March 23, 2015

S.Con.Res. 11 – Concurrent Resolution on the Budget for Fiscal Year 2016

Considerations on the Bill

The Senate budget resolution would balance the budget over 10 years, achieving a $16 billion surplus in 2025 by limiting spending growth to an average of 3.2 percent. The resolution contains $4.4 trillion more in deficit reduction than the president’s budget request. Total deficits in the budget resolution total $1.57 trillion over 10 years, compared to $6 trillion in total deficits in President Obama’s budget request.

The resolution complies with the Budget Control Act’s spending caps by holding base discretionary funding to the cap levels and providing Overseas Contingency Operations at the president’s request of $58 billion. OCO funding is exempt from the spending caps. In the committee markup, a Graham amendment was adopted that would add an additional $38 billion to the fiscal year 2016 OCO account, for a total of $96 billion. The amendment was deficit-neutral over 10 years, as required under Budget Committee rules.

Additionally, the resolution contains a deficit-neutral reserve fund (Sec. 302) that would allow for the consideration of future legislation to further modify discretionary funding levels. The resolution cuts non-defense discretionary spending by $236 billion over 10 years.

Reducing deficits and balancing the budget will have a positive economic impact. Economists agree that government borrowing “crowds out” private investment by taking money from the private sector that would otherwise be invested in the private economy. According to CBO, “the result is a smaller stock of capital and lower output in the long run than would otherwise be the case (all else being equal).” CBO estimates that reducing deficits by the levels in the budget resolution will provide an economic boost to the economy. This would lower mandatory spending by a further $164 billion over the 10 years, with $55 billion of that coming in year 2025 alone.

The Senate Budget Committee has released a document summarizing the budget resolution.

Debate Structure

Under the Budget Act of 1974, as amended, a budget resolution is a privileged piece of legislation. It is not subject to filibuster, and debate time is limited to 50 hours, equally divided. There are sub-limits within the overall time limitation, such as a two-hour limit on any first-degree amendment and a one-hour limit on any second-degree amendment, debatable motion, or appeal. Time can be yielded back. Votes do not count against the 50-hour time limit, nor do quorum calls just prior to votes.

Amendments to the budget resolution must be germane. A point of order lies against non-germane amendments, and 60 votes are required to waive the point of order. Germane amendments are those which:

1) Strike language;

2) Increase or decrease numbers;

3) Add language that restricts some power in the resolution;

4) Add language that is germane to other language in the resolution; or

5) Change dates

Debate on first-degree amendments is limited to two hours – one hour to proponents and one hour to opponents. Debate on second-degree amendments is limited to one hour – 30 minutes to proponents and 30 minutes to opponents. All debate time on a first-degree amendment must be used or yielded back before a second-degree amendment can be offered.

Debate on any motion to waive a point of order is limited to one hour, equally divided. Amendments can be offered at any time.

In the Senate, a motion to recommit is not in order except a motion to recommit with instructions to report back within a specific number of days (no more than three, not counting any day in which the Senate is not in session). Debate on the motion is limited to one hour, equally divided, and is controlled by the mover and the manager of the budget resolution.

Once all debate time has been used or yielded back, Senators may continue to offer further amendments. No debate is in order, but roll call votes can be taken. Dozens of votes may occur with little or no explanation. This is known as “vote-a-rama.” Once all amendments have been dispensed with, a vote on final passage occurs.

Committee Markup

The Budget Committee adopted more than 30 amendments in committee markup, including the Graham amendment related to defense funding. Only the Graham amendment changed the spending levels in the resolution; the effects of that amendment have been incorporated into this notice. In order to expedite publication of this notice, RPC will send information on other amendments at a later time.

Notable Bill Provisions

Title I - Recommended Levels and Amounts

The budget resolution would result in spending in fiscal year 2016 of $3.8 trillion and spending from 2016-2025 of $43.2 trillion. This is compared to the president’s spending in 2016 of $3.96 trillion, and 2016-2025 spending of $49.5 trillion. The Senate budget resolution envisions slowing the rate of spending growth to an average of 3.2 percent per year. By borrowing less, the Senate budget resolution would lead to $701 billion in interest cost savings over the 10-year period.

The budget resolution does not assume any revenue changes over the 10-year period.

The budget resolution would balance in 2025, showing a $16 billion surplus. While the president’s budget contains total 10-year deficits of $6 trillion, the Senate budget resolution’s 10-year deficits would total $1.57 trillion. In 2025, the Senate budget resolution would result in a national debt of $21.2 trillion, while the president’s budget shows the national debt in that year at $25.8 trillion.

Title II – Reconciliation

The budget resolution contains reconciliation instructions to the Finance and HELP committees to reduce the deficit by $1 billion each over 2016-2025. The two committees must report their recommendations to the Budget Committee by July 31, 2015. These reconciliation instructions are intended to be used to address Obamacare.

