CHN: House Approves Fiscal Year 2005 Budget Resolution

On Thursday, March 25 the House of Representatives approved a $2.4 trillion fiscal year 2005 budget resolution (H Con Res 393) by a vote of 215 – 212. All Democrats and 10 Republicans (Michael Castle (DE), John Duncan (TN), Virgil Goode (VA), Joel Hefley (CO), John Hostettler (IN), Walter Jones (NC), Ron Paul (TX), Rick Renzi (AZ), Christopher Shays (CT), and Christopher Smith (NJ)) voted against the Republican-sponsored budget resolution. By promising to move a subsequent bill to make changes to the budget process, Republican leadership was able to persuade several reluctant Republicans concerned about the deficit to vote in favor of the resolution.
The House budget resolution is a very bad deal for low-income families and vulnerable people. Over the next five years, the resolution would cut $120 billion below current levels from domestic discretionary programs (those that must be appropriated each year and are not defense or homeland security-related.) Thirteen out of fifteen categories of domestic spending will be cut, including deep cuts in housing, some child care and child welfare programs, veteran’s medical care and other programs.

Even while cutting deeply into spending, the resolution makes room for $138 billion in new unpaid-for tax cuts over the next five years — enough to make permanent all of the tax cuts passed in 2001 and 2003, including popular provisions set to expire at the end of this year. However, the Center on Budget and Policy Priorities estimates that the cost of making these cuts permanent will explode around 2011 and would cost closer to $1.2 trillion over ten years.

Even though budget crises have forced states to cut Medicaid benefits to more than one million people last year, the House budget directs the Energy and Commerce Committee to cut $2.2 billion from programs in its jurisdiction – cuts that will presumably come from Medicaid. Under the resolution, the Committee on Ways and Means must find $8.3 billion in savings over the next five years by cutting entitlement programs and/or closing tax loopholes. Three other committees must find savings by targeting “waste, fraud, and abuse” in programs under their jurisdiction.

Next Steps
Negotiations between the House and Senate will start immediately, although it is unlikely a conference agreement will be reached before the House begins a two week recess on April 2. Despite similarities between the House and Senate resolutions, discussions could be snagged by a key difference on budget enforcement provisions.

The Senate adopted a “pay-as-you-go” amendment offered by Senator Russ Feingold (D-WI) that requires Congress to pay for any new entitlement spending or any new tax cuts with cuts or tax increases. These pay-as-you-go rules are similar to ones in place in the early 1990s as part of a bigger deficit reduction scheme. The Senate approach is in stark contrast to President Bush’s proposal to apply pay as you go rules only to new spending – not new tax cuts. The House bill does not include any “pay-as-you-go” rules, but several House members embrace the President’s approach, which would give Congress deep incentives to pass more tax cuts and disincentives to increase spending for programs that serve low-income families. To appease Republican members concerned about the deficit, House leaders promised a vote before Memorial Day on a budget enforcement bill (HR 3973) that would enact one-sided pay-as-you-go budget rules.

While House and Senate negotiators are making critical decisions about the final budget resolution, advocates for low-income families should call their Senators and insist that they oppose any conference bill if it includes tax cuts that are not paid for, harsh cuts to Medicaid and deep cuts in discretionary spending. Senators should reject a conference bill that does not retain the balanced Senate pay-as-you-go rules that apply to both new tax cuts and new spending.

For More Information
CBPP: House Budget Would Swell Deficits
CBPP: House Budget Committee’s Discretionary Caps Represent Unsound Policy
CBPP: House Budget Pay-As-You-Go Proposal Exempts All Tax Cuts
CHN March 12 Human Needs Report: Senate Approves FY 2005 Budget Resolution

Budget and Appropriations