Skip to content
News and updates

Category: Budget

House Budget Released

Posted on
15961218283_11da2f4a61_z
US Capitol (AOC)

House Budget Committee Chairman Tom Price (R-GA) released the House Republican budget draft today, which in recent years has been largely a political document. The House Democrats are expected to release a competing draft soon. The federal budget, while it does not become law, does have to pass both chambers of Congress and will guide the House and Senate on federal spending. In addition, the budget typically charges the respective legislative bodies on sweeping policy initiatives, such as tax reform, which is what then-Chairman Paul Ryan (R-WI) suggested last year. This year, Chairman Price includes the repeal of Dodd-Frank and Obamacare, proposes a premium support system for Medicare, asks for a bipartisan study and report to Congress on the problems facing the Social Security program, and would eliminate the Alternative Minimum Tax.

Additionally, the final budget will guide the respective House and Senate Appropriations Committees on how much funding is available to begin work on the 12 annual appropriations bills.

The details are not yet clear, but at first blush, the bill would aim to balance the budget in nine years and create a surplus by 2025.  The measure would also cut $5.5 trillion over the next decade.  This would be achieved by eliminating duplicative programs and eliminating programs within agencies that are not “core functions” of the federal government. Examples of these duplicative, beyond the scope or “corporate welfare” programs cited include, job training programs, and eliminating the Hollings Manufacturing Extension Program  and Trade Promotion Activities at the International Trade Administration.

Redundancies and misuse of tax dollars called out include:

  • There are 92 different anti-poverty programs.
  •  There are 17 food aid programs.
  •  There are 22 housing assistance programs
  • An Inspector General report revealed that employees at the Environmental Protection Agency are taking paid leave after work-related violations.
  • The Department of Defense and the Central Intelligence Agency, two of the most important agencies in our national security apparatus, currently spend part of their budget studying climate change.

For higher education, the legislation proposes a new framework to use “federal dollars more efficiently” in higher education — but details on what that framework would be are thin. Pell grant awards would both be capped for next decade and limited to the neediest borrowers.

The bill would also replace or prevent Sequester cuts — although how is unclear. The measure would keeping the 2011 budget ceilings, and would impose a $1.017 trillion ceiling on spending in the fiscal year beginning on Oct. 1. Domestic discretionary programs would get $493 billion, with $523 billion allotted for the Pentagon’s base budget. The GOP budget ignores Obama’s request for $74 billion in additional spending.

Already, the GOP members of the House Armed Services Committee has been less than committal to the measure. It remains to be seen if the measure will enjoy unified Republican support.

An overview of the House Budget Committee draft can be found here.

The Office of Federal Relations will continue to update on this issue as more information becomes available.

Two Things We Learned this Week

Posted on

1. Republicans are on a collision course over DoD spending: The long-brewing squabble between GOP defense hawks and fiscal hawks over defense spending is coming to a head, with the House Budget Committee planning to move a budget resolution that sets base defense spending next fiscal year $35 billion below what the Pentagon requested. But the defense hawks are lobbying furiously to avoid that outcome, and Senate Armed Services Chairman John McCain (R-AZ) is even vowing to personally oppose a budget resolution that doesn’t increase military spending above what’s allowed under the Budget Control Act of 2011. Sequester? What sequester?

And on the House side, Armed Services Chairman Mac Thornberry (R-TX) is asking the House Budget Committee to boost defense spending, which would bust the BCA caps by more than $50 billion. In a letter he plans to send to the Budget panel today, Thornberry will seek $577 billion in defense spending for the House’s budget resolution and argue that “the lowest acceptable level is $566 billion, the amount identified for 2016 in last year’s House budget,” the aide said.

Thornberry’s request of $577 billion is the amount that was projected for the Pentagon in FY2016 before the 2011 Budget Control Act was approved and sequestration took effect. It’s higher than President Barack Obama’s FY2016 request of $561 billion, which includes base Pentagon funding as well as other spending considered part of the “national security” budget. The GOP aide said that Thornberry’s letter is signed by 31 of the 36 Republicans on the Armed Services panel.

2. Government shutdowns are still a thing: Shortly after the November midterm elections that gave Republicans control of the Senate, then-incoming Majority Leader Mitch McConnell said, “We will not be shutting the government down.” Now here we are, just three months later – with the Department of Homeland Security set to run out of funds at midnight. And House and Senate leaders remain at an impasse over whether to pass a “clean” DHS spending bill or continue pushing to tie DHS funding to the president’s executive order on immigration. 

House leaders are now looking at staving off a shutdown by passing a three-week continuing spending resolution for DHS. Read more here.

Source: Politico

It’s Budget Day!

