The Senate narrowly passed its fiscal year 2006 (FY06) budget resolution late on the night of March 17 by a vote of 51–49. Several amendments from Democrats that would have greatly improved the bill, including one that would have required both spending increases and tax cuts to be paid for, were narrowly rejected. But two amendments dealing with entitlement and discretionary spending, which did pass, could cause irreconcilable differences between House and Senate versions. The Senate version of the budget resolution would allow for $134 billion in additional tax cuts to be protected under “fast track” non-filibuster procedures, would cut $17 billion from entitlement spending over the next five years and cap discretionary spending for FY06 at $848.4 billion. Senate Budget Committee Debate The Senate Budget Committee spent all of Thursday, March 10 working on the budget resolution. The committee debated a variety of amendments throughout the day, ultimately adopting seven amendments before approving the budget resolution and sending it to the floor for debate by a 12–10 party-line vote. Six of the seven amendments adopted were “sense of the Senate” amendments, which are non-binding. In an attempt to implement the budgeting rules that helped reduce deficits in the 1990s, Sen. Russ Feingold (D-WI) offered an amendment to establish true or “classic” pay-as-you-go (PAYGO) rules that would require both mandatory spending increases and tax cuts to be revenue neutral. Feingold argued this rule is an integral part of any attempt to reduce federal deficits in a responsible and effective way. Most Republicans and the GOP leadership favor PAYGO rules to only apply to spending increases, not tax cuts. This “one-sided” PAYGO allows Congress to easily reduce spending levels while at the same time pass fiscally irresponsible tax cuts that are not paid for. The tax cuts envisioned in this resolution would negate any deficit reduction achieved by reducing spending and actually would increase deficits over the next ten years. Feingold’s amendment was defeated 10–12 but he expressed confidence after the markup that it would pass on the Senate floor with the help of a few moderate Republicans. This PAYGO issue emerged during last year’s debate on the budget resolution. With four Republicans supporting Feingold’s position and the House GOP supporting the one-sided PAYGO, no compromise could be reached — and no budget resolution was ever worked out. With Democrats losing Senate seats in the last election, it remained uncertain what would happen on the Senate floor. Also of note, Sen. Jon Corzine (D-NJ) offered a “sense of the Senate” amendment stating the Senate budget resolution should not achieve savings through cutting spending for the Medicaid program. This amendment was adopted in committee and paved the way for a binding amendment on the Senate floor to protect Medicaid funding. One item that ended up in the budget resolution was a provision affecting Senate procedures for considering unfunded mandates pushed by Sen. Lamar Alexander (R-TN). Under the Unfunded Mandates Reform Act, certain intergovernmental mandates can be challenged with a point of order which can be hurdled with a simple majority (51 votes). The Alexander provision would require a super majority (60 votes) to waive the point of order. This change could have profound implications for issues from minimum wage to environmental protections and from family and medical leave to civil rights protections. Senate Floor Debate The Senate began 50 hours of debate on the budget resolution on March 15. Both Budget Committee Chairman Judd Gregg (R-NH) and Ranking Member Kent Conrad (D-MT) pushed the chamber to finish the bill last week before Congress broke for its two-week spring recess. After much of the debate time was used up the next two mornings, Gregg and Conrad stacked the remaining amendments the afternoon of March 17 one after another. Voting progressed all day and late into the night with little debate before each amendment. There were a number of extremely close votes on the floor on key amendments throughout the week including another attempt at establishing true PAYGO rules, protecting Medicaid funding, removing harmful tax cut reconciliation instructions, reversing deep cuts to Amtrak, and removing language allowing drilling in the Artic National Wildlife Refuge. Unfortunately, amendments that would have helped to restore fiscal discipline and achieve equitable deficit reduction were not approved. Below is a list with short descriptions of key amendments voted on during the floor debate. (See a complete, detailed list of floor amendments.)

• Restoring funding to Amtrak: Sen. Robert Byrd’s (D-WV) amendment would have reversed proposed deep cuts to operating subsides for Amtrak at $1.4 billion. The amendment was defeated 46–52.
