Ryan budget would lower spending cap, exempt defense from automatic cuts

Full House to vote March 29.

On March 21, the House Budget Committee approved the FY 2013 budget plan drafted by Committee Chair Paul Ryan (R-WI). The Ryan budget proposal (now the House Budget Committee resolution) sets the spending cap for overall discretionary spending at $1.028 trillion, $19 billion below the $1.047 trillion spending cap enacted in the Budget Control Act (BCA). The proposal also replaces the automatic cut required under the Budget Control Act (BCA) with budget reconciliation instructions directing six House committees to identify necessary savings by April 27 (see below for an explanation).

About half of the budget’s $2.5 trillion in 10-year savings would come from health care programs, including health care reform programs. Food stamp assistance would be cut by an estimated $133.5 billion, and an additional $94 billion would come from the Pell Grants program for low-income college students. The plan extends the Bush-era tax cuts — including lower rates for capital gains — but would phase out current tax benefits for the working poor.

The proposal passed in the Committee by 19-18. The 16 Democrats voted no, joined by two Republicans, Reps. Tim Huelskamp (R-KA) and Justin Amash (R-MI) who felt the Committee bill didn’t cut deeply enough.

Meanwhile in the Senate, Budget Committee Chair Kent Conrad (D-ND) and Senate Appropriations Committee Chair Daniel Inouye (D-HI) urged House leaders to abide by the BCA cap. Chairman Conrad filed a “deeming resolution” which formalized the $1.047 trillion spending limit in the Senate. Formally adopting the BCA cap allows the Senate appropriators to determine “302(b)” allocations, or top-line funding levels for spending bills in each of the 12 appropriations subcommittees.

On March 27, House Democrats released an alternative budget proposal that would set overall spending for Fiscal Year 2013 at the BCA level. In that resolution, Budget Committee Minority Representative Chris Van Hollen (D-MD) proposes to make permanent the Bush-era tax cuts for the middle class but to generate $1 trillion in new revenue by ending tax cuts for millionaires, closing tax loopholes and establishing “the Buffett Rule,” designed to ensure millionaires do not pay lower tax rates than the middle class.

Watch for additional budget alternatives to be offered in the House for a vote, including one from the Republican Study Committee that would enact deeper spending cuts than the Budget Committee resolution. The Budget Committee budget will almost certainly be the only version with enough votes to pass the House. Remember though: even if a proposal is included in the House budget, that doesn’t mean it’s a ‘law.’ The budget is a blueprint that does not carry the force of law itself, but it lays out overall priorities and makes assumptions about how to achieve them. An exception is the Budget Control Act which was passed as a law.

The House Budget Plan for Fiscal Year 2013 uses the mechanism of budget reconciliation to enact the cuts that must be made this year under the BCA. The House resolution instructs authorizing committees to find savings in the programs under their jurisdictions. Each marks up its own bill, which is then combined with other committees’ bills and “reconciled” in a single resolution. This bill’s target is to reduce deficits by $261 billion over the coming decade, and by $18 billion next year.

It goes without saying that 2012 is an election year, and that budgets are political documents. Both parties’ budgets may be characterized as ‘aspirational.’ But their importance for setting the terms of the debate this year between chambers and parties cannot be overestimated.