Posted on

President Obama will release his FY2016 budget today and it will push for tens of billions of dollars more in federal spending by arguing the deficit has been cut and the economy is much improved since he first took office six years ago. His fiscal 2016 budget plan will flip that by making the case that the economy has turned around, which should allow for more federal spending to ensure the improving conditions benefit everyone.

Obama will propose a mix of tax increases and changes in spending programs that, besides paying for the repeal of the sequester, would reduce cumulative deficits by $1.8 trillion over 10 years according to an administration fact sheet.

The administration said the increases would be more than offset by other spending cuts and closing of tax breaks. The plan also proposes repealing the post-sequester discretionary caps through their scheduled end in 2021, raising both defense and non-defense spending on a dollar for dollar basis. The increases would total $74 billion in spending above sequester caps — raising defense spending by $38 billion, to $561 billion, and non-defense accounts by $37 billion, to $530 billion. Obama has suggested the non-defense increase will go toward more infrastructure spending, new research into precision medicine, education programs, and foreign aid for Central American nations to combat child migration. To be sure, the White House also views entitlement spending as an investment and is not expected to make any significant calls for scaling back Social Security, Medicare or Medicaid.

The budget debate will play out over the next several months as appropriators write the annual spending bills and focus on whether to raise the sequester caps. Congress has found ways around those caps three out of the past four years, but that was when Democrats controlled the Senate. The latest sequester proposal seeks Republican support by calling for equal increases between defense and non-defense spending.

Additional reading:

Obama’s Budget: Five Things to Watch

Obama to unveil $4 trillion budget that busts spending limits

Join Bloomberg Government for a rapid response webinar tomorrow, February 3, as they analyze the numbers behind the FY2016 budget request.

President to Propose an End to Sequestration

Posted on

President Obama will advocate for an end to sequestration by proposing equal budget increases in both defense and non-defense discretionary spending in his FY2016 budget to be released on Monday. Obama is giving a ‘sneak peak’ of his budget to House Democrats at their  retreat in Philadelphia today. According to a White House source, the proposal would reverse cuts for domestic priorities and match those investments dollar-for-dollar with the resources our troops need to keep America safe.

Spending caps for FY2016 are due to be set at $1.016 trillion as required the 2011 Budget Control Act (PL 112-25), which exchanged an increase in the deficit for a decade’s worth of strict spending caps, and across-the-board cuts if Congress does not adhere to the caps.

Both Republican and Democrats have expressed a desire for raising some spending levels, but Obama’s proposal is not likely to gain support among Republicans because of how he plans to pay for them. Obama’s plan would be fully paid for with cuts elsewhere and closing tax loopholes. But any tax increase will be a non-starter with Republicans, who have rejected similar proposals before. Obama is probably hoping that his proposal for increased defense spending will help draw the GOP into negotiations.

State of The Union

Posted on

Tonight at 9 pm Eastern, 6 pm Pacific, President Obama is scheduled to give his 6th State of the Union address to Congress. The White House has been previewing certain initiatives, such as two years of free community college and paid sick leave, in advance of the speech tonight.

Tonight, however, the crux of his speech is expected to center around his economic proposals to promote the middle class and make a case for increasing federal spending on education and technology priorities. It is unclear, however, how his proposal to handle the largest funding issue confronting this last two years in office, the return of the Sequester spending cuts, will be received. The President is expected to propose increasing federal spending above the Budget Control Act levels in part by increasing taxes for the rich – his starting position in negotiations with Republicans that will ultimately determine the size of the budget for FY16.

Obama is unlikely to call for specific increases in stringent sequesters spending caps that start again in 2016, but he could call for ways to re-direct funds within those caps or come up with new revenues. As a remedy for past sequesters, the President has suggested maintaining funding for his priorities by increasing corporate taxes mainly by closing loopholes. That plan now would almost certainly be a non-starter on Capitol Hill with Republicans controlling both chambers.

The President did preview his tax increase proposals over the weekend, which included imposing a fee on financial institutions, closing the capital gains tax loophole on inherited assets, and raising the top rate of capital gains and dividends back to the Reagan rate of 28% among others. Additionally, Obama will propose increased and streamlined tax credits for the middle class for child care, two-earner families, and retirement savings.

For higher education, the President will propose consolidating the six overlapping education provisions into just two, while improving the American Opportunity Tax Credit (AOTC) to provide more students up to $2,500 each year over five years as they work toward a college degree. This move would likley make the AOTC permanent, index it to inflation, increase refundability, and resolve a significant problem of coordination with Pell grants that disadvantages low-income students. However, it is unclear how the  Lifetime Learning Credit would be handled and the impact on graduate students.

Read more about the President’s tax proposal here.

Watch the State of the Union at 9pm EST, 6 pm Pacific on most television stations tonight.