On Thursday, February 2, 2012, the House is scheduled to begin consideration of H.R. 3578, the Baseline Reform Act of 2011, subject to a rule. The rule provides one hour of debate, equally divided and controlled by the chairs and ranking minority members of the Budget Committee. The rule also makes one amendment in order, which is debatable for up to ten minutes. A summary of the amendment made in order under the rule is available below the summary of the bill. The bill was introduced on December 7, 2011, by Rep. Rob Woodall (R-GA) and referred to the House Budget Committee. On January 24, 2012, the Committee held a mark-up on the bill. The bill was reported, as amended, on January 30, 2012.

H.R. 3578 would remove the automatic annual inflation adjustment from CBO’s discretionary baseline spending projections, thereby removing the baseline assumption that discretionary spending will increase each year. The bill would require CBO to project future discretionary spending “at the level provided for the budget year in full-year appropriations acts,” requiring CBO to use “zero baseline” budgeting for discretionary spending projections.

H.R. 3578 would also require the CBO Director to prepare a new annual report containing budgetary projections that assume the extension of current tax policy. This report would be required in addition to the current-law baseline projections. “Current tax policy” would mean assuming the extension of the Economic Growth and Tax Relief Reconciliation Act of 2001, the Jobs and Growth Tax Relief Reconciliation Act of 2003, the alternative minimum tax as in effect for taxable years beginning in 2011, and the estate and gift taxes. In addition, the bill would require the Director of the CBO to submit the agency’s Long-Term Budget Outlook on or before July 1 of each year and that the outlook cover at least the ensuing 40 fiscal years.

According to Committee Report 112-378, current law requires CBO and OMB to assume that discretionary federal spending will continue over the course of the ten-year budget window and increase at the rate of inflation. These requirements added approximately $1.4 trillion in outlays (over ten years) to the discretionary baseline in 2011. This assumption of additional spending in the baseline evidences a bias toward additional spending. It also creates the anomalous situation where a program’s funding could be increased in comparison to the previous year but still be called a cut because the funding level is below the inflationary increase assumed in the discretionary baseline.

The bill removes the inflationary assumption and other special exceptions from the discretionary baseline, requiring that the baseline assume neither an increase nor a decrease for these programs. The baseline provides information to the Congress and does not govern what is contained in the budget resolution or the appropriations bills that provide legal spending authority. As a result, changing the baseline does not change funding for these programs, but it does remove an upward bias in spending by comparing spending to previous year’s levels and not an inflated baseline.

According to CBO, implementing H.R. 3578 would “not have a significant impact on the federal budget.” 

Amendment No. 1—Rep. Jackson-Lee (D-TX): The amendment would require the Director of CBO to prepare an analysis and study of the impact of the H.R. 3578 on present and future Social Security recipients. The report would be required within 90 days of enactment.