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Category: Budget

FY16 Budget Conference Committee Resolution

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Late yesterday, House and Senate conferees released SConRes 21 – the Budget Resolution for FY 2016, which is the conference agreement for the FY16 Budget. As a reminder, the Conferenced budget is not law. While it is not signed by the President, the measure does bind the House and Senate on policy and spending directives for the current fiscal year and into the future effectually carrying the force of law.

As a note, the work of Senator Patty Murray (D-WA) and Congressman Paul Ryan (R-MN) lead to the enactment of the Bipartisan Budget Act in December 2013. That law rolled back and replaced a portion of the sequester of discretionary spending required by the 2011 Budget Control Act for FY 2014 and FY 2015 and thereby enabled Congress to later enact omnibus appropriations packages for those two years.

The House is expected to consider the measure today, and it is expected to pass.

The measure’s FY 2016 discretionary spending adheres to the sequester-reduced defense and non-defense caps set by the Budget Control Act but also includes more funds for defense for FY 2016 through the uncapped OCO account and proposes to add extra funds to that account through FY 2021. It assumes an extra $245 billion for defense over 10 years while cutting non-defense spending below sequester-reduced levels by $496 billion.

It proposes $4.2 trillion in reductions to mandatory programs over 10 years, calls for a deficit-neutral overhaul of the tax code that lowers rates and assumes $124 billion in additional savings through “dynamic scoring” through Fair Value Accounting. This accounting measure is concerning because it changes fundamental assumptions of the costs of major programs like Pell and student loans. The measure’s FY 2016 discretionary spending adheres to the sequester-reduced defense and non-defense caps set by the Budget Control Act, but also includes more funds for defense for FY 2016 through the uncapped OCO account and proposes to add extra funds to that account through FY 2021. It assumes an extra $245 billion for defense over 10 years while cutting non-defense spending below sequester-reduced levels by $496 billion.

The agreement calls for a balanced budget by FY 2024, entirely by reducing spending $5.3 trillion over the next 10 years. Funding would be reduced though:

  •  instructions to House and Senate committees with oversight over the health care law to trigger the budget reconciliation process to try to repeal that law,
  • reducing spending on Medicare and Medicaid
  • changing programs such as food stamps.

For higher ed specifically:

  • The budget eliminates all mandatory Pell funding, assumes the maximum grant will be frozen at the current level and be fully funded on the discretionary side.  This purportedly would achieve a $84.6 billion in savings (Mandatory Pell funding is $73.9 billion over ten years, plus another $10.7 billion of mandatory spending already provided to support the discretionary grant.)
  • Eliminates in-school subsidies for undergraduate Stafford loans.  (Saving $34.8 billion.)
  • Eliminates public sector loan forgiveness. (Saving $10.5 billion.)
  • Eliminates expansion of Income Based Repayment programs. (Saving $16.3 billion.)

The Budget Committee’s switch to Fair Value accounting, would make student loans appear vastly more expensive to the federal government than they are – $223 billion more expensive from this year through 2024. Previously, student loans were seen as assets that made money for the federal government.

 

Budgets, Doc Fix, and Reid Retiring

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Breaking News: Senate Minority Leader Harry Reid will not run for reelection in 2016, he said in a video message released this morning.

Budget: GOP leaders in the House and Senate have achieved a major goal of approving their fiscal 2016 budget resolutions this week. The House approved their proposal on Wednesday with the Senate following suit in the early morning hours Friday. The two chambers now face the task of reconciling their two bills before the April 15th deadline, which would establish the framework for annual appropriations bills and set the direction for other legislation through the privileged reconciliation process. The last time lawmakers adopted a budget conference report was in 2009. Both budgets push more funding to the military while laying the groundwork to dismantle the health care overhaul.

Doc Fix: On Thursday the House approved a package to replace Medicare’s oft-criticized physician payment formula in an overwhelming bipartisan vote. The legislation (HR 2) passed 392-37, with 212 Republicans and 180 Democrats joining to support the deal negotiated by Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA).

If it clears the Senate, the bill will put an end to a cycle of 17 short-term “doc fix” bills that temporarily averted cuts to Medicare doctors dictated by the sustainable growth rate formula, or SGR. In addition to replacing the formula, the bill includes a two-year extension of funding for the Children’s Health Insurance Program (CHIP) and Teaching Health Centers for another two years, and would require wealthier seniors to pay more for their Medicare outpatient and prescription drug coverage to help offset the cost. The measure is only partially paid for, with the Congressional Budget Office projecting that it would increase the federal deficit by $141 billion over 11 years.

