March 19, 2015

The chairmen of the House and Senate Budget Committees released their budget blueprints for fiscal year 2016 and the 2016-2025 period this week, with the House panel starting its markup session yesterday and the Senate committee starting earlier this afternoon.

Both budgets establish “reserve funds” that would allow federal infrastructure spending on the mandatory side of the budget (like Highway Trust Fund contract authority) to be increased above the 2015 enacted levels if additional revenues can be found, and would also allow legislation which “maintains the solvency of the Highway Trust Fund.”

And both budgets strictly adhere to the Budget Control Act’s limit on non-defense discretionary spending for FY 2016, so the Appropriations Committees will both operate from the same aggregate total of $493 billion.

But there are also some key differences between the two plans, especially a provision in the House plan that could allow transportation provisions to be included in an omnibus budget reconciliation bill.

“Macro.” From an overall perspective, both the House and Senate blueprints are largely similar. They both assume no net changes to current tax law, with both plans assuming the Congressional Budget Office’s baseline revenue totals. Both plans shoot for a balanced budget in ten years based solely on spending cuts, with assumed outlays over ten years being $5.8 trillion (House) or $5.7 trillion (Senate) below the CBO baseline. And neither budget would actually achieve balance without the use of “dynamic scoring” but would come close without it (the House budget calls for a $50 billion deficit in 2024 without dynamic scoring but a $33 billion surplus if dynamic scoring is used – but at any rate, the federal deficit has not been below $50 billion in nominal terms since 1974).

Both budgets assume that the bulk of the spending cuts would occur in the various health care accounts.

Appropriations. Both the House and Senate plans assume that over the next ten years, Congress will appropriate significantly more for defense accounts than currently allowed under the Budget Control Act (BCA) and significantly less for non-defense programs than the BCA permits. However, one point about a Congressional budget resolution needs to be stressed – the resolution is binding on non-appropriations committees for ten years, but it is only binding on appropriators for one year. And none of the changes to the BCA spending caps proposed by either budget would take effect in 2016. So, practically speaking, neither budget makes any changes in the spending levels subject to the main BCA caps. (Both budgets do make changes to defense spending that is not subject to the caps, called Overseas Contingency Operations, which started out as a way to segregate funding for Iraq and Afghanistan wars but which is now used to some degree as a work-around for a tight defense cap.)

Non-Defense Discretionary Budget Authority (Billion Dollars)

Mandatory spending. Detailed spending tables for the House resolution are not yet available, but the Senate resolution would limit new Highway Trust Fund contract authority to the estimated amount of HTF tax receipts each year. (We can tell because the resolution decreases total mandatory budget authority for transportation each year by about $12 billion but does not deviate at all from baseline total mandatory outlays, and the only programs where budget authority is totally divorced from outlays are contract authority programs subject to obligation limitation.)

However, the cuts in mandatory transportation spending are not the end of the debate, because…..

Reserve funds. Both resolutions contain “reserve fund” language allowing surface transportation reauthorization bills to exceed the dollar amounts in the resolution under certain conditions. The House language is an exact repeat of last year’s resolution, but the Senate language is a bit broader, covering infrastructure generally instead of Highway Trust Fund solvency in particular. The Senate bill would allow GF to HTF transfers to be offset over ten fiscal years instead of in the year that they occur. The Senate language also requires that any HTF legislation be deficit-neutral over both five-year and ten-year windows (the House language only uses the ten-year window).

The House resolution also repeats with the “Ryan rule” requiring that any general fund bailout of the Highway Trust Fund considered outside a surface transportation reauthorization bill be counted as new spending in the year the transfer occurs. There is no exact counterpart in the Senate language, but the Senate proviso bans all transfers from other trust funds to the HTF (so no more LUST transfers) and specifically requires that GF to HTF transfers be fully offset (but it does not specify a time period, so we presume that to be the standard ten years).

The Senate resolution also establishes a deficit-neutral reserve fund for FAA reauthorization and a “spending-neutral reserve fund” (no revenue increases allowed) for water resources legislation.

Reconciliation. There is one huge difference between the House and Senate budget blueprints, and it has to do with the use of the “budget reconciliation” process. The House resolution issues orders to all House committees to report legislation to the Budget Committee by July 15 providing at least de minimis deficit reduction (the Transportation and Infrastructure Committee is ordered to produce a bill reducing the deficit by at least $100 million over ten years, and $10 million per year is basically a rounding error for a committee whose jurisdictional brief tops $70 billion per year).

