The Senate Budget: Floor Consideration
This week will see a process unfold that hasn’t happened in four years: the Senate as a whole will consider and almost certainly pass a budget resolution. A unique set of rules governs how the Senate debates budgets that will make for a colorful and busy week. Because of these rules, Senators can look forward to late nights and dozens of roll-call votes on potentially painful amendments. This week will likely unfold as a fairly rancorous partisan debate – but that is in many ways a function of the rules themselves. The key feature that dominates this process and separates it from usual order in the Senate is limitation of debate. It is a set of rules that sets aside, at least for about a week, the uneasy truce (at least procedurally) that more often-than-not characterizes legislating on the Senate floor.
Debate in the Senate
Perhaps the most important aspect of Senate deliberation that distinguishes it from that in the House of Representatives is the concept of unlimited debate. It is this concept that, in large part, gives individual senators procedural power. Individual senators have the right, under normal rules, to amend legislation with little restriction and engage in extended commentary on just about anything they so choose. This is by design, and ensures the views of states (to the extent senators represent entire states) and political minorities are represented. Contrasted with the House of Representatives, where majority rule prevails, the Senate is a deliberate and potentially slow-moving body.
Individual senators can effectively grind the Senate to a halt under the normal rules unless a super-majority (60 Senators) agrees to limit debate – known as cloture. However, the entire process by which cloture may be invoked is also time-consuming. As a result the Senate rarely operates under the normal rules. Instead the Senate typically operates through unanimous consent (UC) agreements that govern the schedule and consideration of legislative matters on the Senate floor and provide some degree of structure, predictability, and relative brevity of debate. This is the uneasy procedural truce that usual governs what legislation gets voted on and how much time will be spent on it. However, such agreements require the consent of all senators, and therefore do not limit a senator’s ability to engage in extended debate over their objection, as cloture can have the effect of doing.
Why the Budget Resolution is Different
The consideration of the budget resolution is a different matter altogether, and is governed by statute – specifically section 305(b) of the Congressional Budget Act of 1974. The most critical element of this set of rules is the limitation of debate “to not more than 50 hours.” This is important for two reasons. The first appears obvious – it makes clear just how long the Senate will spend on the matter – a total of 50 hours, which includes debate on amendments, motions, or the routine quorum calls in which the Senate is often engaged. This time is divided equally between the majority and minority parties. Within that 50 hour limit, time for debate on first-degree amendments is further limited to 2 hours, with time for debate on second degree amendments and certain other matters limited further still to 1 hour. Importantly, this time does not include time spent taking votes, which becomes important when the full 50 hours is expended and can add considerably to the time ultimately spent considering a budget resolution.
Secondly, to the extent that the debate is limited, the super-majority vote thresholds that are otherwise necessary to limit debate during normal order are irrelevant. As a result, the budget resolution and related amendments require only simple majorities for passage.
This feature can dramatically change the nature of the underlying bill. In the absence of 60 vote super-majorities (such as those held by Senate Democrats in 2009 and 2010), measures typically require some bipartisanship to pass. As a result, if passage is the goal, legislation will be written to adequately accommodate the interests of a sufficient number of Senators of the minority party to gain at least 60 supporting votes. However, if these votes are not required such as with a budget resolution– the exercise becomes more purely partisan. As a result, floor consideration of a budget resolution is adversarial in nature.
Once drafted and released by the Budget Committee Chairman (in this case, Senator Murray), Senate passage of the budget resolution is virtually guaranteed – fellow members of the majority are generally expected to fall in line. With passage a foregone conclusion, there is little incentive for substantive amendment on the floor. As a result, the amendment process becomes a political exercise, with debate and amendments designed to highlight differences between the majority and minority.
As noted above, time spent voting on amendments is not limited by the 50 hour cap. This feature has given rise to a process known as “vote-a-rama,” whereby the senate considers and votes on dozens of amendments. While the 50 limit applies to debate on amendments, the ability of a Senator to offer and secure a vote on an amendment (subject to certain technical limitations) during the consideration of a budget resolution is largely unfettered. As a result, upon the expiration of the 50 hour time limit, there can be literally hundreds of amendments pending that would require multiple days on end of continuous voting to dispose of. At one point, for example, during floor consideration of the last budget resolution, then-Chairman Conrad noted: “As of now, we have over 230 amendments pending. If you divide 230 by 3 [the time required for a roll-call vote], that is almost 80 hours – about 76, 77 hours. That would mean we would be here all day today, tomorrow, and all day Saturday.”[1] Ultimately many amendments are disposed of in less time-consuming ways such as voice-votes. However, the 38 roll-call votes on amendments and motions related to the FY2010 budget resolution is a significant number of recorded votes over the course of just three days.
