CHN: Congress Passes FY 2008 Budget Resolution

May 18, 2007

The House and Senate agreed to a Budget Resolution on May 17 that included funding for domestic appropriations nearly at the higher level provided in the House budget, a victory for human needs advocates.  The final Budget Resolution included $417.6 billion for all appropriations except defense and international affairs.  That was only slightly less than the House version, and approximately $7 billion more than the Senate’s.    The cost of maintaining current levels of services next year would be $405.5 billion, so the budget allows Congress to provide a modest increase beyond inflation for domestic programs.  The President’s budget had cut domestic spending below the amount needed just to keep up with inflation.

Funding allows rebuilding to begin.  Advocates had worked hard to persuade Congress to allow some actual improvements in services over this year’s levels.  Inadequate funding over the past years has caused services to decline, and the increase provided in the FY 2008 Budget Resolution does not undo all that damage.  According to the Center on Budget and Policy Priorities, after adjusting for inflation and population growth, funding in FY 2008 is actually 6 percent less than the level in FY 2004 for all appropriations except defense.  Still, the new budget does begin the process of rebuilding, so more people will be served, or served better, in FY 2008 than in FY 2007.

Appropriations (aka “discretionary” spending) are up above inflation.  The Budget Resolution is a statement of Congress’ priorities, but it leaves most of the hard decisions for later.  Now that total funding for appropriations has been set, it is the job of the House and Senate Appropriations Committees to distribute allocations to each of their subcommittees, who then do the work of providing specific funding levels for all of the annually appropriated programs.  Chairman Obey (D-WI) has already provided his subcommittees with their allocations.  The House hopes to complete all its appropriations bills except defense before the July 4th recess.   The Senate must also do its appropriating and the differences between House and Senate must be resolved prior to the end of the fiscal year (September 30).  Further complicating the process, the Bush Administration has threatened to veto appropriations bills that exceed its budget’s below-inflation levels.  [link to OMB press release: http://www.whitehouse.gov/omb/pubpress/2007/051607_budget_conference.pdf ]  Since Congress has accepted the President’s defense spending, this would mean serious cuts in domestic priorities such as education, housing, energy assistance, job training, and other social and community services.  Congress explicitly rejected these cuts in its budget language.

Funding allowed for improvements in nutrition, children’s health, and child care – now all that’s needed is the way to pay for it.  The Budget Resolution also left unresolved all of the hard decisions about programs such as the State Children’s Health Insurance Program (SCHIP) and Food Stamps.  These programs do not need annual appropriations, but must be reauthorized this year.  The budget provides a $50 billion 5-year deficit neutral reserve fund to pay for maintaining and improving SCHIP.  The reserve funds in the House and Senate differed, and the conference committee did not resolve those differences. Instead, they allowed each body to come up with funding according to its own guidelines, with the details to be worked out later.  SCHIP does not get this additional funding unless Congress finds a way to pay for it, either from spending cuts, increased revenues, or some combination of both.

Similarly, the budget includes a $20 billion reserve fund over 6 years for new funding in the farm bill.  In addition to farm subsidies and other services, the bill funds conservation, research, and nutrition programs including Food Stamps.  The final budget resolution took the House’s $20 billion for the reserve fund, rather than the Senate’s $15 billion version, but here too House and Senate each maintained its own language, leaving the all-important decisions about where the money comes from and what it should be spent on for later.  Anti-hunger advocates are seeking increases in Food Stamp benefits (now only about $1 per meal, with the minimum monthly benefit stuck at $10 for the past three decades) and other improvements.

The final budget included the Senate’s $5 billion reserve fund for increased child care expenditures (the House did not have this provision).  There were quite a number of other reserve funds, for such services as Medicaid for HIV-positive patients, health improvements, and immigration reform.  All of the reserve funds are deficit neutral; that is, the funds will not be spent unless Congress comes up with a way to pay the cost, either by finding more revenues or cutting other expenditures.

Both tax cuts and entitlement spending must be paid for. The Budget Resolution requires that all these worthy expansions are paid for as part of its commitment to “pay-as-you-go.”  With language affirming that Congress will seek statutory language to give it more force, the “pay-go” rules insist that neither tax cuts nor non-discretionary spending increases deepen the deficit.  The Senate was allowed to cut itself some slack in paying for tax cuts.  The budget retained Senate provisions allowing it to “pay for” tax cuts with a projected 2012 surplus.  The House will not approve new or extended tax cuts unless it finds new revenue sources (or spending cuts) to replace the lost funding caused by the tax cuts.  Here too, the different approaches of the two bodies will have to be resolved – but that’s for another day.

Budget language signals Congressional support for vital services.  The budget also contains Sense of the Congress provisions that signal congressional good intentions.  Advocates were pleased to see language recognizing the ongoing need to respond to the problems wrought by Hurricanes Katrina and Rita, to fight hunger, provide affordable health care coverage, and to restore funding for child support enforcement.  These provisions compel no direct action, but advocates will work hard to remind members of Congress that they should enact legislation and provide funding to convert intent into reality.

The Budget Resolution passed the House 214 to 209, with no Republicans voting for the budget and 13 Democrats voting against it.  The vote in the Senate was 52 to 40 in favor of the Resolution, with no Democrats opposed and two Republicans (Snowe and Collins of Maine) voting in favor.  Should the President carry out his veto threat on individual appropriations bills, advocates will have to seek the support of more Republicans in order to secure the two-thirds vote needed to override a Presidential veto.



Categories: Budget and Appropriations