When Congress returns from the recess, one of the first items on the agenda will be the annual Congressional budget resolution. The staff for the Budget and Appropriations Committees has been busy over the recess, and it is likely that we will see a flurry of budget related activities over the next few weeks.
Since the President’s budget was released on February 1st, the Budget and Appropriations Committees have been holding a series of hearings on various components of the President’s budget. Now that the speeches have been made and the questions have been asked, the focus will shift from hearings to the often time consuming process of crafting the budget resolution and the annual appropriations bills.
In the weeks ahead, we will be hearing and reading a lot about the President’s budget, the Congressional Budget resolution, and appropriations bills. These terms are frequently used together, though each of them has a distinct purpose and role to play in the budget process.
The President’s Budget is typically released on the first Monday in February. It is a detailed request for budget authority for every federal program ranging from the Department of Defense to the Environmental Protection Agency, to everything in between. The President’s budget is to Congress, but the specific recommendations included in it are not binding on Congress. Since Article I of the Constitution gives Congress the power to appropriate (often referred to as the “power of the purse”) Congress ultimately has the authority to determine the specific spending levels for each account. Depending on the President’s standing with Congress, his budget can either be very influential or promptly declared “dead on arrival” as Presidents have often experienced when Congress is not controlled by the same political party.
After the President’s budget is released and hearings are held, Congress begins the process of developing the Congressional Budget Resolution. The budget resolution is a nonbinding blueprint, which establishes funding levels to guide Congress as it considers spending and revenue legislation during the year. The budget resolution is a concurrent resolution that is passed by both the House and Senate. Since it is intended to guide Congress, it is not signed by the President and does not have the force of law. Shortly after Congress returns, the House and Senate Budget Committees will hold “mark-ups” which are business meetings that the committees use to consider the annual budget resolutions. The Budget Act requires action on the Budget Resolution to be completed by April 15th, though there is no penalty for missing the deadline and it is rarely met. (According to the Congressional Research Service, since the time table was established in 1974, Congress has met the budget resolution deadline only six times, most recently in 2003 for the FY 2004 Budget Resolution).
One component of the budget resolution that often receives a great deal of attention is the allocation to the House and Senate Appropriations Committees. This is referred to as a 302(a) allocation (the section of the Budget Act that created the allocation), and it sets the total amount of spending that will be available for the year’s appropriations bills. After receiving the 302(a) allocation, the Appropriations Committee allocates the funding to the twelve subcommittees using what are referred to as 302(b) allocations. The subcommittees then use these allocations to begin writing the twelve annual appropriations bills.
There are important distinctions to bear in mind between the budget resolution and appropriations bills. Unlike the budget resolution, an appropriations bill is binding legislation that is signed into law by the President. While the budget resolution includes an overall spending allocation to the Appropriations Committee, the Budget Committee does not decide the specifics of which accounts or agencies will receive the funding. Determining the details of how the allocation will be used is the responsibility of the Appropriations Committees (and other committees that receive allocations).
After the recess, one of the first priorities for the Appropriations Committee will likely be considering an FY 2010 supplemental spending bill. Supplemental spending bills are usually considered each spring and are intended to provide funding for wars, natural disasters, and other unforeseen events that could not be funded through the regular appropriations process. The President’s budget included a request for $47 billion in supplemental funding to fund war related activities, provide disaster relief, and other purposes. Since then, the President has also requested additional supplemental funding for purposes such as providing aid to Haiti after the earthquake.
Typically, supplemental funding includes an emergency designation which exempts it from the Appropriations Committee’s 302(a) allocation. In recent years, supplemental spending has increased significantly and Congress has often used the emergency designation as a budget gimmick to get around limits on discretionary spending. While many of the items included in supplementals clearly are emergencies, the bills also frequently include items that are not emergencies and are included for the sole purpose of evading the budget resolution’s spending limits.
After the FY 2010 supplemental is completed, the Appropriations Committees will then turn to passing the 12 annual appropriations bills for FY 2011. Traditionally, the bills are considered first in the House and then move to the Senate, where the Senate’s tradition of unlimited debate often results in a considerably longer process. The goal is for the budget and appropriations process to be completed in time for the President to sign all of the appropriations bills into law by October 1st (the start of the new fiscal year). Like most deadlines in the budget process, this is rarely met.
