Download National Low-Income Housing Coalition Budget Process

NATIONAL LOW-INCOME HOUSING COALITION
BUDGET PROCESS PRESENTATION
Ellen Nissenbaum
Legislative Director
February 27, 2006
COMPOSITION OF THE
FEDERAL BUDGET IN 2005
Social Security &
Medicare
Other Entitlements
7%
2%
32%
17%
Defense & Homeland
Security
Domestic
International
21%
21%
Center on Budget and Policy Priorities; last revised February 3, 2006.
Interest
KEY COMPONENTS OF THE BUDGET
RESOLUTION
By law, the Congress is supposed to pass a Congressional
Budget Resolution by April 15 which typically covers a 5 or 10
year period. It sets:
• Annual targets (FY2007-2011 or 2007-2016) for overall spending,
spending by function and congressional committee, revenues, and
the deficit. It also establishes:
• the overall funding level for the Appropriations Committee
• targets (increases or decreases) for entitlement program costs by
“function” and by committee
• the overall annual revenue targets (e.g. increasing or decreasing
total revs)
BUDGET RECONCILIATION
(DOES NOT APPLY TO APPROPRIATED SPENDING)
• A fast-track legislative process established by Stockman to reduce
the deficit by requiring authorizing committees to cut entitlement
spending (or to raise revenues too).
• In recent years, reconciliation has been used by Congress to cut
taxes. “Reconciliation directives” in the budget resolution require
various Congressional committees with jurisdiction over entitlement
programs and revenues to produce legislation that will achieve a
certain level of changes in entitlement programs or revenues over a
certain number of years.
• The committees can choose whatever policies they want to meet the
budget targets. The bills crafted by the committees are combined
into one or two “reconciliation bills” which are considered under
special rules, including a prohibition against a filibuster in the Senate
so it only takes 51 votes to pass.
• Congress just adopted the 2005 budget reconciliation bill that cut
entitlements like Medicaid, child support enforcement, etc.
• Congress is still working on the 2005 TAX reconciliation bill.
WHAT DOES THE BUDGET
RESOLUTION NOT DO?
The resolution is not a law; it’s a “fiscal blueprint” of
our nation’s budget priorities
• It does not determine funding levels for particular
appropriated programs.
• It does not determine how much of the total funds
allocated to the appropriators goes for defense vs.
domestic
• It does not determine which entitlements will be
cut, or by how much.
• It does not determine which taxes will be cut.
BUDGET AMENDMENTS CAN HELP
DISCRETIONARY SPENDING… OR NOT
• When the full Senate takes up the budget resolution, it
often considers amendments to “add” funds to certain
domestic discretionary programs or areas.
• Unless the amendment increases the TOTAL allocation
of funds (“302A”) to the appropriators, it has little IF ANY
effect.
• But often amendments are offered just to increase
funding to discretionary areas or programs without
enlarging the total discretionary “pie.”
• The budget amendments that matter vis-à-vis
approps are ones that increase the total funding
provided to the appropriations committees.
BUDGET PROCESS:
THE RULES “DETERMINE THE GAME”
The budget also may include changes to certain
budget rules, such as procedural requirements for
certain types of bills.
Examples:
• Discretionary caps
• Pay-as-you-go (e.g. “one sided” on
entitlements)
DISCRETIONARY CAPS
• In 2004, the Administration and congressional Republicans
proposed severe binding statutory caps on total funding for
discretionary programs that would have required well over $100
billion in cuts over five years The new Bush budget proposes tough
5 year caps again — with automatic across-the-board cuts
(“sequester”) as enforcement if the caps are breached by Congress.
• Experience has shown that discretionary caps can be effective in
imposing fiscal discipline if they are: set at reasonable levels, and
part of a larger program of shared sacrifice that includes revenue
increases and cuts in entitlement programs.
• The statutory discretionary caps that were in place for much of the
1990s met these two tests. (For example, they were accompanied
by a balanced “paygo” requirement, described below.) As a result,
those caps helped eliminate the deficit over the course of the
decade.
DISCRETIONARY CAPS CONTINUED..
• In 2005, caps to limit discretionary spending in fiscal
years 2006, 2007, and 2008 were established as part of
Senate rules. These caps are not as binding as the
statutory caps that have been proposed because they
can be revised each year in the Congressional budget
resolution and exceeding them would not trigger an
automatic across-the-board cut in discretionary funding
the way exceeding statutory caps would.
• Will Congress accept the Bush proposal for legally
binding caps, or simply have caps that, if breached, only
raise procedural points of order?
