is cut from $5.113 billion to $4.802 billion.
Department of Labor (DOL): The budget cuts discretionary budget authority for the Labor Department from $11.9 billion to $11.3 billion, a cut of 5.0 percent. According to an April 9 analysis by the Democratic staff of the House Budget Committee, the president’s budget will reduce the department’s appropriated funds for employment and training services by $541 million, a cut of 9.5 percent.
The April 9 Bush budget fleshes out reforms for Social Security, Medicare, and other mandatory programs that were included in the February 28 outline.
Social Security: The Bush plan taps nearly $600 billion of the $2.6 trillion Social Security surplus expected over the next ten years to fund its other priorities. Perhaps surprisingly, the administration has successfully avoided attacks from Democrats on this issue by claiming that only $2 trillion of the national debt can be redeemed over that time period and by arguing that the remaining surpluses are being withheld in a contingency reserve that could be used for a variety of purposes, including covering transition costs associated with privatizing the program. While the Bush budget endorses privatization, it does not provide many details, providing only a series of principles for reform. These include: (1) protecting the benefits of current retirees and near-retirees; (2) saving the Social Security surpluses for Social Security or Social Security reform efforts; (3) not raising Social Security payroll taxes; (4) not investing Social Security trust fund reserves in the private economy; and (5) supporting private accounts. The president is expected to name a bipartisan commission to recommend reforms for the program sometime soon. Over the next several months, the House Ways and Means Committee is also expected to launch a series of hearings on the issue on college campuses across the country.
Medicare: The president’s plan allocates all of Medicare’s expected $526 billion surplus over the next ten years to other priorities, subsuming it within a $841 billion contingency fund. The president’s budget outline reiterates his plan to spend $153 billion over ten years on prescription drug coverage for low-income Americans and catastrophic drug coverage for all Americans, provided primarily through a block grant to the states.
Medicaid and SCHIP: The president’s budget proposes implementing reforms for Medicaid and the State Children’s Health Insurance Program (SCHIP) and it assumes $17.4 billion in savings over ten years from Medicaid. According to the budget, the administration plans to address the Medicaid upper payment limit loophole by preventing new hospital loophole plans approved after the December 31, 2000 from receiving the higher upper payment limit.
The Senate-passed budget resolution was clearly a setback for the administration and its $1.6+ trillion tax cut. On April 4, by a vote of 53-47, the Senate adopted an amendment reducing the tax cut by $450 billion and shifting the resources to education and debt reduction. Republicans attempted to reinstate the larger tax cut number, but subsequent changes were only marginal, leaving the final number at $1.18 trillion.
Senate Republicans were able, however, to avoid a potentially devastating procedural ruling on the president’s tax cut that could have effectively ended its prospects for enactment this year. In the days leading up to floor consideration of the resolution, Sen. Robert Byrd (D-WV) had indicated that he would challenge the practice of using budget resolutions to provide tax cuts protection from filibusters. The existing rules, argued Byrd, only provide such protection to tax increases and other legislation whose primary goal is reducing budget deficits and the national debt, something the GOP-backed tax cuts clearly do not do. Importantly, Senate Parliamentarian Robert Dove was reportedly prepared to side with Byrd on the matter, an event that could have stripped the Bush tax cuts of filibuster protection and required its supporters to garner 60 Senate votes for final passage — probably an insurmountable hurdle in the evenly divided Senate.
Parliamentary rulings can themselves be overturned by a simple majority vote, however, and Senate GOP leaders were able to avoid a debacle by enforcing strict party unity among their ranks on a procedural question. While Sens. Lincoln Chafee (R-RI) and James Jeffords (R-VT) were willing to buck their leadership on the tax issue, they were apparently unwilling to challenge them on a procedural one. In the end, Byrd decided not to force the matter because doing so would have set a precedent explicitly allowing tax cuts under current rules. When tax-related reconciliation instructions in the resolution were eventually considered they passed by a vote of 51-49, a margin that included the support of all 50 Republicans and Sen. Zell Miller (D-GA). Those instructions will allow two tax bills to be brought to the Senate floor later this year without the threat of a filibuster.
Meanwhile, although the Senate-passed resolution only provided for $1.18 trillion in tax cuts over ten years, congressional Republicans are vowing to reinstate the $1.62 trillion number in coming House-Senate conference negotiations. Doing so would force wavering senators like Chafee and Jeffords to choose between sticking to their positions on the final budget resolution vote by opposing the larger tax cut or backing the president on a potentially make-or-break vote early in his administration. Some analysts believe that at least one, if not both, will stick with the president on the final budget resolution vote, but reserve the right to vote against specific tax bills later in the year.
Bumps in the road in the Senate have not similarly slowed progress on tax cut legislation in the House, which has passed three bills whose combined cost is already approaching the president’s $1.62 trillion proposal limit. On March 8, the House passed a $958 billion, ten year income tax rate reduction bill (H.R. 3). On March 29, the House passed a $399 billion package of tax cuts (H.R. 6) addressing the so-called marriage penalty, doubling the child tax credit to $1000, and making it partially refundable. Finally, on April 4, the House passed a $192 billion bill (H.R. 8) that would slowly phase out the estate tax, repealing it completely in 2011. The bill garnered the support of 58 House Democrats on a 274-154 vote. The House may take up a fourth tax bill after the Easter recess that is expected to contain an assortment of other tax changes worth up to $200 billion over ten years.
The Senate Finance Committee is expected to mark up the first of its two tax bills by May 10, and congressional Republicans say they could send a tax cut bill to the president as early as Memorial Day, though that is probably overly optimistic. Tax considerations are also likely to affect debate in the Senate on a proposed increase in the minimum wage. Any package of tax cuts accompanying the increase is not likely to be considered, however, as part of the budget reconciliation process and thus will not be granted protection from a filibuster. Such a filibuster seems unlikely at the moment, but that could change once more details of the proposal are made available, probably in May.
House and Senate conferees on the budget resolution, who must work out differences between the two chamber’s versions, have already been named. They are expected to wrap up work reasonably quickly. Final floor action could take place in the House and Senate in late April or early May. Action on appropriations and outstanding tax legislation (primarily in the Senate), is expected to take place soon after that.