It’s “Budget Week” on Capitol Hill

House and Senate will vote on FY 2016 resolutions

Both the House and Senate are planning numerous budget votes this week as each chamber’s Fiscal Year (FY) 2016 budget resolution will be debated on the floor, and numerous amendments will be offered by the minority party and various caucuses.  

Recall that the budget is a non-binding resolution that does not go to the President for signature. The budget is, first, a statement of the spending priorities of the majority parties, and serves as a guideline for the appropriations committee as it divides available funds among the subcommittees.  

Do the House and Senate have to agree on a budget?  In many years, the House and Senate have not been able to hold a conference (reconciling two versions of a bill) to settle on one budget document between them.  A conference is possible this year since both chambers are controlled by the same political party.  But the resolutions developed by the Budget Committees in each chamber have significant differences. 

Scientists will want to know, first, how the budgets deal with research agencies, and there is no solid information to answer that question.  While the president’s budget was more detailed, and would provide $29.64 billion for the National Institutes of Health (2.1 percent increase over FY 2015), $6.3 billion for the National Science Foundation (5.2 percent increase) and $1.11 billion for research at the Department of Veterans Affairs (5.2 percent increase), the House and Senate budget resolutions don’t recommend specific funding levels.  

The President could propose those increases in part because his budget assumed an end to sequestration, and the House and Senate budgets don’t make the same assumption. The proposed cuts in both congressional chambers go beyond sequestration caps, which are budget caps signed into law in 2011 that reduced planned federal funding for subsequent years. But because of the Ryan-Murray budget deal in 2014, for the past two fiscal years Congress has passed spending above the sequestration caps, and President Obama’s 2016 budget request seeks spending far above them.

The FY 2016 Senate resolution would balance the budget in 10 years and cut spending by $5.1 trillion over the next decade, while the House resolution brings the budget to balance in nine years and cuts $5.5 trillion in spending. Both resolutions would repeal the Affordable Care Act, shift more responsibility to the states for Medicaid and food stamps, and make changes to Medicare to achieve the reduced levels of spending.  

The resolutions differ on how they manage the defense side of the ledger. Many lawmakers in both chambers have said the sequestration caps, agreed to in 2011 by both parties, restrain military spending too severely given security threats from abroad.  The House resolution would “plus-up” defense spending using an off-the-books measure, the Overseas Contingency Operations account (OCO), which includes funds for overseas conflicts and which isn’t subject to the budget caps. While the President’s budget asked for $58 billion in OCO funding for the Department of Defense, the House budget provides $94 billion. Around $20 billion of that funding must be offset through a deficit-neutral reserve fund. That means in essence that a revenue offset must be identified for $20 billion so that amount is not added to the deficit. 

The Senate resolution implements a rule limiting OCO funding to the $58 billion president’s request.  To provide more funding for defense, the Senate resolution creates a deficit-neutral reserve fund that would allow the Budget Committee Chairman to permit particular committees to spend at a level above the budget limits during the appropriations process. The Senate budget also allows increased domestic spending through a reserve fund, which may make possible negotiations with Democrats who will insist that parity be observed between domestic and defense increases. 

Parity is not observed in either of the two budget resolutions.  The House budget would cut nondefense discretionary spending by $33 billion (6.7 percent) in FY 2017 and by another $8 billion (1.7 percent) in FY 2018. The budget plan then calls for a roughly 1.3 percent yearly increase in nondefense spending until FY 2025. The Senate resolution also cuts funding below the sequestration levels in the years after 2016 for non-defense discretionary programs — the part of the budget that funds basic scientific and medical research, education, job training, early intervention programs for children, and transportation, all of which are important to increasing opportunity, raising productivity, and boosting long-term economic growth.

Remember that the budgets are an indicator for spending, but there are many more steps in the process to come.  There is still time for the House and Senate to set in motion negotiations on caps and revenue that would change the funding scenario. A “grand bargain” seems unlikely.  But still, the Ryan-Murray budget agreement was relatively modest, and especially given the pressure for increased defense spending, an agreement of similar size that gives some relief to non-defense programs like research is not out of the question.