April 6, 2011

What’s the purpose of a budget resolution?:  The congressional budget process begins after the president releases his proposal and is focused on establishing a concurrent budget resolution. The budget resolution’s main purpose is to develop a framework for Congress to consider revenue, spending and other budgetary considerations including an overall spending limit. In both the House and the Senate, the budget committee is responsible for marking up and reporting the budget resolution, and once passed it will have the same rules for floor consideration. The Congressional Budget and Impoundment Control Act of 1974, which established the budget process to be taken during the course of the year, affirms that the final adoption of the budget resolution be completed by April 15, although this deadline is often missed. While the budget resolution is signed by the president, the revenue and spending amounts designated make the basis for enforcement of budget policies through a point of order. The budget resolution provides aggregate budget levels, discretionary spending limits and allocations for each appropriations subcommittee. While these levels are viewed as ceilings, they may be adjusted due to legislative changes.

CONTENTS (from legislative language in House Joint Resolution 1, sponsored by Wisconsin Representative Paul Ryan, chairman, U.S. House Budget Committee)
(1) Would establish a reserve fund* to  make budgetary adjustments from legislation repealing the 2010 federal health care reform laws (Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010).
(2) Would establish a deficit-neutral reserve fund for any legislation reported by the House Ways and Means Committee (tax, trade, human services, Medicare) that does not increase the deficit for FY 2012-FY2021.
(3) Would establish a reserve fund for legislation amending or replacing the Medicare physician reimbursement system, if the legislation does not increase the deficit for FY 2012-FY2021.
(4) Would establish a reserve fund for changing or reauthorizing the Secure Rural Schools and Community Self-Determination Act or for changing the Payments in Lieu of Taxes Act, if that legislation does not increase the deficit for FY2012-FY2021, or for FY2012 only, or for FY2012-2016.
(5) Would allow the Chairman of the House Budget Committee to make adjustments to the concurrent resolution to accommodate measures that extend the 2001 and 2003 tax cuts, the alternative minimum tax exemption and the 2010 estate and gift tax provisions. The same authority would be granted for trade agreements and legislation repealing the tax provisions of federal health care reform. This authority would not be granted for legislation increasing the deficit for FY2012-2021. It would not be granted for legislation increasing revenues for FY2012-2021 (unless such increase results from a repeal of the individual mandate and health insurance subsidies in federal health care reform law).
(6) Would rule out of order any legislation increasing mandatory spending above $5 billion for any one of four consecutive 10-year periods.
(7) Assumes Medicare reform that preserves benefits for those in or near retirement, establishes a “premium support payment and selection of guaranteed health coverage options” for “future generations, and provides additional assistance for lower-income beneficiaries.
(8) Assumes reform of an actuarial Social Security balance trigger if an annual Trustee’s report determines that Social Security is in deficit.
(9) Disallows use of a conference report on the budget resolution for increasing the national debt limit.
(10) Recommends establishment of enforceable statutory caps on discretionary spending established in the FY 2012 budget resolution and carrying through FY 2021.
(11)  Recommends enactment of a budget enforcement mechanism requiring automatic across-the-board spending reductions if there is an increase in the national debt limit.

*Reserve funds are essentially contingency authorizations for the Budget Committee. If legislation addressing the purposes of a designated reserve fund is enacted, the Budget Committee may revise spending allocations and spending ceilings to reflect the spending or savings impact of the legislation. Reserve funds are also used as messag devices to help advance legislation that relates to the purposes of a specific reserve fund.

ASSUMPTIONS (from “The Path to Prosperity”, a narrative document accompanying the budget resolution authored by Wisconsin Representative Paul Ryan, Chairman, U.S. House Budget Committee)

(1) Elimination and/or consolidation of duplicative programs, with job training the most-often cited example.
(2) Continuation of the ban on earmarks.
(3) Reduction of non-security discretionary spending (home to most state-federal discretionary grant programs) to below FY 2008 levels and imposition of a capped five-year freeze.
(4) Reduction of the deficit by $4.4 trillion ($6.2 trillion in spending reductions modified by extension of various existing tax provisions costing $1.8 trillion) over 10 years.
(5) Reduction of a net $78 billion in defense spending over 10 years.
(6) Repeal of the 2010 federal health care reform laws.
(7) Converting Medicaid into a block grant to states.
(8) Requiring all mandatory programs (including all state-federal mandatory and entitlement programs) to be subject to the annual appropriations process rather than remain on automatic spending authority pilot.
(9) Removal of impediments to domestic energy production.
(10) Consolidation of federal tax brackets, lowering of federal individual income tax rates and establishment of a top individual income tax rate of 25%.
(11) Lowering of the federal corporate income tax rate from 35% to 25%. Eliminate or modify deductions, credits and special carve-outs that result in no federal tax liability.
(12) Reduce the federal work force by 10 percent over three years; freeze federal employee salaries for five years; reform employee benefit packages; require federal employees to pay for half of the defined retirement benefit.
(13) Increase anti-fraud accounts for the Medicare, Medicaid, Unemployment Insurance, Supplemental Security Income and Disability Insurance programs.
(14) Reduce the federal auto fleet by 20 percent (Defense, Postal Service exempted).
(15) Streamline process for disposal and sale of federal property.
(16) Prohibit general fund transfers to the Highway Trust Fund; consolidate transportation programs that the Government Accountability Office has identified as duplicative.
(17) Eliminate financial reform provisions that allow for future bailouts.
(18) Privatize the activities of Fannie Mae and Freddie Mac.
(19) Restructure farm programs and their subsidies; reform crop insurance.
(20) Convert the Supplemental Nutrition Assistance Program (SNAP; food stamps) into a block grant. Make aid contingent on work or job training.
(21) Reduce Pell Grants to their pre-ARRA levels and ensure aid is targeted to the needy.
(22) Restore funding for the District of Columbia Opportunity Scholarship Program.
(23) Preempt state medical malpractice and tort authority and establish federal non-economic damage caps for medical malpractice suits.
(24) Keep overall federal revenue at 18-19 percent of the Gross Domestic Product.
(25) Bring federal spending down to below 20 percent of GDP by 2015, below 15 percent by 2050.
(26) Achieve primary budget balance (spending less interest payments) by 2015.

The “Path to Prosperity” is available at:

For additional information:

Michael Bird
NCSL Budgets and Revenue Committee

Jeff Hurley
NCSL Budgets and Revenue Committee