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Staff Contact: Brad Watson (x69719) May 21, 2008

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Budget Policy Brief

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S.Con.Res. 70---Concurrent Resolution on the Budget for Fiscal Year 2009
Conference Report

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**[Order of Business:]{.underline}** The closed rule ([H.Res.
1214](http://www.rules.house.gov/SpecialRules_details.aspx?NewsID=3342))
provides for one-hour of debate on the Conference Report.

**[Major Provisions of Note:]{.underline}**

-   **The Largest Tax Increase in U.S. History:** The House-passed
    budget resolution's revenue figure assumes expiration of all of the
    2001 and 2003 tax cuts---a \$683 billion tax increase over five
    years. The conference report contains a lower revenue figure, which
    would be the equivalent to a \$347 billion tax increase over five
    years. However, as the House Budget Committee Republicans note,
    ***the effect of this conference report is to require the full \$683
    billion tax increase*** for two reasons. First, the budget
    resolution contains a "tax trigger" which does not allow any of the
    2001 and 2003 tax cuts to continue beyond 2010 unless surpluses are
    projected in 2012 and 2013. Second, nothing in this budget
    resolution waives the PAYGO rule, which would require an extension
    of the 2001 and 2003 tax cuts to be offset with tax increases.

-   **\$80 Billion Increase in FY 2009 Discretionary Spending:**
    Provides an FY 2009 discretionary spending 302(a) allocation to the
    Appropriations Committee of \$1.013 trillion, an \$80 billion or
    8.6% increase compared to last year. This is \$21 billion above the
    President's request, which translates to \$241 billion over five
    years.

-   **Debt Limit Increase:** Per the "Gephardt rule," House passage of
    the FY 2009 budget resolution would result in House approval of an
    increase in the debt limit to \$10.2 trillion. The current debt
    limit is \$9.815 trillion.

-   **War Funding:** Provides \$178 billion for war funding in FY 2008
    and FY 2009, but assumes no spending beyond that amount in
    2010---2013.

-   **Entitlements/Earmarks:** The conference report includes no
    entitlement reform or earmark reform provisions, and contains no
    reconciliation instructions.

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**Comparison of House, Senate, and Conference Report Budget
Resolutions**

**Increase or Decrease in Federal Taxes**:

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Compared to CBO Baseline, as Adjusted to Assume the Extension of the
2001 and 2003 Tax Cuts

Negative Number Signifies Tax Relief, Positive Numbers Are Tax Increases

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# [In Billions of Dollars]{.mark}

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  **PROPOSAL**                       **2009**          **2009-2013**

  House                              -69               +683

  Senate                             -84               +283

  Conference Report                  -71               +683\*
  ---------------------------------- ----------------- -------------------

***Note:*** As mentioned above, the lower \$347 billion tax increase
figure for the conference report does not waive PAYGO and relies on a
tax trigger that allows for extension of some of the tax cuts *only if*
surpluses are projected in 2012 and 2013.

**Total On-Budget (Excludes Social Security) Spending:**

# In Billions of Dollars

  ---------------------------------- ----------------- -------------------
  **PROPOSAL**                       **2009**          **2009-2013**

  House                              2,563             13,489

  Senate                             2,576             13,476

  Conference Report                  2,566             13,483
  ---------------------------------- ----------------- -------------------

**Note:** This analysis does not look at the funding suggested for the
separate functional categories. For discretionary spending, the
Appropriations Committee is not bound by the functional suggestions in
the budget resolution. For direct spending, only reconciliation
instructions to change existing law are of real relevance. In addition,
only the relevant 302(a) committee allocations made in the accompanying
Committee Report are important for budget enforcement.

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**On-Budget Deficit (Excludes Social Security):**

# In Billions of Dollars

  ---------------------------------- ----------------- -------------------
  **PROPOSAL**                       **2009**          **2009-2013**

  House                              -536              -1,373

  Senate                             -564              -1,759

  Conference Report                  -536              -1,703
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**Unified Deficit (Includes Social Security):**

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# In Billions of Dollars

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  **PROPOSAL**                       **2009**          **2009-2013**

  House                              -340              -262

  Senate                             -368              -649

  Conference Report                  -340              -591
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**Increase in the Federal Debt Ceiling:**

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# [In Billions of Dollars]{.mark}

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  **PROPOSAL**                       **2009**          **Increase**

  House                              10,200            +633

  Senate                             10,279            +660

  Conference Report                  10,207            +632
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**Spending Reconciliation:**

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-   The budget resolution contains *no* reconciliation instructions for
    either mandatory spending or revenue.

**Reserve Funds:**

-   Establishes a tax trigger that allows for extension of some of the
    tax cuts *only if* there is a projected a projected surplus in 2012
    and 2013, and does not allow more than 80 percent of any surplus to
    be used for tax relief. This is an additional point of order, which
    applies only in the House, against extending the 2001 and 2003 tax
    cuts.

-   Provides deficit-neutral reserve funds for AMT tax relief and for
    "middle-income tax relief." However, it is important to note that
    since the budget's revenue figures do not reflect such tax relief,
    these reserve funds are meaningless.

-   Creates a total of 37 deficit-neutral spending reserve funds, 20 of
    them for the House and 17 for the Senate. The House reserve funds
    include:

> *Dollars in Millions*

  ---------------------------------------------------- ------------------
  **Reserve Fund**                                     **Five Years**

  SCHIP Reauthorization                                50,000

  Veterans                                             \-\-\--

  Education Benefits Veterans                          \-\-\--

  Infrastructure                                       \-\-\--

  Renewable Energy                                     \-\-\--

  Middle-Income Tax Relief                             \-\-\--

  Alternative Minimum Tax                              \-\-\--

  Higher Education                                     \-\-\--

  Affordable Housing                                   \-\-\--

  Medicare                                             \-\-\--

  Health Care                                          \-\-\--

  Medicaid                                             \-\-\--

  9/11 Health                                          \-\-\--

  Trade Adjustment Assistance                          \-\-\--

  County Payments                                      \-\-\--

  San Joaquin River                                    \-\-\--

  National Park Centennial                             \-\-\--

  Child Support Enforcement                            \-\-\--

  TANF                                                 5,000
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**Budget Process Provisions:**

-   Creates PAYGO point of order for both direct spending and revenue
    measures in the Senate, which could be waived only if 3/5 of
    Senators voted to do so.

-   Creates a point of order in the Senate against reconciliation
    legislation that would increase the deficit or reduce a surplus.
    This would also apply to both direct spending and revenue bills and
    could be waived only if 3/5 of Senators voted to do so.

-   Creates a similar point of order in the Senate against any
    legislation that increases long-term deficits for any of the four
    ten-year budget windows after the FY 2009 to FY 2018 period (FY 2019
    -- FY 2028, etc.).

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-   Loosens a restriction on advanced appropriations by increasing the
    annual restriction from \$25.6 billion to \$28.9 billion, providing
    roughly \$3 billion in additional discretionary spending each year.

-   Exempts funding designated as emergency spending from budget
    constraints.

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