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House and Senate Budget Committees Approve FY 2016 Budget Plans

Published on March 20, 2015 by Althea Arnold
House and Senate Budget Committees Approve FY 2016 Budget Plans

This week, both the House and the Senate Budget Committees reported their respective Budget Resolutions.  The resolutions moved swiftly through the committees, having been released only days earlier by their Republican chairmen, Representative Tom Price (R-GA) and Senator Mike Enzi (R-WY).  Both committee-passed resolutions are expected to be debated on the floor of their respective chambers the week of March 23-27. 

 

Congressional Budget resolutions provide broad parameters for federal spending and taxation, including overall limits on discretionary spending and guidance to authorizing committees directing them to report legislation that accomplishes specific spending or tax-related goals.  Congressional Budget resolutions that pass both chambers also provide procedural protection from Senate filibuster for legislation reported in response to such guidance, which is also known as “reconciliation instructions.”  Budget resolutions are intended only to guide congressional activity and are not bills.  They require a simple majority vote for passage in each chamber and cannot be blocked by filibuster in the Senate.  Budget resolutions do not go before the President for his signature and are not subject to his veto authority.    

 

The House and Senate Committee-passed Budget Resolutions outline their respective chambers’ Republican policy priorities and differ sharply from the Administration’s FY 2016 Budget proposal released February 2.  Unlike the Administration’s Budget, both the House and Senate Committee-passed Budget Resolutions adhere to the FY 2016 discretionary spending caps imposed by the Budget Control Act of 2011 (BCA).  The Administration’s Budget proposal would exceed these limits by $74 billion, or roughly 7 percent.  The House and Senate plans also call for further cuts to non-defense discretionary spending below the BCA levels and reforms to entitlement programs.  Both include reconciliation instructions to repeal the Affordable Care Act. 

 

Of particular concern is language included in both chambers’ Budget resolutions that would alter accounting methods for federal loan and guarantee programs, requiring increased funding to support such programs and likely resulting in a significant funding shortfall for HUD programs.  More specifically, the slightly different but similar language included in both resolutions would shift the accounting methods for federal loan and guarantee programs from the scorekeeping methodology enacted as part of the Federal Credit Reform Act of 1990 (FCRA) to “fair value” accounting.  The change would affect all federal loan and guarantee programs, including Federal Housing Administration (FHA) and USDA Rural Housing Service (RHS) single-family and multifamily loans. 

 

The Congressional Budget Office (CBO) estimates that, using fair value accounting, FHA lending programs would cost $3.5 billion, instead of raising $4.4 billion in revenue.  Because FHA net receipts impact how much funding appropriators make available to other HUD programs, this accounting change would likely result in cuts of nearly $8 billion to HUD accounts.  Earlier this week, NCSHA and more than a dozen other housing advocacy groups signed a joint letter warning Congress about the risks inherent in fair value accounting and urging them to oppose this change.

 

The House Committee-Passed Resolution

 

The House Committee-passed Budget Resolution adheres to the BCA FY 2016 spending caps ($523 billion for defense and $493.5 billion for non-defense programs).  It is designed to cut spending by $5.5 trillion over the next decade and balance the federal budget within nine years.  The plan proposes to achieve savings through spending reductions and entitlement reform.  Specifically, the proposed spending cuts include a $759 billion decrease in non-defense discretionary spending from FY 2017 through FY 2025, an additional 14 percent below the reduced spending levels already required by the BCA and the sequestration system it imposes to make automatic across-the-board cuts if Congress exceeds its spending limits. 

 

As noted above, the House Committee-passed Budget Resolution would alter the accounting method used to determine the value and cost of federal loan and guarantee programs, which would likely result in significant reductions in HUD program spending.  It calls for housing-assistance programs to be “sustainable and focused” and seeks reforms in them, including expanding the Moving to Work program.

 

On taxes, the House Committee-passed Budget Resolution calls for lower corporate and individual tax rates and the repeal of the alternative minimum tax (AMT).  It also includes reconciliation instructions to the Ways and Means Committee directing it to identify $1 billion worth of spending cuts over the next decade.

 

The House Committee plan proposes privatizing Fannie Mae and Freddie Mac and makes the Consumer Financial Protection Bureau (CFPB) subject to the annual appropriations process.  CFPB currently receives its funding from the Federal Reserve.  The House Committee plan also calls for increasing defense spending, reforming Medicaid and Medicare, repealing the Affordable Care Act, and converting the Supplemental Nutrition Assistance Program (previously known as food stamps) to a state block grant.

 

The Senate Committee-Passed Resolution

 

The Senate Committee-passed Budget Resolution provides far fewer policy details than the House version but would also uphold the BCA spending caps.  The Senate Committee-passed Budget Resolution would balance the budget in 10 years with $5.1 trillion in spending cuts.

 

The Senate Committee-passed Budget Resolution would cut $236 billion from non-defense discretionary spending through FY 2025.  It also proposes modifying Medicaid to cut $400 billion in spending and echoes the Administration’s request to find $430 billion in Medicare savings.  The Senate Committee plan also calls for lower corporate and individual tax rates and instructs the Finance Committee and the Committee on Health, Education, Labor and Pensions to identify $1 billion worth of cuts over the next decade.

 

The Senate Committee plan also includes language to shift the accounting methods for federal loan and guarantee programs.  The Senate language would require CBO to provide fair value estimates but does not appear to require the Appropriations Committee and other committees to use them.

 

Several amendments passed during the Senate Budget Committee markup, including an amendment cosponsored by Senator Mike Crapo (R-ID) and Senator Mark Warner (D-VA) that would ensure Congress cannot raise Fannie Mae and Freddie Mac guarantee fees to offset the costs associated with unrelated initiatives.  NCSHA joined several other housing organizations in a joint letter supporting this amendment, which the Committee passed by a voice vote.  The Senate adopted similar language during the 113th Congress with bipartisan support.

 

Please contact NCSHA’s Althea Arnold with any questions or comments. 

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