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Digest for H.Con.Res. 34
112th Congress, 1st Session
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H.Con.Res. 34
Establishing the budget for the United States Government for fiscal year 2012 and setting forth appropriate budgetary levels for fiscal years 2013 through 2021
Sponsor Rep. Ryan, Paul
Committee Budget
Date April 14, 2011 (112th Congress, 1st Session)
Staff Contact Andy Koenig

On Thursday, April 14, 2011, the House is scheduled to consider H.Con.Res. 34, under a rule.  H.Con.Res. 34, was introduced by Rep. Paul Ryan (R-WI) and was reported out of the House Committee on the Budget by a vote of 22–16 on April 11, 2011.  The rule for consideration of the resolution makes in order Chairman Ryan’s Amendment in the Nature of a Substitute and provides for four hours of general debate.

The rule also makes in order five substitute budget resolutions submitted. A forthcoming summary of these substitute resolutions will be distributed when it is complete.  Substitutes made in order include the following:

  • An amendment offered by Rep. Cleaver (D-MO)—The Congressional Black Caucus budget substitute;
  • An amendment offered by Rep. Cooper (D-TN)—A stand-alone budget substitute;
  • An amendment offered by Reps. Garrett (R-NJ), Jordan (R-OH), McClintock (R-CA) and Mulvaney (R-SC)—The Republican Study Committee budget substitute;
  • An amendment offered by Reps. Raul Grijalva (D-AZ), Honda (D-CA), Barbara Lee (D-CA), Woolsey (CA) and Ellison (MN)—The Progressive Caucus budget substitute;  and
  • An amendment offered by Rep. Chris Van Hollen (D-MD)—The Democrat budget substitute.

H.Con.Res. 34 would set the federal government's budget policies for FY 2012 and projects spending, revenues, and deficits over a ten-year budget window between Fiscal Years 2012 and 2021.  The budget sets the total limits of spending, revenue and debt for a given year and outlines a plan to achieve those levels, but does not provide specific funding or policies for agencies or programs.  For additional information and supplementary materials on the FY 2012 Budget Resolution, including a detailed report on the budget, please see the House Budget Committee website or the House Republican Conference’s budget page.

 

Spending

The budget would provide for $3.529 trillion in spending outlays in FY 2012 and assumes revenues of $2.533 trillion, resulting in a deficit of $995 billion.  Spending in FY 2012 under H.Con.Res. 34 would be $111 billion lower than spending under the current CBO baseline and $179 billion below the President’s budget projection.  Over ten years, spending under H.Con.Res. 34 would total $39.9 trillion.  Over ten years, H.Con.Res. 34 would reduce spending by $5.8 trillion compared to the current CBO baseline and $6.2 trillion relative to the President’s request.

As a percentage of GDP, spending would decrease from 24.1 percent in FY 2011 to 22.5 percent in FY 2012.  In FY 2017, H.Con.Res. 34 would bring government spending down to 19.9 percent of GDP and spending would not grow beyond 20 percent of the economy for the remainder of the budget window.  Under the current CBO baseline, spending as a percentage of GDP would be 23.3 percent in FY 2012 and 24 percent in FY 2021.  Under the President’s budget, spending as a percentage of GDP would be 23.6 percent in FY 2012 and 23.1 percent in FY 2021.  The historic average of government spending as a percentage of GDP from the end of World War II to today (1946–2010) has been 19.7 percent.

Revenue

H.Con.Res. 34 would project $2.553 trillion in revenues in FY 2012, which would be $25 billion lower than projected revenues under the current CBO baseline and $11 billion below the President’s budget projection.  Over ten years, revenues under H.Con.Res. 34 would total $34.8 trillion.  H.Con.Res. 34 would reduce revenues over ten years (primarily from tax receipts) by $4.1 trillion compared to the current CBO baseline and $1.8 trillion relative to the President’s request.