INFLUENCING THE BUDGET PROCESS: “SWIM UPSTREAM”
•
Traditionally, many non-profits have ignored budget resolution and the “top line”
decisions made and waited to work with federal policymakers until
appropriations subcommittee action, or until a Committee prepared to vote on
changes to key entitlements.
•
By that time, most important decisions have been made, severely limiting policy
options and overall allocation of resources. For appropriations, waiting until
the subcommittee fight means fighting over smaller and smaller bag of M & Ms.
For key entitlements, waiting for Committees to consider changes in key
entitlements often means picking and choosing among bad options for the “least
harmful.”
•
Many non-profits continue to limit their public policy work to spending and
do not engage with policymakers to ensure an adequate level of resources
for key programs. Over time, will not be able to sustain critical federal
programs and responsibilities if we continue to have revenues drop as
percent of our economy. Also insufficient attention to impact of federal
budget on state budgets/revenues.
•
Need more non-profits to understand the budget process, and “swim upstream”
to engage at the front end of the process (consideration/adoption of the budget
resolution), not “downstream” when most of the major overall decisions have
been made.
LEGISLATION ADDING TO DEFICITS:
MOSTLY TAX CUTS AND DEFENSE
Cost in 2006 of legislation enacted since January 2001
40% Tax Cuts
Defense, Homeland
37% Security and
International
11%
12%
40%
12% Entitlements
Domestic
11% Discretionary
(except Homeland
Security)
37%
Source: CBPP calculations based on Congressional Budget Office data
Center on Budget and Policy Priorities; last revised February 17, 2006.
IS SPENDING OUT OF CONTROL?
• Claim:
Funding for domestic discretionary
programs has been growing out of control.
• Response: Funding for domestic discretionary
spending has grown by less than 1 percent annually
since 2001 when inflation and population growth are
accounted for. Relative to the size of the economy,
domestic discretionary funding has actually declined
since 2001.
• Funding for discretionary programs has grown since
2001, after adjusting for inflation and the increase in
the U.S. population, but funding for domestic
programs has grown at one-fourteenth the rate of
funding for security programs.
EVEN WITH KATRINA, FEDERAL SPENDING IS
BELOW AVERAGE FOR RECENT DECADES
25
24
Outlays (%GDP)
23
22
Outlays with Katrina
21
20
19
18
17
Average Outlays as
Share of the Economy
1975-2005:
Outlay Path without Katrina
21%
16
15
1975
1980
1985
1990
1995
Source: CBPP Calculations based on Congressional Budget Office Data
Center on Budget and Policy Priorities; last revised February 14, 2006.
2000
2005
2010
REVENUES AS A SHARE OF THE ECONOMY
ARE BELOW THEIR HISTORICAL AVERAGE
25
Revenues (%GDP)
24
23
22
21
Average Revenues
As Share of the Economy
1975-2005: 18.3%
2005 Revenues
As Share of the Economy:
17.5%
20
19
18
17
16
15
1975
1980
1985
1990
1995
Source: CBPP calculations based on Congressional Budget Office Data
Center on Budget and Policy Priorities; last revised February 3, 2006.
2000
2005
2010
TAX CUTS FOR PEOPLE WITH INCOMES OVER $1 MILLION
COST MORE THAN ALL OF THE CUTS IN DOMESTIC
DISCRETIONARY PROGRAMS WOULD SAVE
Tax Cuts and Spending Cuts, 2011
$70
Billions of dollars
$60
$50
$40
$30
Tax Cuts for
Millionaires:
$67 Billion
Domestic
Discretionary
Program Cuts:
$57 Billion
$20
$10
$0
Source: CBPP calculations from Office of Management and Budget, Joint Committee on Taxation, and
Urban-Brookings Tax Policy Center data.
KEY CHALLENGES AHEAD
• Federal Budget Outlook
o More tax cuts/ tax reform
o Unsustainable deficits
o Fighting conservative “starve the beast”
attacks
o Budget process reform (’07?)
These will make it more difficult to make progress
on our goals of expanding critical programs,
getting people out of nursing homes, etc.
START WORKING TO ENSURE ADEQUATE
GOVERNMENT RESOURCES/REVENUES
Step 1: Internal institutional work to “connect the dots” between
revenues & funding for critical housing programs (discussion with
Board, Policy Committee, etc.).
Step 2: Adopt policy positions in favor of retaining/raising federal &
state revenues.
Step 3: Educate the public and supporters about the need for adequate
revenues to sustain and improve your programs (op-eds, policy
memos, other public communications, etc.).
Specific policies to endorse:
• Restoring “Pay As You Go” rules requiring that tax cuts be paid for.
• Opposing permanent extension of 2001/2003 tax cuts, especially for
high-income households.