It's Baa-aack: What to Expect from the Budget Season this Year
by Scott Klinger, 3/17/2015
The budget season starts in the U.S. Congress this week. The Republican majority in the House will go first – releasing its budget late this afternoon. The Senate Republican majority will unveil its budget on Wednesday. Each chamber’s budget committee will review and approve their respective budgets in a mark-up session the day after each is released.
Next week, the budget resolutions move to the House and Senate floor. Next Tuesday, we expect the House to debate and vote on at least three alternative budgets – one from the Democrats on the House budget committee, and one each from the Congressional Black Caucus and the Congressional Progressive Caucus. There may also be an alternative budget released by House Republicans dissatisfied with the one put forth by the House leadership and the budget committee.
The Senate is not expected to consider alternative budgets. The unique feature of the Senate budget debate is “vote-a-rama,” a free-for-all of rapid-fire amendments offered by members. Two years ago, more than 500 amendments were introduced and 101 were voted on during a marathon 13-hour voting frenzy.
The Budget Resolution provides vision and aspirations – it is not a law
The budget resolutions in each chamber of Congress frame the appropriations process that will take place later in the year. The specific money approved for particular programs will be determined during the appropriations process.
The budget resolution is best understood as an aspirational document. It contains both numbers and narrative. In order to understand the budget resolution, both must be considered. The numbers portion assigns dollar values to hundreds of budget categories, while the narrative provides hints about how programs might be changed.
What to watch for
We expect both the House and Senate resolutions to push for a balanced federal budget over the next 10 years. This will involve reducing federal spending by about $5.5 trillion by 2026. Both House and Senate budget leaders have signaled they believe they can make these cuts without raising taxes or cutting defense spending. We do not expect them to propose major cuts to Social Security.
That means $5.5 trillion of cuts will come out of a relatively small portion of the budget, covering entitlement programs serving low-income Americans and the non-defense discretionary part of the budget that funds everything from education to infrastructure to public protections.
Because programs like Supplemental Nutrition Assistance (food stamps) and Medicaid (health care for low-income Americans) are entitlements, funding rises and falls to meet needs. So in order to control costs, Republicans are expected to propose converting them from entitlement programs to block grants to states. It would then be up the states to establish rules outlining who gets to participate and to figure out how to ration food and health benefits when demand for public services outstrips available funding.
Both House and Senate Republicans have discussed their desire to use the budget process to repeal the Affordable Care Act, otherwise known as Obamacare. In the Senate, leadership is expected to use a special budget rule known as reconciliation to avoid the need to garner 60 votes to end a filibuster. If reconciliation is approved, the ACA can be repealed with just 51 Senate votes. Senate Republicans may also invoke budget reconciliation rules to address immigration reform and to make sweeping changes to Medicare (including partial privatization), Medicaid, and SNAP. Reconciliation doesn’t negate the president’s ability to veto the measure, and the Senate and House would still need to come up with 2/3 of the votes in order to override a White House veto of any part of the budget.
Big fights ahead
While the budget process in March promises to be contentious, the real fights will occur over the spring, summer, and into the fall, as the appropriations committees implement the headlines contained in the budget resolutions.
Expect the funding cuts to be concentrated toward the end of the 10-year budget window, so the public won’t feel much pain before the congressional and presidential elections in 2016. Spending levels for the next two years are likely to be similar to those currently in place. Expect a significant fight over whether to keep or relax the automatic budget cuts known as the sequester that were adopted as a part of the Budget Control Act of 2011.
There is a growing fault line within the Republican caucus between those whose first priority is to cut the budget deficit and others who are more interested in restoring defense spending to pre-sequester levels.
The White House and most Democrats in Congress have made it clear that they will not lift the ceiling on military expenditures unless the domestic spending parts of the budget are also relaxed. The White House has said it would veto any budget that did not maintain parity between defense and social spending limits.
The austerity mindset portends dark clouds
Even though public support for austerity economics is waning, the majority party appears poised to double down on these failed economic policies. Federal budget cutbacks have slowed the pace of the economic recovery and resulted in more anemic job growth than would have otherwise been expected.
The prospect of sharp cuts in federal spending after 2016 is bad news for the economy and the job market. The United States faces a series of unmet investment needs that put our economy at risk and threaten to make our businesses less competitive. The American Society of Civil Engineers tells us we need more than $3.6 trillion to maintain and modernize our deteriorating infrastructure over the next five years; America’s individuals and businesses lose an estimated $101 billion annually just from road delays pertaining to insufficient infrastructure. In the next two weeks, the vision that the current Congress has for the economy and the American people will become clearer. Stay tuned.
Image in teaser by flickr user Glyn Lowe