As a percentage of GDP, H.Con.Res. 34 projects that revenues would total 16.1 percent in FY 2012 and 18.3 percent in FY 2021.  Over the ten year budget window, revenues would average 17.7 percent of GDP under H.Con.Res. 34.  Under the current CBO baseline, revenues as a percentage of the economy would be 16.3 percent of GDP and rise to 20.8 percent of GDP by 2021.  Under the President’s budget proposal, revenue as a percentage of GDP would be 16.6 percent in FY 2021 and would grow to 20 percent of GDP in FY 2021.  The historic average of government revenues as a percentage of GDP from the end of World War II to today (1946–2010) has been 17.7 percent—the same as revenues over ten years under H.Con.Res. 34.

 

H.Con.Res. 34 Compared to CBO's Baseline and the President's Budget
(In Billions) 

 

H.Con.Res. 34

H.Con.Res. 34 vs. CBO Baseline

H.Con.Res. 34 vs. President's Budget

Year

Outlays

Revenue

Deficit

Outlays

Revenue

Deficit

Outlays

Revenue

Deficit

2012

3529

2533

-995

-111

�25

�86

�179

�11

�169

2013

3558

2860

-698

-221

�227

6

�241

�39

�203

2014

3583

3094

-489

-371

�346

�24

�393

�118

�275

2015

3667

3237

-430

-513

�406

�107

�523

�206

�318

2016

3855

3377

-478

-605

�448

�157

�620

�258

�363

2017

3996

3589

-407

-665

�482

�183

�691

�228

�463

2018

4123

3745

-378

-733

-527

�206

�773

�249

�524

2019

4354

3939

-415

-794

�544

�250

�846

�240

�606

2020

4547

4142

-405

-865

�561

�304

�935

�240

�696

2021

4745

4354

-391

-935

�597

�338

�1,011

�243

�768

Total

39958

34870

-5087

-5813

-4162

-1649

-6214

-1831

-4382

 

Deficits

H.Con.Res. 34 would project a deficit of $995 billion in FY 2012, which would be $86 billion lower than the projected deficit under CBO’s baseline and $169 billion less than the deficit projected by the President’s budget.  Over ten years, projected deficits under H.Con.Res. 34 would total $5.088 trillion.  H.Con.Res. 34 would reduce deficits projected under CBO’s baseline by $1.6 trillion over ten years and would reduce the amount of deficits projected under the President’s budget by $4.38 trillion over the budget window.

As a percent percentage of GDP, the FY 2012 deficit would be 6.1 percent in 2012 and would average 2.7 percent over the ten year budget window.  Under CBO’s baseline, the FY 2012 deficit would be 7 percent of GDP and deficits would average 3.6 percent over the budget window.  Under the President’s budget, the deficit would be 7 percent in FY 2012 and deficits would average 3.7 percent of GDP over the budget window.  The historic average of annual government deficits as a percentage of GDP from the end of World War II to today (1946–2010) has been 2 percent.

 

Reserves and Contingencies

Generally, budget resolutions provide for adjustments to specific spending allocations subsequent to adoption of the resolution.  H.Con.Res. 34 includes reserve funds to allow for allocation adjustments under certain circumstances. 

Global War on Terrorism:  H.Con.Res. 34 would allow allocations to be adjusted in FY 2012 for the global war on terrorism.

Reserve Fund for Health Care Reform:  H.Con.Res. 34 would allow allocations to be revised for any legislation that repeals the Patient Protection and Affordable Care Act or the Health Care and Education Reconciliation Act of 2010 (ObamaCare).

Reserve Fund for the Sustainable Growth Rate of Medicare:  H.Con.Res. 34 would allow revisions to allocations, aggregates, and other appropriate levels for the budgetary impact provisions relating to the system of Medicare payments to doctors (the so-called “doc fix”), so long as it does not increase the deficit in the period of FY 2012–FY 2021.

Reserve Fund for Deficit-Neutral Revenue Measures:  H.Con.Res. 34 would allow allocation adjustments for any legislation to decrease revenue, so long as it does not increase the deficit in the period of FY 2012–FY 2021.

Deficit-Neutral Reserve Fund for Rural Counties and Schools:  H.Con.Res. 34 would allow allocation adjustments for legislation that makes changes to or provides for the reauthorization of the Secure Rural Schools and Community Self Determination Act of 2000 or the Payments in Lieu of Taxes Act of 1976, so long as it does not increase the deficit in FY 2012, over the FY 2012–FY 2016 period, or over the FY 2012–FY 2021 period.

