CHN: House, Senate Unable To Agree On Budget Before Recess

The failure of Congress to agree on a final budget conference for fiscal year 2005 before it left for spring recess is a victory for advocates for low-income families. The delay presents an opportunity to target Senators and Representatives to tell them the House and Senate budget resolutions are a bad deal for low- and moderate-income Americans. Both the House and the Senate will be back in session during the week of April 19.The Senate passed a budget resolution on Friday, March 12 (S Con Res 95), while the House passed its resolution on Thursday, March 25 (H Con Res 393). Although there are similarities between the two resolutions, the Senate version contains important principles that must be preserved in conference.

One key difference between the two resolutions is the “pay-as-you-go” rule included in the Senate version. Senator Russ Feingold (D-WI) introduced the pay-as-you-go amendment, which is a fiscal discipline measure that requires Congress to pay for new legislation as it passes it. Under the Senate pay-as-you-go rule, new spending on entitlements (such as Medicaid or Social Security) and any new tax cuts would have to be paid for (offset) by cuts elsewhere in the budget or by raising revenues. The rule would help ensure adequate federal resources are available in the future for critical needs.

The House budget resolution does not include a pay-as-you-go rule, but a separate bill was approved by the House Budget Committee (HR 3973) that is similar to the President’s alternative plan to make Congress pay only for new spending as a way of reducing the burgeoning deficit, with no such requirements for new tax cuts. This approach is far from even-handed, by allowing additional tax cuts with no apparent “cost,” while placing much of the burden for deficit reduction on services like Medicaid or other entitlements of vital importance to low-income Americans.

Entitlement Cuts
The House-passed budget resolution requires several committees to find “savings” of about $13 billion from entitlement programs (programs that are not appropriated each year). The directive to the Energy and Commerce committee would effectively cut $2.2 billion from Medicaid. The Senate rejected entitlement cuts when it agreed to an amendment sponsored by Senator Max Baucus (D-MT).

Discretionary Cuts
Both the House and Senate budget resolution includes deep cuts in discretionary spending, or spending that must be appropriated by Congress each year. The House version cuts domestic discretionary spending by $120 billion over the next five years; the Senate cuts about $100 billion over the same time frame. The cuts would affect a wide array of services, such as child care, Head Start, job training, juvenile justice, and housing programs, as well as certain child welfare, community health and nutrtion programs.

Tax Cuts
Despite deep cuts in discretionary and entitlement spending, the House budget resolution still finds room for $138 billion in new tax cuts over the next five years, enough to make permanent all the tax cuts of 2001 and 2003, which primarily benefit the wealthiest Americans. The Senate resolution includes $80 billion in tax cuts over the next five years (expected to cover the increased child tax credit, marriage penalty relief, and the expanded 10 percent tax bracket due to expire at the end of 2004, as well as extending the estate tax reduction another year). Merely by making permanent the tax cuts of 2001 and 2003, the richest one percent of taxpayers will receive tax cuts averaging more than $60,500 in the coming year.

What You Can Do
Advocates are urged to call their Senators and Representative to tell them to reject the budget conference agreement which fails the most vulnerable Americans. Alert your friends and networks to make calls and send letters. Congress must respond to our demands for a budget that is fair and balanced and addresses human needs. To speak with your members of Congress, call the U.S. Capitol Switchboard at 202-224-3121.

In particular, it is important to mobilize your networks and members in order to reach two sets of Republican Senators: those who supported the Fiengold amendment on the pay-as-you-go rule and those who supported the Baucus amendment to strike entitlement cuts. Thank them for their vote and ask them to hold firm to their position!

Republican Senators who voted for the Feingold pay-as-you-go rule: Lincoln Chafee (RI), John McCain (AZ), Susan Collins (ME), and Olympia Snowe (ME). (All Democrats except Zell Miller (GA) supported this amendment.)

Republican Senators who voted for the Baucus amendment to strike entitlement cuts: Chafee, Collins, Norm Coleman (MN), Gordon Smith (OR), Arlen Specter (PA), Kit Bond (MO), and Mike DeWine (OH). (All Democrats except Zell Miller (GA) voted yes.)

Talking points for speaking with your Members of Congress:
“Please oppose the budget conference report if it does not meet these principles:
* The final agreement should not include cuts to Medicaid or other entitlement programs. Cuts to entitlements – especially Medicaid – will put the squeeze on state budgets already in crisis. The final budget agreement should retain the Senate’s approach.
* The final agreement must require that new tax cuts and new spending be paid for as in the Senate pay-as-you-go rule.
* The final agreement should not include deep cuts in discretionary spending. The House budget cuts $120 billion in discretionary spending over five years; the Senate cuts $100 billion and imposes two year caps. The caps should not be extended to additional years.
* The final agreement should not include huge new tax cuts that are not paid for.

For More Information
CBPP: Certain Compromises on Pay-as-You-Go Rule Would Gut the Rule
CBPP: House Budget Plan Would Swell Deficits
CBPP: Budget Priorities Under Senate Plan

Budget and Appropriations