Budget Rules! Process in the House and Senate Budgets
Now that the Senate and House have passed their respective budget resolutions, a budget conference committee is right around the corner. One aspect of the competing resolutions that will have to be dealt with are provisions related to the budget process. Both budgets include provisions to address issues with the budget process that our Better Budget Process Initiative (BBPI) has identified. While we have previously written on both budgets' treatments of reconciliation instructions, below we’ll go further and highlight some of the other budget process provisions.
The House’s resolution embraces both the dynamic scoring rules put into place at the start of the 114th Congress as well as the rules prohibiting a general fund transfer from the Social Security Old Age and Survivors' Insurance (OASI) trust fund to the Disability Insurance (DI) trust fund that does not also improve overall solvency. In addition, the House’s budget scores general fund transfers to the Highway Trust Fund as new spending. This is significant given the impending insolvency of the Highway Trust Fund on May 31, one of the upcoming fiscal speed bumps.
We have advocated that the budget process should better focus on the long term. The House budget partially addresses this by including a long-term spending point of order.
The House budget also adds rules regarding so called fair-value estimates of government credit programs. Specifically it provides for supplemental analysis from the Congressional Budget Office (CBO) at the request of the Chair or Ranking Member of the Budget Committee. Further, it allows the Chair of the Budget Committee to use this supplemental estimate as the official score for budget enforcement.
In addition to the changes in enforcement, the Houses budget contains a policy statement advocating for budget process reform. This statement has no applicable impact on the budget process, but lays out priorities for budget process reform in the House including: reasserting Congress's “power of the purse”; creating incentives for lawmakers to abide by the existing budget process; encouraging control over spending; increasing oversight through tools like zero based budgeting, which would require a department or agency to justify its budget each year as if it were a new expenditure; and caps on direct spending to enhance oversight of mandatory spending. However, the budget process policy statement then takes a less fiscally responsible turn by advocating against paying for current policy in the tax code for items like tax extenders. We wrote a blog last year about the budgetary treatment of expiring tax provisions. The budget resolution also contains a policy statement supporting a Balanced Budget Amendment to the Constitution.
The Senate’s take on budget process rules has similarities to the House. It embraces supplemental dynamic estimates and fair value accounting. But it also includes a variety of other measures to strengthen budget enforcement rules in the Senate.
The budget extends the Senate’s pay-as-you-go (PAYGO) rules and a variety of other existing points of order. This is despite its removal of the "Conrad Rule" point of order against reconciliation instructions that increase the deficit inside the ten-year budget window (more on that and reconciliation in our blog). In addition, the budget requires the Joint Committee on Taxation to produce distributional estimates showing how major legislation would impact different income groups.
Despite momentum on discussions from some Republicans on the issue, the budget maintains a 60 vote point of order against designating Overseas Contingency Operations (OCO) funding in excess of the President’s request of $58 billion for enforcement of the statutory discretionary caps. This is in direct contrast to the House’s treatment of OCO. We strongly encourage conferees to keep this point of order in place during conference.
This budget does even more to focus on the long term than the House budget by containing requirements for supplementary estimates of long-term impacts of legislation as well as a point of order against legislation that increases long-term deficits by more than $5 billion in any of the 4 decades after the budget window. We proposed similar recommendations in our BBPI paper.
The Senate budget importantly tightens fiscal responsibility by phasing out “Changes in Mandatory Program Spending” (CHIMPS) and prohibiting the use of rescissions which do not achieve savings. Both of these changes are very prevalent budget gimmicks that are used as fake offsets to justify higher spending levels. To read more on how CHIMPS and rescissions are used as gimmicks read our blog on the FY15 CROmnibus. Another gimmick the budget attempts to prevent is the use of timing shifts, in which spending is delayed for one year or revenues accelerated for one year. The budget excludes these gimmicks from determining whether legislation complies with budget rules.
Finally, the Senate budget included an important prohibition against consideration of legislation that hasn’t been scored by CBO. Just last year the Senate learned this lesson the hard way when they took up and passed a Veterans Affairs bill without waiting for a score only to find out how expensive the legislation actually was.
All in all both the House and Senate budgets take more steps forward than backward on budget process and enforcement reforms. We will continue to provide analysis and updates as budget resolutions are conferenced. You can also read more about developments with the FY 2016 budget here.