 

Budget Enforcement

Discretionary Spending Limits:  H.Con.Res. 34 would set discretionary budget authority and outlay limits for each year of the FY 2012–FY 2021 period.  Under the resolution, it would not be in order to consider any bill that caused discretionary budget authority to exceed any level set forth in the resolution.  The discretionary budget authority limits under the resolution are as follows:

  • $1.019 trillion in FY 2012.
  • $1.027 trillion in FY 2013.
  • $1.038 trillion in FY 2014.
  • $1.046 trillion in FY 2015.
  • $1.055 trillion in FY 2016.
  • $1.067 trillion in FY 2017.
  • $1.085 trillion in FY 2018.
  • $1.103 trillion in FY 2019.
  • $1.122 trillion in FY 2020.
  • $1.141 trillion in FY 2021.

Limitation on Advance Appropriations:  H.Con.Res. 34 would prohibit any bill from providing advance appropriations with the exception of $52.5 billion for fiscal year 2013 for Veterans Medical Services, Veterans Medical Support and Compliance, and Veterans Medical Facilities.  It also allows up to $28.8 billion in additional advanced appropriations for other veterans health programs.

Adjustments of Aggregates and Allocations:  H.Con.Res. 34 would provide a special enforcement mechanism for legislation reducing revenues.  Any measure that reduces revenue relative to the March 2011 CBO baseline would be subject to a point of order unless it is specifically provided for in this section of the resolution.  

Under the resolution, the Chairman of the Committee on the Budget would be authorized to make allocation adjustments for the budgetary effects of the following provisions:

  • The budgetary effects of extending the Economic Growth and Tax Relief Reconciliation Act of 2001;
  • The budgetary effects of extending the Jobs and Growth Tax Relief Reconciliation Act of 2003;
  • The budgetary effects of adjusting the Alternative Minimum Tax (AMT) exemption amounts to prevent a larger number of taxpayers as compared with tax year 2008 from being subject to the AMT;
  • The budgetary effects of extending the estate, gift, and generation-skipping transfer tax provisions of title III of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010;
  • The budgetary effects of measures providing a 20 percent deduction in income to small businesses;
  • The budgetary effects of measures implementing trade agreements;
  • The budgetary effects of measures repealing the tax increases from ObamaCare;
  • The budgetary effects of measures reforming ObamaCare, so long as the measure repeals the individual mandate included in ObamaCare or modifies the subsidies to purchase health insurance; and
  • The budgetary effects of measures reforming the tax code and lowering tax rates.

Limitation on Long-Term Spending:  H.Con.Res. 34 would prohibit the consideration of any legislation that would increase spending by more than $5 billion in any ten-year period over the 40 year period following enactment of the most recent concurrent budget resolution.

Budgetary Treatment of Certain Transactions:  H.Con.Res. 34 would provide that the Committee on Appropriations retains control of the administrative expense of the Social Security and the United States Post Office.  In addition, the resolution would clarify that allocations to the Committee on Appropriations of the House would be enforced using estimates of the budgetary effects of a measure that include any off-budget discretionary amounts.  This section of the legislation would also allow allocation adjustments for legislation that reforms the federal retirement system without causing a net increase in the deficit.

Application and Effect of Changes in Allocations and Aggregates:  H.Con.Res. 34 would stipulate that any change in allocation or aggregates made pursuant to the resolution would apply while that measure is under consideration, take effect upon the enactment of that measure, and be published in the Congressional Record as soon as practicable.

Fair Value Estimates:  H.Con.Res. 34 would provide the Chairman or Ranking Member of the Committee on the Budget the authority to request a supplemental estimate scored using “fair value”—which generally incorporates market risk—for any program affecting or establishing Federal loans or loan guarantees.