In recent years, complications and delays have become a routine part of the budget process. This is particularly a problem in election years when there is pressure for Congress to finish early to campaign and there are few incentives for a party that hopes to gain seats in November to cooperate. In some years, agreement on a budget resolution has been delayed (or never reached) and a procedural step called a deeming resolution has been used to consider appropriations bills without passing a final budget resolution. In other years, the budget resolutions have passed, but the appropriations process has continued long past the start of the fiscal year.
When the appropriations process is delayed, Congress often uses continuing resolutions (CR’s) and omnibus appropriations bills. A continuing resolution is a resolution passed by Congress to continue funding the government (usually at existing funding levels) when all of the appropriations bills have not been enacted prior to the start of the new fiscal year. Without a CR, the government would not be funded and would be forced to shut down. An omnibus appropriations bill is a single bill used to combine several appropriations bills that have not passed individually. During the FY 2010 process, several continuing resolutions were passed and the final appropriations bill was not signed into law until 12/19/09. The FY 2009 process was not completed until all of the appropriations bills were wrapped into an omnibus that was finally signed into law on 3/11/09, several months after the start of the new fiscal year.
As we move toward the busiest part of the budget and appropriations season, there are several key issues that The Concord Coalition will be following and a number of questions worth asking:
- Deficit Reduction. According to CBO’s March estimate, the President’s budget will reduce the deficit from 10.3% of GDP in 2010 to 4.3% of GDP in 2015. This is an ambitious goal, which The Concord Coalition supports. What will the deficit reduction target be in the budget resolution? Will it be credible and based on realistic assumptions? Will there be specific details on offsets that will be used to reach the deficit targets or will there be vague discussions of eliminating waste, fraud, and abuse or closing tax loopholes? Will there be as much detail about offsets as there is about spending priorities?
- Reconciliation. During last year’s budget resolution debate, the most controversial issue was whether or not to use the budget reconciliation process for proposals such as health care or climate change legislation. The reconciliation process is an optional procedure that was intended to allow Congress to consider deficit reduction legislation using an expedited process. It is particularly important in the Senate, where reconciliation bills cannot be filibustered and are protected by points of order which restrict the amendments that can be offered. Given that reconciliation was successfully used this year to pass health care and student loan legislation, there will be pressure to use the process for other proposals. There has already been some discussion of this issue in the media. Will the reconciliation process be used during FY 2011? If the answer is yes, will it be used for the intended purpose of deficit reduction or as a procedural shortcut to pass controversial proposals? If a reconciliation instruction is included, will it require significant deficit reduction or will it be a token amount that exists solely to trigger an expedited process? The Concord Coalition has long argued that the reconciliation process should only be used for the purpose it was intended—deficit reduction.
- Discretionary Spending. According to CBO’s March estimate, the President’s budget requested $1.3 trillion in discretionary budget authority for FY 2011, roughly the same as the FY 2010 level. While the budget proposes increases for security related spending at agencies such as the Department of Defense, Homeland Security, State, and Veterans Affairs, non-security discretionary spending is essentially frozen for three years. Maintaining these levels will likely require cuts to many popular programs. The Appropriations Committee will face a great deal of pressure to increase funding for these programs while the Budget Committees will face pressure to show that their blueprint will reduce deficits projected to be $6 trillion over ten years in CBO’s March baseline and almost $10 trillion over ten years in the President’s budget. The Concord Coalition supports the President’s proposed freeze on discretionary spending and will be watching closely to see if it is effectively implemented. What will the overall discretionary spending level be in the budget resolution and how will it compare to the President’s request? How will the Senate’s discretionary spending level compare to the level included in the House resolution? Will the Appropriations Committee adhere to the limits without resorting to budget gimmicks, such as designating large amounts of spending as emergency spending?
- Budget Enforcement. In addition to including discretionary spending limits, the budget resolution also includes other budget enforcement mechanisms designed to enforce the targets included in the resolution. These are primarily points of order that require a super majority to waive the Budget Act when they are raised. Will there be any new enforcement mechanisms included in this year’s budget resolution? Last year, The Concord Coalition raised concerns about the Administration’s proposal to include large exemptions (such as extensions of expiring tax cuts) from the statutory PAYGO proposal. Will the FY 2011 budget resolution include credible budget enforcement mechanisms or will there be new exemptions and loopholes
- Highway Bill. In March, the President signed legislation that extended the highway bill through the end of the year. In the months ahead, Congress is likely to be considering options for when the extension expires. Will there be a reauthorization of the highway bill and how will it be paid for? How will this be addressed in the budget resolution? Previous extensions have been paid for by simply transferring revenues from the Treasury into the Highway Trust Fund.