House Passes FY2012 Budget Resolution

On April 15, the House passed, 235-193, the FY2012 budget resolution (H. Con. Res. 34), sponsored by Rep. Paul Ryan (R-WI). The Budget Committee approved the measure on April 6 (see The Source, 4/8/11).

According to the Budget Committee report, H. Con. Res. 34 would provide $1.14 trillion (budget authority) in discretionary spending and $2.302 trillion in mandatory spending (budget authority), for a total of $3.442 trillion in spending in FY2012. This amount is $267.155 billion below President Obama’s proposed budget.

Included in the amount for discretionary spending for the budget categories, also known as functions, is $32.316 billion for international affairs; $4.895 billion for agriculture; $77.273 for education, training, employment, and social services; $50.122 billion for health; $56.883 billion for income security; and $47.676 billion for justice, among other functions.

The nonbinding budget guideline proposes to convert the federal share of Medicaid to block grants that “gives states the flexibility to tailor their Medicaid programs to the needs of their unique populations” (p. 34). Currently, the Medicaid program operates as a federal-state matching program, which states administer based upon federally established requirements. The states determine eligibility for the program, while the federal government determines the matching rates for each state.

Among the changes recommended for the income security function – which includes unemployment compensation, low-income housing assistance (Section 8), food and nutrition, Temporary Assistance for Needy Families, and Earned Income Credit – the proposal also would convert funding for the Supplemental Nutrition Assistance Program (SNAP) into a block grant for each state to administer according to its population. The new block grant would be indexed for inflation and eligibility; the changes would not take effect until 2015, after employment has recovered (p. 108).

The budget recommends substantial changes to the Pell Grant program, including the elimination of year-round Pell Grants, reducing lifetime limits from 18 semesters to 12 semesters, eliminating eligibility for students who attend classes for less than half-time, and adopting a sustainable maximum award, which currently is $4,860 (p. 95). The resolution would eliminate funding for the Even Start program and would reform and possibly eliminate the Social Services Block Grant program (p. 97).

One of the most controversial provisions of the FY2012 budget resolution includes changing the Medicare program so that younger workers “will be able to choose from a list of guaranteed coverage options, enjoying the same kind of choices in their plans that Members of Congress enjoy today. Medicare would then provide a payment to subsidize the cost of the plan. In addition, Medicare will provide increased assistance for lower-income beneficiaries and those with greater health risks” (p. 35).

On the revenue side, the budget resolution would consolidate the current tax brackets and reduce the top individual tax rate from 35 percent to 25 percent. The tax cuts of 2001 and 2003 would be made permanent.

During consideration of the budget, the House rejected:

• A substitute amendment by Rep. Scott Garrett (R-NJ) on behalf of the Republican Study Committee, 119-136. The amendment would freeze discretionary spending at 2008 levels beginning in 2013 and reduce mandatory spending (except for Medicare, Medicaid, and Social Security) by $1.9 trillion between 2012 and 2021. The amendment would increase the retirement age at which an individual can receive full Social Security benefits to 70 and the age of eligibility for Medicare to 67 for those born after 1952. The amendment also would repeal the Patient Protection and Affordable Care Act (P.L. 111-148).
• A substitute amendment by Rep. Emmanuel Cleaver (D-MO) on behalf of the Congressional Black Caucus, 103-303. The amendment would raise revenue by adopting the revenue options in the president’s FY2012 budget, including the expiration of the tax cuts of 2001 and 2003. The amendment also would include additional funding for education and job training and would not enact the president’s proposed spending cuts to the Community Development Block Grant, the Community Services Block Grant, the Pell Grant program, and the Low-Income Heating Assistance Program;
• A substitute amendment by Rep. Raúl Grijalva (D-AZ) on behalf of the Congressional Progressive Caucus, 77-347. The amendment would extend marriage relief tax credits and incentives for children, but allow the 2001 and 2003 tax cuts to expire. The amendment includes Rep. Jan Schakowsky’s “millionaire tax rate proposal.” In addition, the amendment would enact a public option for health care reform and provide $1.45 trillion in job creation, education, child care, housing, research and development, and energy and broadband infrastructure;
• An amendment by Rep. Chris Van Hollen (D-MD) on behalf of the Democratic Caucus, 166-259. The amendment would provide $585 billion for defense spending, $103.8 billion less than the president’s budget request, and would impose a five-year freeze on non-security discretionary spending. The amendment would phase out the Pell Grant Funding direct spending program and allow for changes to allocations in existing legislation to expand federal child care assistance, prevent child abuse, and modify child support enforcement programs.