 

Policy Statements

Policy Statement on Medicare: H.Con.Res. 34 includes a number of House findings regarding the Medicare program including the following, the Medicare Hospital Insurance Trust Fund will be exhausted by 2020 and unable to pay scheduled benefits, and Medicare costs for the 46 million Americans who depend on it is growing faster than the economy.  The resolution notes that failing to address these problems will leave millions of American seniors without adequate health security and younger generations burdened with enormous debt to pay for spending levels that cannot be sustained.

In order to address the Medicare crisis, H.Con.Res. 34 assumes Medicare reform which would ensure that:

  • Current Medicare benefits are preserved for those in and near retirement, without changes.
  • For future generations, when they reach eligibility, Medicare is reformed to provide a premium support payment and a selection of guaranteed health coverage options from which recipients can choose a plan that best suits their needs.
  • Medicare will provide additional assistance for lower-income beneficiaries and those with greater health risks.
  • Medicare spending is put on a sustainable path and the Medicare program becomes solvent over the long-term.

Policy Statement on Social Security:  H.Con.Res. 34 assumes reform in the form of a trigger which would require that in any year the Social Security Trustees issue a report that shows that the 75-year actuarial balance of the Social Security Trust Fund is in deficit, the Trustees should report recommendations for achieving a positive 75-year actuarial balance to the President.  The President would then be required to submit legislation to Congress in the same calendar year and include recommendations to achieve actuarial balance and the House and Senate should also introduce legislation upon receipt of the President’s bill.  H.Con.Res. 34 would stipulate that the legislation should be reported by appropriate committees and considered in Congress within 60 days under expedited procedures.  In addition to achieving actuarial balance, the President’s proposal should: 1) protect those in or near retirement, 2) preserve the safety net for S.S. disability recipients, 3) improve fairness for participants, and 4) reduce the burden and ensure certainty for future generations.  

Policy Statement on Budget Enforcement and Debt Controls:  H.Con.Res. 34 would state that it is the policy of this resolution that in order to begin to bring debt under control the following statutory spending and debt controls are needed:

  • Enforceable statutory caps on discretionary spending at levels set forth in FY 2012 for the period of FY 2012–FY 2021.
  • Any increase in the statutory debt limit be accompanied by the enactment of a budget enforcement mechanism to ensure that if spending reductions are not achieved there would be:
  1. An across-the-board reduction in spending at the end of the year;
  2. A fast-track process or failsafe mechanism to give Congress the ability to expedite consideration of legislation to reduce spending and avoid the automatic across-the-board spending reductions; and
  3. An exemption of Social Security from these enforcement mechanisms, with Social Security solvency ensured.
  • Limits on total spending with long-term structural reforms that require:
  1. OMB and CBO to provide long-term budget projections;
  2. Enforceable caps on total spending as a share of gross domestic product;
  3. Review by Congress of Congressional Budget Office projections relative to the statutory caps;
  4. An enforcement mechanism to ensure that if these spending reductions are not achieved, there would be an across-the-board reduction in spending at the end of the year; and
  5. A fast-track process or failsafe mechanism to provide Congress with the ability to expedite consideration of legislation to reduce spending and avoid the automatic across-the-board spending reductions.

A CBO cost estimate for H.Con.Res. 34, was not available as of press time.

Policy Assumptions

While the text of the budget resolution does not provide specific policy assumptions for every aspect of the federal budget, the Committee Report accompanying the resolution includes certain policy assumptions for meeting the spending and revenue projections outlined in the resolution.

Medicare Reform:  According to House Report 112-058, the resolution assumes reforms that would protect health and retirement security.  Starting in 2022, new Medicare beneficiaries would be enrolled in the same kind of health care program that members of Congress enjoy.  Future Medicare recipients would be able to choose a plan that works best for them from a list of guaranteed coverage options. This is not a voucher program, but rather a premium-support model. A Medicare premium-support payment would be paid, by Medicare, to the plan chosen by the beneficiary, subsidizing its cost.  In addition, Medicare would provide increased assistance for lower-income beneficiaries and those with greater health risks.  Reform that empowers individuals—with more help for the poor and the sick—would guarantee that Medicare can fulfill the promise of health security for America's seniors.

