Senate Amends Budget Resolution in Committee

While considering the FY 2016 budget, the Senate Budget Committee voted on about 50 amendments before passing the budget resolution on a party line 12-10 vote.  (We described the underlying budget here).  Some of these amendments were steps toward fiscal responsibility, some were steps backwards, and some were more mixed. Below, we describe the good, the bad, and the other notable amendments, even though not all of them passed.

The Good

• Reconciliation Cannot Increase the Deficit - Failed 10 to 12

The amendment would have eliminated the budget's repeal of the Conrad rule that prevents reconciliation legislation that increases the deficit inside the budget window. We strongly support this amendment, which prevents reconciliation from being used as a fast-track procedure to increase the deficit. Deficit reduction should be the focus of reconciliation. Sponsored by Sens. Baldwin, Warner, and Whitehouse

• Long-Term Scoring of Highway Trust Fund - Passed on a Voice Vote

This amendment requires CBO to produce an advisory 30-year score for legislation that increases the discretionary spending caps or contains a general fund transfer to the highway trust fund. The amendment is a good first step that we recommended in our paper entitled “Improving Focus on the Long Term," although it would benefit from being broader. Sponsored by Sen. Corker.

• Restrict OCO in Future Years - Passed 12 to 10

The amendment expanded the existing resolution point of order so Overseas Contingency Operations funding would be limited to a maximum level of $59.5 billion in 2017. This amendment was offered immediately after Senator Graham's amendment increasing OCO spending in the current year, preventing the gimmick from being used in any future year. This amount is above the President’s specified out-year request, but we appreciate the admirable spirit of preventing the OCO gimmick from being used in perpetuity. Sponsored by Sen. Toomey.

• Replace the Sequester with Mandatory Savings - Failed 10 to 12

This amendment would have creates a "deficit neutral reserve fund" to replace the sequester with mandatory savings. While a reserve fund does not change numbers in the budget resolution, it provides flexibility for responsibly offsetting the sequester.  Sponsored by Sen. King.

• Replace the Sequester with Revenue - Failed 10 to 12

This amendment replaces $37 billion each of the defense and non-defense sequester in 2016 and $37 billion in defense and $46 billion in non-defense in 2017.  The $157 billion in total cost is replaced with additional revenue spread out over the entire window. We generally favor replacing the blunt tool of sequester with smarter deficit reduction. Sponsored by Sen. Murray.

• Adding the Costs of Tax Expenditures to the Budget Resolution - Passed 16 to 6

This informational amendment should be beneficial by helping shine a light on backdoor spending in the tax code and promote tax reform. Sponsored by Sens. Whitehouse and King.

• Distributional Effects of Tax Changes- Passed on a Voice Vote

This amendment requires the Joint Committee on Taxation to produce estimates of distributional effects of tax changes when the budget requires them to use dynamic scoring (the budget contains a similar provision to the House's requirements for dynamic scoring). This additional information should be useful to policymakers. Sponsored by Sen. Baldwin.

• Long-Term Projections of Significant Spending Legislation - Passed on a Voice Vote

The amendment requires CBO to produce a supplemental estimate of the budgetary effects during the second decade of legislation if the gross change in outlays exceeds 0.25 percent of Gross Domestic Product (GDP) in the first decade, in the tenth year, or if requested by Chair of the Budget Committee. By initiating supplemental long-term scores this amendment is very helpful. We proposed a similar scoring policy in our paper entitled “Improving Focus on the Long Term".  We would also support adding to this amendment to include revenue legislation. Sponsored by Sen. Wicker.

• Prevent Health Legislation from Adding to the Long-Term Debt - Failed 10 to 12

This amendment would have eliminated an exemption in the resolution allowing a bill that modified the Affordable Care Act (ACA) and increased long-term deficits to not violate the normal point of order against increasing long-term deficits. We support attempts to maintain rules against adding to long-term deficits. Sponsored by Sen. Stabenow.

• Eliminate Duplicate Reports - Passed on a Voice Vote

This deficit-reducing reserve fund supports efforts to eliminate duplicate reports within the government. While redundant reports are a small portion of the government's fiscal problems, this amendment helps lock in any savings for deficit reduction. Sponsored by Sens. Warner and Ayotte.

• Require CBO Baseline to Project 30 Years Instead of 10 - Passed on a Voice Vote

The amendment requires CBO in its annual budget and economic outlook to provide a projection of federal revenues, outlays and deficits for a thirty-year period beginning with the budget year in both dollars and as a percentage of GDP. This amendment provides additional information similar to the long-term budget outlook, which is already produced every year.  It might be helpful if not redundant or excessively burdensome to CBO. Sponsored by Sen. Johnson.

• Reporting Tax Expenditures - Passed on a Voice Vote

The amendment requires CBO to publish in its annual budget and economic outlook an estimate of the revenue lost to tax expenditures over the budget window and dating back to 1965. This informational amendment should be beneficial by helping shine a light on backdoor spending in the tax code and promote tax reform. Sponsored by Sens. Whitehouse, Warner, and Portman

The Bad

• Use OCO to Increase Defense Spending - Passed 12 to 10

This amendment raised the FY 2016 Overseas Contingency Operations (OCO) funding account by $38 billion to the $96 billion (to match the President's FY 2016 defense request). However, because the additional spending in labeled as OCO and emergency spending, it is not offset or subject to budget caps and will increase the deficit. OCO is for emergency spending for active military operations overseas, not a slush fund to backfill defense budgets. We wrote further on the amendment here. Sponsored by Sen. Graham.

• Prevent Medicare Savings From Being Used As An Offset - Failed 10 to 12

Many entitlement reforms are going to be needed to improve the long-term debt and deficit outlook of the country. It is inappropriate to take Medicare savings off of the table to pay for long-term reform packages to bend the curve of health care spending. Sponsored by Sen. Sessions.

Mixed

• Require CBO to Report Budget Effects of ACA - Passed on a Voice Vote

The amendment requires CBO to include in their annual economic and budget outlook the changes in direct spending and revenue associated with the ACA. However, the Congressional Budget Office has previously been asked to do this, and they noted the difficulty of obtaining separate estimates for the ACA (like any existing legislation) "as the conditions that would have prevailed in the absence of the original legislation become increasingly uncertain." Sponsored by Sen. Johnson.

• Replace the 2016 Sequester with Updated Budget Projections and Provide for Further Sequester Replacement - Failed 10 to 12

This amendment eliminates $37 billion in defense and $37 billion in nondefense sequester in 2016, paying for it by updating the baseline to use March's CBO baseline (rather than January), which included more positive revenue projections. This is an inappropriate offset, as updating the baseline does not result in any actual additional revenue raised. However. the amendment's additional mechanisms for an eventual deal to fix the FY 2016 and beyond sequester are important. Sponsored by Sen. Murray.

• Scorekeeping Rule for Fannie/Freddie - Passed on a Voice Vote

The amendment bars the use of Fannie and Freddie guarantee fees (G fees) as offsets. Fortunately this amendment removes G fee changes for paying for other spending or tax breaks; however, changing G fees should be able to be scored as deficit reduction. Sponsored by Sens. Crapo, Warner, Corker, and Merkley.

We will continue to dive into the House and Senate budgets in the coming days and compare them with alternative budgets as they come out. You can also read more about developments with the FY 2016 budget here.