This process is informed by the partisan nature of budget consideration and offers the opportunity to force the majority to take votes on politically difficult amendments. It is likely this feature that has encouraged the Senate leadership to avoid taking up a budget in the last 4 years. One should expect that many of the votes that senators take this week will show up again in their re-election campaigns. With the Senate committed to moving a budget resolution on the floor this week, observers will witness a unique legislative process that reflects the confluence of budget and legislative arcana with familiar partisan debate.
[1] Congressional Record, “CONGRESSIONAL BUDGET FOR THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2010,”(Senate - April 02, 2009), page: S4254
A Brief History of President Obama’s “Deficit Neutral” Policies
The president’s customary laundry list of SOTU quick-fixes, included an interesting qualification: none would increase the deficit. Sounds good, but a quick review of past such pledges betrays what this pledge really means – higher taxes and budget gimmicks chasing higher spending.
Making deficit-neutrality the sole budget yardstick ignores how a federal policy interacts with the economy more broadly. It grants equivalency to a policy that would raise $100 billion in taxes while spending $100 billion with one that budgetarily did nothing at all. Both would have no net effect on the deficit, but very different impacts on the economy.
Taken a step farther, this approach to budgeting would celebrate a policy that raises $1 trillion in new taxes and $900 billion in new spending as a deficit reduction plan of $100 billion. While that narrative would not be arithmetically wrong, it is a well practiced deception that has been exercised in at least three different variations by this administration.
The crown jewel of this is the healthcare law. The administration and its allies still trumpet the “deficit reduction” achieved by this law. But this line of argument is predicated on a $788 billion expansion in federal spending that is ultimately netted out by $511 billion in cuts to programs, including Medicare, and $420 billion in higher taxes, according to the original cost estimate. This critique does not address the further budget gimmicks (CLASS Act, off-budget receipts, Medicare double-counting, etc) that further erode the credulity of any claims that the health law approaches fiscal soundness. Rather, it serves to reveal that this administration’s idea of “deficit reduction” is often a rather loaded proposition.
Take also last year’s American Jobs Act. That campaign-style proposal included a number of front loaded costs financed with 10 years of higher taxes. As has been previously noted, short-term spending binges financed by long-term tax increases actually end up costing more than advertised because of the borrowing costs associated with the need to borrow to finance the front-loaded spending. In the case of the American Jobs Act, this new borrowing would have cost $63.7 billion in interest expense – wiping out the claimed $3.2 billion in deficit reduction. Policies structured in this fashion also seem to run afoul of the will of the American people, who, according to one recent poll, appear to view the tax increase debate as settled in the wake of December’s tax hikes.
Finally, look no further than the oft-used near term spending increases offset by 10 years of promised spending cuts. One example of this was the president’s proposal for the so-called “doc fix” in his FY2012 budget. The budget proposed a two-year fix, financed with savings from 10 years worth of cuts. This sort of deficit neutrality exhausts the means to achieve meaningful deficit reduction. Near-term appetites (i.e. an expensive two year expenditure) satisfied by longer-term resources meets the definition of unsustainability that characterizes the federal budget.
The administration has done an admirable job torturing numbers to sell itsg policies as costless or deficit neutral, but such characterizations are misleading and often belie the scope and scale of the true budgetary implications. By either dramatically expanding both sides of the federal ledger through higher taxes and spending or indulging in near-term spending binges financed over the long term, the administration’s past approach to “deficit neutrality” should provoke skepticism that last night’s claim would be any different.
“Manageable”
President Obama took to the podium to chastise Congressional Republicans for daring to suggest that the United States remains in a precarious fiscal position. Instead of acknowledging this reality, the president has posited that the U.S. needs only modest deficit reduction to stabilize the debt. As has been documented elsewhere, this assumption is flawed for a number of reasons.
It is also worth pointing out that the president knows better. One need look no further than the president’s own budget projections, which happens to include massive new tax increases and benign economic feedback, to see just how little progress with the nation’s debt problems has been or will be made if the president gets his way. Even when the president and the administration can create an artificial future – both in terms of policy and economics – we’re still headed for a debt crisis.