Welfare and Medicaid Reform:  According to House Report 112-058, the budget would build upon the historic welfare reforms of the late 1990s by converting the Federal share of Medicaid spending into a block grant that lets States create a range of options and gives Medicaid patients access to better care.  The budget proposes similar reforms to food stamps, ending the flawed incentive structure that rewards States for adding to the program's rolls.  Finally, this budget recognizes that the best welfare program is one that ends with a job: it would consolidate dozens of duplicative job-training programs into more accessible, accountable career scholarships that would better serve people looking for work.

While strengthening welfare programs for those who need them, the budget calls for eliminating welfare for those who do not.  It targets corporate welfare, first by ending the conservatorship of Fannie Mae and Freddie Mac that is costing taxpayers hundreds of billions of dollars.  It would get rid of the permanent Wall Street bailout authority that Congress created last year.  It would roll back expensive handouts for uncompetitive sources of energy, calling instead for a free and open marketplace for energy development, innovation, and exploration.

Tax Reform:  According to House Report 112-058, the budget would focus on growth by reforming the Nation's outdated tax code, consolidating brackets, lowering tax rates, and assuming top individual and corporate rates of 25 percent.  It maintains a revenue-neutral approach by clearing out a burdensome tangle of deductions and loopholes that distort economic activity and leave some corporations paying no income taxes at all.

Budget Enforcement:  According to House Report 112-058, this budget proposes process reforms--including real—enforceable caps on spending—to make sure government spends and taxes only as much as it needs to fulfill its constitutionally prescribed roles.

Social Security:  According to House Report 112-058, this budget calls for policymakers to work together to enact common-sense reforms. The goal of this proposal is to achieve a solution similar to the plan the President's bipartisan Fiscal Commission put forward to save Social Security for current retirees and strengthen it for future generations.

Highlights of the Path to Prosperity

GROWTH AND JOBS

  • According to a recent study by the Heritage Center for Data Analysis, the Path to Prosperity would create nearly 1 million new private-sector jobs next year, bring the unemployment rate down to 4 percent by 2015, and result in 2.5 million additional private-sector jobs in the last year of the decade.
  • According to the study, the Path to Prosperity would spur economic growth, increasing real GDP by $1.5 trillion over the decade.
  • According to the study, the Path to Prosperity would result in $1.1 trillion in higher wages and an average of $1,000 per year in higher income for each family.

SPENDING

  • The Path to Prosperity would cut $6.2 trillion in government spending over the next decade compared to the President’s budget, and$5.8 trillion relative to the current policy baseline.
  • The Path to Prosperity wouldbring government spending to below 20 percent of the economy, a sharp contrast to the President’sbudget, which never falls below 23 percent of GDP over the next decade.
  • The Path to Prosperitywould reduce non-security spending by $1.1 trillion relative to the President’s budget over the next decade.

DEBT AND DEFICITS

  • The Path to Prosperity would reduce deficits by $4.4 trillion compared to the President’s budget over the next decade.
  • The Path to Prosperity would surpass the President’s low benchmark of sustainability—which his own budget fails to meet—by reaching primary balance in 2015.
  • The Path to Prosperity would put the budget on a path to balance and pays off the debt.

TAXES

  • The Path to Prosperity would keep taxes low so the economy can grow by eliminating the roughly $800 billion tax increase imposed bythe President’s health care law.   In addition the resolution would prevent the $1.5 trillion tax increase called for in the President’s budget.
  • The Path to Prosperity would call for a simpler, less burdensome tax code for households and small businesses. The resolution would also lower tax rates forindividuals, families and businesses.  This budget would set top rates for individuals and businesses at 25 percent.

GOVERNMENT TAKEOVER OF HEALTH CARE

  • The Path to Prosperity would repeal and defund ObamaCare, ensuring that not a penny is spent on the government takeover ofhealth care that was enacted last year. Instead, it moves toward patient-centered health care.
  • The Path to Prosperity would stop the raid on the Medicare Trust Fund that was going to be used to pay for ObamaCare.  Any current lawMedicare savings would be required to go to saving Medicare, not financing the creation of new governmenttakeover of health care.