Title III – Reserve Funds

Reserve funds allow the Budget Committee chairman to change numbers contained in an already-passed budget resolution if legislation meeting the reserve fund’s criteria is considered. This allows the legislation to be considered without a budget point of order against it for violating the levels contained in the budget resolution. Reserve funds only allow numbers to be changed in the budget resolution; they do not eliminate the need for cloture or otherwise expedite floor consideration of legislation. Deficit-neutral reserve funds can have the effect of allowing spending increases to be offset by tax increases. For this reason, some of the reserve funds below are spending-neutral reserve funds, meaning that the reserve funds stipulate that the legislation must be deficit-neutral and cannot raise “new revenue.”

The budget resolution contains reserve funds regarding:

1. Economic growth and private sector job creation (Spending-neutral reserve fund – SNRF)
2. Funding for national security or domestic discretionary programs (Deficit-neutral reserve fund – DNRF)
3. Full repeal of Obamacare or the “replacing and reforming” of Obamacare (DNRF)
4. Other health care provisions, such as the individual mandate, employer mandate, and SGR (DNRF)
5. Child welfare, including nutrition and protection from sexual predators (SNRF)
6. Improving services and benefits for veterans (DNRF)
7. Tax reform, tax extenders, medical device tax repeal, or IRS administration (DNRF)
8. Infrastructure investment (DNRF)
9. Air traffic control services (DNRF)
10. Trade (DNRF)
11. Employment of disabled workers and administration of disability benefits (DNRF)
12. Higher Education Act reform (DNRF)
13. Energy policy reforms (SNRF)
14. Reform of environmental laws to promote job growth (DNRF)
15. Water resources, including flood control, commercial navigation and environmental restoration of waterways (SNRF)
16. Mineral security and mineral rights (SNRF)
17. Reform of the abandoned mine lands program (SNRF)
18. Improvement of forest health, including increasing timber production for federal lands (SNRF)
19. Reauthorization of payments in lieu of taxes (SNRF)
20. Reform of the financial regulatory system (SNRF)
21. Improving the Supplemental Security Income and Social Security Disability Insurance programs (DNRF)
22. Agreements between the U.S. and nations with which it maintains a Compact of Free Association (SNRF)
23. Protection of payments to rural hospitals and health access for rural areas (SNRF)
24. Encouraging state Medicaid demonstration programs to promote independence and work for the disabled (SNRF)
25. Allowing pharmacists to be paid under Medicare (SNRF)
26. Supporting community health centers (SNRF)

Title IV – Budget Process

Title IV includes new points of order and extensions of existing points of order for the purposes of budget enforcement in the Senate. Title IV also contains scoring rules.

Points of order:

1. Extends various points of order in Sec. 401, including extending indefinitely two points of order (regarding pay-as-you-go and short-term deficit increases) by repealing their sunset provisions.
2. Point of order against legislation that would increase the on-budget deficit by more than $5 billion in any of four consecutive 10-year periods after the current 10-year budget window.
3. Point of order against certain advance appropriations, with traditional exceptions of the Corporation for Public Broadcasting and certain Veterans Affairs accounts.
4. Reinstates the three-fifths waiver threshold for the existing unfunded mandate point of order.
5. Restores the equal treatment of all reconciliation bills, consistent with budget law prior to 2008, by repealing a point of order that prohibited consideration of reconciliation legislation that increases the deficit or reduces surplus.
6. Phases out Changes in Mandatory Programs that do not reduce outlays. The resolution phases out the use of CHIMPS in appropriations bills that reduce budget authority but don’t result in any net outlay savings. For fiscal year 2016, the limit on this type of CHIMP is $19 billion, the amount contained in fiscal year 2015 appropriations measures. Thereafter, the limit is reduced 20 percent per year until fiscal year 2021, when CHIMPs that fail to reduce net outlays would no longer be permitted in appropriation measures. The limit is enforced with a 60-vote point of order.
7. Point of order against a vote on final passage of legislation without a CBO score being available at least 28 hours before the final passage vote.
8. Prevents amendments to reconciliation bills that would use the excess savings of a reconciliation bill to increase spending.
9. Reviews OCO Spending. The resolution establishes a point of order that allows the Senate to review the designation for Overseas Contingency Operations in fiscal years 2016 and 2017. Designations that cause the total amount of OCO spending in those years to exceed $58 billion and $59.5 billion, respectively, are subject to a point of order that, if raised, would require 60 votes to waive. If sustained, the offending provision would be stricken, but the rest of the measure would remain standing.

Scoring rules:

1. Scoring rules that direct the chairman of the Budget Committee to ignore the budgetary effects of timing shifts and fake rescissions in determining budget violations.
2. Requires CBO to provide cost estimates of legislation affecting federal loans or loan guarantee legislation on both a “fair value” and FCRA basis.
3. Requires CBO to produce both static scores and dynamic analyses of the budgetary impact for legislation for which the net absolute value of budgetary effects exceeds $15 billion in any fiscal year.
4. Directs CBO to incorporate the impact of reduced borrowing associated with a conversion from the paper dollar to the dollar coin.
5. Directs CBO to score energy contracts using net present value rather than cash basis – a method that better reflects the economic value of the transaction.

Cost

The Congressional Budget Office does not score budget resolutions since a budget resolution does not change current law.

Amendments

Amendments will be considered, many in vote-a-rama.