Source: OMB: http://bit.ly/VaQKXR
All You Need to Know about Today’s Mid-Session Budget Review
This afternoon the Office of Management and Budget (OMB) released the FY2013 Mid-Session Budget Review. Like all previous such submissions from this Administration, this one also missed the July 16th deadline. No matter, though, since this Review offers little insight into any of the nation’s pressing budgetary challenges, such as the looming fiscal cliff or the nation’s long-term debt problem. Since the FY2013 Budget was released in February little has changed: the economy is still weak (take 1.5% 2nd quarter GDP growth, for example) while the president’s fiscal talking points are essentially the same as they were 5 months ago. In short, there’s really nothing to update.
To be sure, the passage of time has provided that some of OMB’s numbers change. No doubt some news will be made by the facile observation that today’s Budget report predicts a current year deficit that is $100 billion smaller than was predicted in February. Unexpected economic growth? Deficit savings from legislation? Not likely. This change is explained in the following:
“The reduction in the estimated 2012 deficit from February is more than accounted for by lower projections of spending for this year, which are partly offset by lower projected receipts. A portion of the lower deficit is due to revised estimates of the impact of the Administration’s proposals for temporary tax relief and investments to create jobs and jumpstart growth…However, because most of these proposals have not yet been enacted, the MSR estimates that these costs will largely shift to 2013 and later years, which reduces the 2012 deficit.”
Translation: the policies we pretended were going to happen in FY2012 haven’t happened, so we’re going to pretend like they’re going to happen later, making the FY2012 deficit smaller. In other words, the smaller deficit number is not an upside-budgetary surprise. Rather, it confirms pretend policies in February are still pretend policies today.
Everything else is largely unchanged, with net projected deficits $240 billion lower over ten years – a less than 4 percent deviation from the projected 10 year deficit of over $6.4 trillion. The single largest driver of this change is lower projected interest rates that lower projected borrowing costs. This would be nice if it were not associated with projections of lower economic growth.
To the extent anything is new or interesting in this “update” it’s just a timing shift, and an implausible one at that. What remains is the same budget trajectory complete with red ink and tepid economic growth. With all this good news, one has to wonder why the administration would put this out on a Friday afternoon, just before the start of the Olympics.
Still a Sham
There has been quite a bit of discussion of late on the precarious nature of budget projections. Robert Samuelson offers a particularly good review of the fallibility of predicting the future path of federal finances. In this context, recent analyses by the Congressional Budget Office (CBO) are remarkable in demonstrating what hasn’t changed.
When all was said and done, the two laws that comprised “Obamacare” were estimated to reduce 10-year deficits by $143 billion. This quickly became a major selling point. And just as quickly began to unravel.
First, that $143 billion included $19 billion in savings related to student loan policies that hitched a ride in the reconciliation bill that got Obamacare across the legislative finish line. Second, the deficit savings figure benefited from $70 billion in up-front collection of premiums for a new long-term care program known as the CLASS Act. And lastly, the big deficit savings figure counted $29 billion in net Social Security taxes – technically “off-budget” and practically unrelated to health reform. So, with those pieces omitted, the net “on-budget” savings from the ACA only amounted to about $25 billion over 10 years – not quite the budgetary salve that had been advertised.
Over two years have passed since the Affordable Care Act became law. With the passage of time, budget windows advance and nominal dollar figures grow, but the shaky fiscal underpinnings of the law remain.
According to a letter to Speaker John Boehner from the CBO, repealing the ACA would increase deficits by $109 billion over 10 years. This is the net effect of scrapping the new taxes, the Medicare and other such cuts, and the health care subsidies. While technically not the same as a re-estimate of its cost in total, it’s a reasonable proxy. But that number is as illusory today as it essentially was two years ago.
In a few ways the new number is devoid of the tricks that artificially inflated the original claimed savings. The figure does not include the budget effects of the education provisions that were in the original reconciliation bill, so those, like in the cross-walk above are omitted. Gone are the front-loaded CLASS Act collections. Rightly derided as a “Ponzi scheme” by none other than Democratic Senate Budget Committee Chairman Kent Conrad, the CLASS Act has since been abandoned by HHS as actuarially unsound.
However, the ACA still relies on Social Security revenue to paper-over much of the ACA’s cost. This budgetary “plug” has only grown with time to $95 billion or 87 percent of the deficit effect from a repeal effort. Thus for all the lip-service about cost-control and delivery system reform, the “on-budget” savings associated with the ACA (as measured by the cost of repeal) remain paltry – $14 billion. So, while the analyses by CBO today shed more light on the evolution of the ACA, they are also instructive in what hasn’t changed: from a budgetary perspective, the Affordable Care Act is still a sham.
