The Latest on House and Senate Budget Resolutions

With one party control in Washington the President and Congress are pursuing the use of Budget Reconciliation to enact the President’s top legislative priorities because it allows a simple majority vote in the Senate rather than 60 votes to move a bill to the Floor. 

There are a lot of steps in the process that must align but it is deemed the easiest way to enact controversial and often complex legislation without bipartisan support. The biggest step is that the House and Senate must agree on the parameters of the process up front. Right now, the House and Senate are heading down different paths so it is unclear where the compromise will fall. Both chambers must pass an identically worded Budget Resolution to unlock the budget reconciliation process which allows for more flexibility on the voting side but also limits what can be included in the final legislation. 

Because of the significant differences between the two chambers (see House & Senate actions below) the current plan to keep the ball rolling (i.e., get something done before they leave for Passover/Easter Recess April 10th) is to have each chamber write different fiscal directions to their respective committees. Once the identical Budget Resolution is passed in each chamber it will allow the appropriate committees of jurisdiction to draft legislation necessary to address the tax and spending cuts so directed in the Budget Resolution.  Later in the process, both chambers will come together to iron out differences. Enacting laws under Budget Reconciliation, while providing flexibility, can take many months to accomplish.  

House Actions

On February 23rd the House passed their version of the Budget Resolution. Major priorities include:

• Reduce spending, or raise new revenues (i.e., reduce the deficit) in agriculture programs, including nutrition assistance by no less than $230 billion over 10 years,
• Reduce spending on education and workforce programs by no less than $330 billion over 10 years,
• Reduce spending on Medicaid and other health programs, and or commerce programs by no less than $880 billion over 10 years,
• Reduce spending by no less than $50 billion on government administration and operations over 10 years,
• Increase defense spending (i.e., increase the deficit) by no more than $100 billion over 10 years,
• Increase spending on homeland security programs by no more than $90 billion over 10 years,
• Increase spending in Judiciary related programs (immigration and deportation) by no more than $110 billion over 10 years,
• Increase the deficit by no more than $4.5 trillion over 10 years on tax cuts, and
• The resolution was amended to require a reduction in the size of tax cuts to no more than $4 trillion over 10 years if spending reductions are not achieved.

The House Budget Resolution also increases the federal debt limit by $4 trillion.

Senate Actions

The Senate, on February 20th, adopted their Budget Resolution which only covers defense, border and energy security with a goal of passing a second budget resolution later to address tax and spending cuts. The first Senate Resolution would increase the deficit by $523 billion over 10 years on higher spending for defense ($150B), homeland security ($175B) and energy programs. 

The first Senate budget resolution does not provide for any increase in the federal debt limit.  

Next Steps

As described above, House leaders are more concerned about reducing deficits than making them bigger so some level of spending cuts and other changes will likely be added to reduce the cost of the overall package. But neither chamber has put forth a budget resolution that would reduce the deficit. Either way, with the federal debt limit quickly approaching they will have to agree to raising the federal debt limit. Under budget reconciliation the debt limit must be a specified dollar amount – they cannot suspend or repeal the limit. As of late March, the Senate is finally coming around to the idea of raising the debt limit in reconciliation, but it still faces a lot of opposition in that chamber. 

The expectation is that Medicaid, nutrition, social services, Affordable Care Act subsidies, green energy subsidies and tax credits, education, labor, and possibly Medicare programs will remain as primary targets for spending cuts/reforms as proposed in the House budget resolution. The goal by many in congress is to reduce federal spending by as much as $2.5 trillion over the next 10 years to help offset some of the costs of renewing expiring tax cuts from 2017, adding new tax cuts, and increasing spending for the President’s top priorities.

New York State and its residents have a high reliance on several of the programs targeted for cuts especially Medicaid, ACA health insurance subsidies, SNAP benefits and other social services programs.  

In our next update, we will break down some of the primary impacts of key proposals on New York State residents and county government.