CHN: Final Agreement on the Budget Awaits Congress’ Return
The House and Senate approved their own versions of the FY 2009 Budget Resolution on March 13 and 14, and then left Washington for a two-week recess. On their return, the two bodies must work out their differences and enact a final Resolution. They must settle on a total for next year’s appropriations in the face of rising need among families hit by the worsening economy. On taxes, the gap between the House and Senate may slow down the push for final enactment.
Taxes: The multi-trillion dollar tax cuts enacted in 2001 and 2003 will start expiring in 2010 if Congress does not extend them. Their high cost makes Congress likely to delay action for another year. But Congress will have to act on at least another temporary fix for the Alternate Minimum Tax (AMT), which if ignored will raise the tax bill for households mostly with incomes $100,000 or more. The House’s Budget Resolution wants the one-year $70 billion cost to be paid for with other tax increases or, less likely, cuts in entitlement programs. The Senate wants to repeat this year’s AMT repair job by paying for it with borrowed money (that is, raising the deficit). The House also wants to prevent scheduled cuts in Medicare reimbursement rates to doctors, and wants the committees in charge to find revenues or savings to pay the cost, with a little left over for deficit reduction. The Senate leadership does not think it can insist on paying for either the AMT or the doctors’ fees and pass the Resolution.
Appropriations: Of particular importance, the Budget Resolution sets a total for annual appropriations, known as “discretionary” spending. That sum will later be divided among the many hundreds of programs requiring annual funding approval, from housing to community health centers to defense. Complicated budgeteering makes it difficult at this point to sort out all the differences between the House and Senate for annual appropriations. It appears that the House provides at least a few billion dollars more than the Senate.
Human needs advocates are disappointed that both House and Senate did not go far enough in adding funds for domestic appropriations. They point to a damaging multi-year trend of cuts, leaving services unprepared to meet the growing needs brought on by economic hard times. Both the House and Senate provide domestic funding above the current cost of services, but even the higher House figure (approximately $20 billion over the current service level) is inadequate to meet the multiple needs. For example, home heating oil has shot up 33 percent in the past year, and 1.2 million households had their gas or electricity shut off last spring. But although families must pay more, the Low Income Home Energy Assistance Program (LIHEAP) reduced its annual assistance to families from $464 in 2006 to $378 in 2008 in order to stretch their funding farther. The cost of groceries is also up dramatically, 5.1 percent overall since February 2007, but with staples like eggs (25 percent), milk (17 percent) and rice or pasta (13 percent) skyrocketing. Emergency food programs and the Women, Infants and Children nutrition program (WIC) will need enough to cover both rising costs and more qualifying families because of lost earnings. Sixty-two percent of Head Start programs have had to cut operations in the last year, according to the National Head Start Association (http://www.nhsa.org/press/News_Archived/index_news_031808.htm). School districts and states facing declining revenues need more federal help to prevent cuts. And a growing number of injured veterans from Iraq and Afghanistan must be served.
These increasingly urgent needs require more than either the House or Senate has provided. Advocates are pressing for the highest possible discretionary figure in the final Budget Resolution. They are also calling for inclusion of the Senate’s $35 billion economic stimulus initiative, which allows for addressing the downturn with more funding for Food Stamps, emergency food (TEFAP), WIC, LIHEAP, unemployment benefits, state aid, summer jobs for youth, etc. The language calling for a stimulus plan is not binding, but could help to guide Congress to respond to growing hardship.
Among the other choices in the budget outline are a number of reserve funds, which allow expansion of services as long as Congress finds savings or new revenues to pay for them. Both the House and Senate, for example, allow $50 billion to be spent over five years to expand the State Children’s Health Insurance Program (SCHIP), if it’s paid for. Only the Senate includes a reserve fund for the farm bill; the House hopes it will be dealt with this year, not next. For a list of reserve funds in the House and/or Senate versions, see the March 7 Human Needs Report, (http://www.chn.org/humanneeds/080307a.html).