Unfortunately, the Senate left for a two-week recess early this morning without taking any action on the bill. Instead they have vowed to make it their first order of business when they return to the Capitol on April 13th.

The current one-year payment patch expires in four days and CMS has said it doesn’t have any plans to hold off on processing claims as it has done in the past to buy Congress time. But in an email to health professionals, the agency noted that electronic claims aren’t paid until at least 14 calendar days after they’re received, providing something of a cushion before doctors feel the scheduled cut. CMS also said it would provide an update by April 11 about whether Congress has acted.

Busy Budget Week in Congress

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It’s shaping up to be a busy week as Capitol Hill continues its efforts to finally pass a repeal and replacement of the much-maligned Sustainable Growth Rate (SGR) or “Doc Fix.” While a group of bipartisan legislative leaders released the broad outlines of a proposal last week, we are sure to see more detailed legislative language as early as today – and the official cost of the proposal. A vote could take place later this week, just a few days before the increased rates are to take effect (March 31st) if Congress takes no action.

In addition to impending action on the SGR proposal, Congressional leaders from both chambers continue to debate their respective budget resolutions. Unlike the potential SGR fix, the budget debate will be largely partisan and include attempts (again) to repeal the Affordable Care Act. The result of these budget negotiations could go a long way toward setting up their overall strategy — and the tone for what they accomplish — heading into the heart of the legislative year.

Congress will then recess for a two-week Easter break, returning to the Capitol on April 13th.

 

House Budget Bill — Update

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After a marathon markup that ran late into the evening, the House Republicans passed the bill out of the Budget Committee along a party line vote this morning. Late last night, the House Republican caucus seemed sharply divided between defense hawks and those committed to cutting spending.

According to an analysis from the Committee for Education Funding, the House Republicans’ proposed 2016 budget would make cuts to student aid that are deeper than meets the eye and would hurt funding for major education programs. The budget would eliminate expansions to the income-based repayment program, public sector loan forgiveness and in-school interest subsidies for undergraduate Stafford loans. The three changes, in addition to cuts to the Pell Grant program, would add up to tens of billions of dollars in federal savings.

The House budget also plans changes to non-defense discretionary spending in future years that will squeeze other education programs, which will more than likley lead to cuts to Head Start, Title I, IDEA and other programs.

Senate Introduces Budget Resolution

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Senate Budget Committee Chairman Mike Enzi (R-WY) introduced the Senate Budget today, whihc differs in big ways from a House GOP blueprint introduced yesterday. Both aim to balance the budget (the Senate in 10 years, the House in nine) and both cut over $5 billion in spending (the Senate cuts $5.1 trillion and the House would cut $5.5 trillion).  It proposes an additional $236 billion in cuts to non defense discretionary spending from FY2017-FY2025 and it would leave the defense discretionary caps at the sequester levels.

Most importantly, and a point that goes directly to the contention in the House Republicans, the Senate GOP budget only provides $58 billion for a war funding account known as the Overseas Contingency Operations (OCO) fund — much less than the $90 billion included in the House GOP budget. In a move to appease House defense hawks, the House Budget had a huge increase in the OCO, which is not subject to the Sequester caps. The budget resolution effectively draws a line in the sand over war funding by creating a point of order against raising Overseas Contingency Operations account funding above $58 billion next year. Points of order require 60 votes to pass. That means any move to boost the OCO funding would need the support of Senate Democrats. Obama has proposed $51 billion in war funds for the military.
As for policy directives, the Senate proposal includes reconciliation instructions for the Senate Finance and Senate Health, Education, Labor, and Pensions (HELP) Committees to each find no less than $1 billion of savings over 10 years to put toward deficit reduction by no later than July 31, 2015. It also creates a Deficit-Neutral Reserve Fund (DNRF), a budget gimmick that allows Committee chairs to break budget constraints and will not result in a budget point of order, for the HELP Committee to reauthorize the Higher Education Act (HEA).  The budget proposal also creates a DNRF for improvements in medical research, innovation and safety, among other health reforms.  The budget also calls for a DNRF for energy legislation, which could include reforms to research programs at the Department of Energy.
Similar to the House Republican Budget, the Senate budget would cut Pell — and cut $90 billion from the Pell grant program over 10 years. Additionally, the  proposal would set non-defense discretionary spending at $493 billion for 2016.
To read about the Senate Budget, click here. 
The Senate is marking up the budget Wednesday and Thursday, and it is expected that the full Senate will consider the proposal next week.

The Office of Federal Relations is currently monitoring the legislation and will make more information known as it becomes available.