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House Republicans Pass 2012 Budget Resolution

April 18, 2011 - by Donny Shaw

Last Friday before Congress left for their two-week recess, the House passed a Republican budget resolution for FY2012 that proposes to reduce the deficit while lowering taxes by cutting social program funding across the board and fundamentally alter entitlements like Medicare and Medicaid. While the Republicans’ budget is not going to directly effect how Congress allocates federal funds over the next couple years, it will be hugely influential as the Democrats in the Senate and the White House work towards a compromise that can pass Congress and keep the government operating beyond the 2011 fiscal year.

According to an anonymous Democratic Senate aide, Senate Democrats are considering using the Republican House budget as a “framework” for their own budget resolution. So let’s take a quick look at what’s in it:

  • Taxes — prevents the 2003 Bush tax cuts and the tax cuts signed into law by President Obama last year from sunsetting in 2012 as they would under current law. Reduces the top tax bracket for individuals and corporations from 35% to 25%
  • Medicare — replaces the current direct payment system with vouchers that seniors could use to purchase private insurance on the individual market. The vouchers would not be indexed to increases in health care costs, so analysts expect some of the costs to be transferred, gradually, from the government to individuals. People under 55 years of age would be grandfathered into the current system.
  • Medicaid — replaces the current entitlement arrangement with federal block grants that would be given to the states to set their own rules for administering the program. Over 10 years, the block grant program would cut $770 billion from Medicaid spending below current projections. Notably, the expansion of Medicaid eligibility that was included in last year’s health care reform law would be repealed.
  • Discretionary Spending — budget authority for nearly all areas of discretionary government spending would be reduced over a ten year period. Non-security spending would see a total cut of 32% over the ten-year period, while Defense and other security-related spending would see an increase of 11%. The largest cuts would be in the areas of transportation infrastructure, environmental protections and community development.
  • Social Security — untouched, but calls on Congress and the President to work on a bipartisan basis to reform Social Security in order to ensure its long-term solvency.

Procedurally, here’s how things work from here. The Senate now has to put together and pass their own FY2012 budget resolution, which they usually do with a floor “vote-a-rama,” holding snap votes on dozens of amendments with very little debate on each. Once the Senate resolution is finalized and passed, the House and Senate appoint conferees to convene a conference committee and resolves the discrepancies between the two resolutions. This is the only time that the two chambers — and in this session the two parties — come together in an official context to discuss the overall budgeting framework for the year and to set broad national priorities. After an agreement is reached in the committee, the budget conference report is sent back to the Senate and House for final passage. It does not have to be signed by the President since it is a concurrent resolution that does not have the force of law, but binds Congress internally.

The subcommittees of the Appropriations Committees then begin drawing up bills to actually spend money according to the budget’s parameters. Those appropriations bill — there are 13 of them — then have to be passed by the Senate and House in identical form and signed into law. Any agencies that are left without spending authority under the appropriations process by the time the new fiscal year arrives will be funded under a continuing resolution, unless, of course, there is a disagreement that leads to a shutdown.

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