• Drilling in ANWR: Sen. Maria Cantwell offered an amendment to remove language from the budget resolution that assumes $2.5 billion in revenue from leasing drilling rights in the Artic National Wildlife Refuge (ANWR) in Alaska. The amendment fell two votes short and was defeated 49–51. Opening ANWR has been a goal of conservatives in Congress since the late 1980s and by including it in the budget resolution, Senate GOP leadership was able to get around the roadblock of the filibuster that had previously kept ANWR protected.
• Establishing true PAYGO: Sen. Feingold’s (D-WI) PAYGO amendment, cosponsored by Sen. Lincoln Chafee (R-RI), would have helped restore balanced deficit reduction measures to the budget process. While his amendment in committee was defeated on a straight party-line vote, four Republican senators had previously supported this amendment in last year’s budget resolution floor debate. That year a similar amendment was adopted by one vote and ultimately derailed the conference negotiation with the House. Despite the support of those same four Republicans and the added vote of Sen. George Voinovich (R-OH), the amendment failed 50–50.
• Protecting Medicaid: Sens. Gordon Smith (R-OR) and Jeff Bingaman (D-NM) offered an amendment to strike the reconciliation instructions in the budget to cut $15 billion from the Medicaid program. The skepticism of many senators about cuts to the Medicaid program and a very harsh backlash from governors around the nation has helped reduce support for these cuts. The amendment passed 52–48 and will be a major point of conflict with the House during the conference.
• Fighting Irresponsible Tax Cuts: Sen. Thomas Carper offered an amendment to remove from the budget reconciliation instructions that would protect $70 billion in unpaid-for tax cuts. Carper described this amendment during the debate as the last opportunity to impose restraint on unfettered, unpaid-for tax cuts that would add to deficits. The Senate once again refused to choose the fiscally responsible path as the amendment failed 49–50.
• Increasing Size of Tax Cuts: Sen. Jim Bunning (R-KY) offered an amendment to nearly double the target level for tax cuts in the budget resolution from $70.2 billion to $134 billion. This amendment would repeal the 1993 tax on Social Security benefits that was dedicated to the Medicare program. It passed 55-45. But a budget resolution cannot require the tax writing committee to include specific tax cuts in their reconciliation bill. Thus, the Bunning amendment has the effect of simply increasing the size of tax cuts that can be offered under reconciliation.
• Boosting Education Spending: Sen. Ted Kennedy (D-MA) surprised many late into the voting on amendments to the budget resolution when he secured support for an amendment to increase education funding by $5.4 billion. The amendment passed 51–49. The practical effect of the amendment is to raise the overall discretionary spending ceiling from $843 billion to $848.4 billion. It is thought this increase will create tensions with the House during the conference committee.

Potential Impediments to House/Senate Compromise The House and Senate passed very different budget outlines and it is expected to be very challenging to resolve those differences during the conference committee. In particular, both the Smith Medicaid amendment and Kennedy amendment to boost education spending could be particularly troublesome in brokering a compromise between the House and the Senate. Adoption of the Smith amendment slashes mandatory savings almost in half in the Senate version to $17 billion. The House has included $69 billion in savings in their bill. The increase in the discretionary spending cap due to Kennedy’s amendment may be difficult to accept for some conservative House Republicans who already expressed displeasure with the House level of spending. Earlier this month, a small group of conservative House Republicans threatened to withhold support for the budget resolution unless it cut spending more and included mechanisms to enforce those cuts. Lead by Rep. Mike Pence (R-IN), approximately 18–20 members of the Republican Study Committee threatened to vote against the House budget resolution because they felt GOP leaders were not serious enough about enforcing spending cuts. A last-minute compromise between House GOP leaders and the revolting Republicans was reached, but balancing the concerns of those Republicans and senators seeking a smaller level of cuts will be very difficult for the conference committee. It could cause a situation similar to last year where a budget resolution was never passed when the two chambers were unable to come to a compromise on PAYGO rules. If no compromise is reached and Congress is unable to pass a budget resolution this year, it will be a major setback for Republicans in Congress and President Bush as entitlement cuts and tax cuts could not be protected by fast-track reconciliation rules. Despite this possibility, the Senate budget resolution is irresponsible. It sets the stage for increased deficits and misleading budgeting for years to come. The Senate has failed to include proven deficit reduction rules that would greatly increase the effectiveness of the budget in reducing deficits in a responsible way. Instead, it opted for rules that would allow permanent extension of tax cuts causing serious damage to the budget and the fiscal stability of the United States.