CHN: House and Senate Approve Budget Resolutions

President’s Priorities Move Forward, but Not Without Roadblocks
The House and Senate moved the priorities of the Obama budget – important steps forward in passing their own Budget Resolutions on April 2.  But the Senate’s steps towards investments in health care reform, education, and renewable energy were impeded by a number of amendments that signal roadblocks to overcome in the campaign to achieve the Administration’s objectives.

The budgets coming out of committee differed in two important respects:  the House total for annual appropriations (“discretionary” spending) was closer to the President’s figure, and the House included a provision allowing for filibuster-proof consideration of health care reform and education policy in the Senate (a.k.a. “reconciliation instructions”).  But after a slew of Senate floor amendments, the differences between the House and Senate Resolutions grew more pronounced, especially in the area of taxes.

Appropriations:  Although $7 billion less than the President’s budget, the House’s appropriations total is $8 billion higher than the Senate’s.  (House FY 2010 appropriations total:  $1.089 trillion; Senate:  $1.081 trillion; President:  $1.096 trillion.)  Some senators, including Sessions (R-AL), Crapo (R-ID), and Johanns (R-NE) introduced amendments to make deeper cuts in domestic appropriations – which fund education, public health, job training, housing, children’s, family and community services, renewable energy and the environment, and much more.  That went too far for Senators, who defeated all of these amendments.  The Sessions amendment cut most deeply, holding all spending except for defense and veterans’ services to the FY 2009 levels in FYs 2010 and 2011, and then only allowing 1 percent annual increases from FYs 2012-2014.  It was defeated 40-58, mostly along party lines, but with Senator Bayh (D-IN) voting for it and Senators Collins (R-ME) and Martinez (R-FL) opposing.

Taxes:  Although both resolutions follow the broad outlines of President Obama’s budget priorities, amendments in the Senate both called for more tax cuts and explicitly sought to deny him certain revenue sources he had identified as ways to pay for health care reform, education expansions, and climate change initiatives.  A bare majority of Senators lined up on the side of paying out hundreds of billions of additional dollars to multimillion dollar estates, voting to slash the estate tax still further, exempting individuals’ estates worth $5 million or less ($10 billion or less for couples; current law exempts estates of $3.5 million or less for individuals and $7 million for couples), and reducing the maximum tax rate from 45 percent to 35 percent.  The maximum rate is very different from the average rate actually applied to estates, which is now only 22 percent.  The cost of the cut would have to be paid for by raising other revenues or securing savings. The Lincoln (D-AR)-Kyl (R-AZ) amendment passed 51-48, with 10 Democrats joining 41 Republicans in favor.   A Durbin (D-IL) amendment was introduced to blunt the impact of Lincoln-Kyl.  It would require 60 votes to pass a further reduction in the estate tax unless it were accompanied by a tax cut of similar size aimed at taxpayers with incomes of $100,000 or less, which would also have to be paid for.  The Durbin amendment passed 56-43, with many of the same Senators who supported Lincoln-Kyl voting for it.

In a Congress that has been frequently willing to cut taxes without paying for those cuts, simply pairing the deeper cut in the estate tax with a middle class tax cut would not seem enough to prevent the loss of estate tax revenues.  But the need for 60 votes is a powerful deterrent; at the moment, there are far fewer than 60 in favor of giving the richest estates even more than the budget resolution already provides.

Other tax amendments passed by the Senate would place certain revenue sources off limits in the quest to find ways to pay for the Obama priorities.  For example, a Thune (R-SD) amendment passed to ensure that federal income tax changes in the treatment of charitable deductions do not negatively affect nonprofit organizations, and a Bennett (R-UT)-Hatch (R-UT) amendment passed to simply prohibit changing tax laws related to charitable contributions in order to pay for health care reform.  (The Obama budget proposed limiting the value of federal income tax deductions for families with incomes over $250,000 towards paying for the cost of health care reform.)  An Ensign (R-NV) amendment would require 60 votes to increase taxes on the middle class, including those intended to pay for climate change initiatives.

After the Congressional Budget Office re-estimated the President’s budget to show bigger deficits in light of worsening economic conditions, both the House and Senate wanted to make changes to reduce the deficit.  As a consequence, they assume that Congress will either allow the Alternative Minimum Tax to affect more of the upper-middle and middle class after 3 years, or will start to find other revenues to pay for it.  The House and Senate do not assume that the President’s middle class Making Work Pay tax credit will continue after 2010.  That does not mean it cannot continue; it does mean that Congress and the Administration will have to find a way to pay for it, or change the rules before the tax cut would expire.

Climate Change:  Both the House and Senate showed reluctance to follow the President’s lead in collecting hundreds of billions in revenues from auctioning permits to pollute, in order to invest in renewable energy, discourage carbon emissions, and provide relief to low- and middle-income families hit by rising energy prices.  The House showed its hesitation by refusing to require a fast-track, filibuster-proof approach to this issue in the Senate.  The Senate passed a Johanns (R-NE) amendment to prohibit such fast-tracking (the procedure known as reconciliation).  It also passed a Thune (R-SD) amendment stating that climate change initiatives should not result in raising gas or electricity prices, despite the certainty that increased prices would occur if we are to discourage carbon emissions.

Avoiding the Need for 60 Votes in the Senate:  The House resolution would apply reconciliation instructions to health care reform and education initiatives.  Such instructions would affect the Senate, requiring the relevant committees to come up with program initiatives and ways of paying for them.  Under reconciliation, debate is limited.  That means proposals to enact health care reform or make improvements to higher education programs could not be filibustered – and therefore would not require 60 votes to end a filibuster.  The Senate resolution did not include such language, and key Senators have opposed using reconciliation to enact major legislation.  While reconciliation is intended to be used to reduce the deficit, it has been used in the past for other purposes:  for example, to pass the massive Bush tax cuts in 2001.  The decision to include the reconciliation option in the final budget will be made in the conference between House and Senate.  Many believe it is an important option to retain, if for no other reason than as leverage to encourage Republicans to come to the table to negotiate a health care reform package.  If they do not negotiate, Congress could turn to reconciliation to prevent a minority from obstructing enactment.

House Actions:  The House does not allow floor amendments to the budget approved by the House Budget Committee, but does allow entire substitutes to be considered.  Four substitutes were debated, and all failed.  There were two Republican substitutes, both which would lead to deep reductions in domestic appropriations over time; one makes cuts in mandatory programs as well.  The Progressive Caucus developed a substitute that cut military spending and increased investments in domestic priorities.  The Black Caucus substitute would have repealed the Bush tax cuts for the highest earners and plowed those funds back into domestic priorities.

Floor Votes; Next Steps:  Both the House and Senate voted for their budget resolutions largely along party lines.  The House vote was 233-196, with no Republicans voting in favor and 20 Democrats opposing.  The Senate voted 55-43, with no Republicans supporting and two Democrats voting no (Bayh, IN and Ben Nelson, NE).  Negotiations will be under way during the Congressional recess, with final votes expected some time after they return on April 20.

For Senate Roll Call Votes on the Budget Resolution and Amendments, go to

For House Roll Call Vote on the Budget Resolution, go to

For Center on Budget and Policy Priorities analysis of the House and Senate budgets, see:

Budget and Appropriations
Policy Analyses and Research