House Passes FY 2015 Budget Resolution
On April 10, the House passed by a vote of 219 to 205 its FY 2015 Budget Resolution, H. Con. Res. 96. House Budget Committee Chairman Paul Ryan (R-WI) released his FY 2015 budget plan, The Path to Prosperity: FY 2015 Budget Resolution, in conjunction with H. Con. Res. 96, on April 1 and the House Budget Committee reported the budget resolution on April 2.
Senate Budget Committee Chairman Patty Murray (D-WA) has stated she will not introduce a budget resolution in the Senate this year, since Congress already agreed to a FY 2015 discretionary spending cap of $1.014 trillion in the Bipartisan Budget Act of 2013 (BBA). Therefore, there will be no budget conference between the Senate and the House for FY 2015 and Congress will not adopt a joint budget resolution. The budget resolution establishes non-binding spending ceilings for discretionary programs and establishes limits for total government revenue and mandatory spending. It does not set limits for spending on particular programs; program-specific spending levels typically are developed by the appropriations committees.
Before passing the budget resolution, the House voted against a number of alternatives, including a Democratic alternative offered by House Budget Committee Ranking Member Chris Van Hollen (D-MD) and an alternative offered by the Republican Study Committee.
Ryan’s plan claims to cut spending by $5.1 trillion compared to the current spending outlook, and balance the budget within ten years. The plan proposes to achieve the savings through spending reductions and entitlement reform. Included in the proposed spending cuts is a $791 billion decrease in nondefense discretionary spending from FY 2016 through FY 2024. Those cuts would be in addition to the reduced spending levels already required by sequestration. The budget would keep in place the FY 2015 discretionary spending cap set by the BBA.
In its discussion of discretionary spending, Ryan’s plan calls for reforms to housing assistance programs “to ensure the affordability of these programs to the taxpayer and to ensure that assistance is available to those most in need.” One reform suggested by the plan is a gradual expansion of the Moving to Work (MTW) program to high-performing public housing agencies (PHAs). The plan also recommends reviewing community and regional development programs, including the Community Development Block Grant (CDBG) program, for consolidation and streamlining opportunities.
Ryan’s budget plan calls for overhauling the tax code by simplifying it and lowering rates but does not endorse the tax reform discussion draft offered by Ways and Means Committee Chairman Dave Camp (R-MI). Rather, it states Congress should consider “the full myriad of pro-growth plans,” including Camp’s.
The plan again proposes to wind down Fannie Mae and Freddie Mac. It states that until the eventual elimination of Fannie Mae and Freddie Mac, the resolution envisions that policymakers will take steps to remove “distortions to allow an influx of private capital” and advance “various measures that would bring transparency and accountability to these two government-sponsored enterprises, which could include measures described in H.R. 2767, the Protecting American Taxpayers and Homeowners Act of 2013 (PATH Act).”
The plan acknowledges that the Federal Housing Administration’s (FHA) Mutual Mortgage Insurance Fund (MMI Fund) capital ratio improved from FY 2012 to FY 2013, but notes it has not met its congressionally mandated capital reserve ratio of 2 percent since the financial crisis. The plan states that given the FHA’s financial position, the government should “adopt measures to control the assumption of risk by FHA as other government-backed entities (e.g., Fannie Mae and Freddie Mac) are wound down.” The plan also says the budget resolution would require supplemental cost estimates using fair-value scoring for all federally backed mortgages and mortgage-backed securities in order to properly evaluate taxpayer risk.
The plan further states that the future housing finance system “should allow private-market secondary lenders to fairly, freely, and transparently compete, with the knowledge that they will ultimately bear appropriate risk for the loans they guarantee.”
The budget plan would also make the Consumer Financial Protection Bureau (CFPB) subject to the annual appropriations process. CFPB currently receives its funding from the Federal Reserve. The plan also calls for increasing defense spending, reforming Medicaid and Medicare, repealing the Affordable Care Act, and reforming the Supplemental Nutrition Assistance Program (previously known as food stamps).