The House resolution also gives the Budget chairman the option of packaging the committee submissions into one omnibus bill or moving them to the House floor as several smaller bills. (The House budget does specifically call for the use of reconciliation to repeal “Obamacare,” so one option under the House strategy would be an Obamacare reconciliation bill and an “everything else” reconciliation bill.)

The Senate resolution, by contrast, only gives two committees reconciliation directives (Finance and HELP) and appears only focused on health care savings.

Unlike the rest of the budget resolution, which can be “deemed” to take effect in either chamber without the consent of the other, the reconciliation process can’t really get going unless the House and Senate agree on one single budget plan (the whole point of reconciliation is that a reconciliation bill is immune from filibuster in the Senate, but the Senate parliamentarian won’t grant such protection to a reconciliation bill unless the House and Senate have agreed on a budget calling for it).

But if Congress can enact a budget resolution this year, and if that resolution contains the House version of reconciliation, it raises the possibility of addressing Highway Trust Fund solvency in a reconciliation bill. Some budget experts have long held that it might be easier for Congress to address the issue of HTF solvency outside of the surface transportation bill (as happened in 1997-1998), since a real revenue increase for the Trust Fund would be much more likely to be enacted as part of a much larger budget or tax deal. The House plan would give Congressional leaders the flexibility to do that.

There has been some discussion of using reconciliation as a vehicle for transportation reauthorization legislation, and there is precedent – not on highways but on aviation. The Omnibus Budget Reconciliation Act of 1990 contained the “Aviation Safety and Capacity Expansion Act of 1990” and the “Airport Noise and Capacity Act of 1990” because, as one former staffer told it, Transportation Secretary Skinner and Ways and Means chairman Dan Rostenkowski (D-IL) really wanted a PFC increase for O’Hare and Senate Majority Whip Wendell Ford (D-KY), who also chaired the Senate Aviation Subcommittee, wanted a way to bypass a potential filibuster of the bill by opponents of the airport noise and capacity provisions.

The Senate has a rule (called the “Byrd rule”) prohibiting reconciliation bills from carrying provisions that do not increase or decrease federal outlays or receipts, and it takes at least 60 votes to waive such a point of order. In 1990, the Senate voted, 69 to 31, to waive a D’Amato (R-NY) point of order under the Byrd rule against the aviation provisions of the reconciliation bill (an extremely bipartisan vote – 30 Republicans and 39 Democrats in favor, 15 R’s and 16 D’s opposed).

However, that kind of thing is not likely to happen again. In 1990, the points of order on the reconciliation bill were being organized by Budget ranking member Pete Domenici (R-NM), who was trying to help move the process along swiftly, and Domenici arranged for opponents of the aviation provisions to only make one point of order against the whole thing. If reconciliation is used to carry any kind of transportation authorization legislation, we are much more likely to see something like what happened in 2010. This was when reconciliation was used to make changes in health care – opponents would make separate points of order against every single section or subsection that did not directly affect the deficit (which, in a policy bill, is almost all of them) and would keep forcing record votes until enough provisions were stricken to make the deal fall apart. Reconciliation is a poor choice as a vehicle for legislation that is largely policy-based.

But, as noted above, reconciliation is a great way to move a package of revenue increases and spending cuts that may be unpopular as individual items but which, as a package, can muster 218 votes in the House and 51 votes in the Senate.

Other items. The Senate resolution has a few items that the House resolution lacks:

• In the Senate, the resolution effectively bans rescissions of contract authority without a corresponding reduction in the obligation limitation (“the Chairman of the Committee on the Budget shall not count any rescission of budget authority or contract authority that does not have an effect on outlays”). Committees could still rescind the contract authority but would not be able to use it to offset new budget authority (as the Appropriations Committees used to do – they would rescind over $3 billion in un-spendable highway contract authority each year and use the “savings” to offset $3 billion in real new appropriations).
• The Senate resolution requires CBO to include in its cost estimates a fair value accounting estimate of all legislation relating to federal credit programs. This would not be used to score the legislation (that would require a change in law) but even having the information out there may reduce political support for some transportation-related federal credit programs (TIFIA, RRIF) by highlighting how risky loans might greatly increase potential cost to taxpayers.
• The Senate resolution creates a new 60-vote point of order in the Senate against considering any legislation that has not had a CBO cost estimate posted online at least 28 hours before the vote starts. (In the past, conference reports on highway bills rarely had a cost estimate circulated in advance.)

More details on the House budget can be found here and more information on the Senate budget can be found here.