Committee for a Responsible Federal Budget

Fill in the Blanks: The Unspecified Parts of the Budget Resolutions

Mar 22, 2013 | Budgets & Projections

Continuing in our analysis of the FY 2014 budget resolutions, we will be discussing the things in the budgets that the authors didn't tell you. There were a lot of specifics in these plans that were left up to committees to figure out or for policymakers to work out down the road. Doing so is not really a gimmick, since budget resolutions cannot enact any actual policies; rather, they create processes or parameters within which Congress works. Still, there were many areas where budgets did not specify what they would like to see in areas where they called for savings. Leaving these savings unspecified, without giving illustrative policies, may hide difficult choices that lawmakers would have to make.

We will examine some areas where the three party-endorsed budget resolutions -- from the House Republicans, Senate Democrats, and House Democrats -- left fill-in-the-blanks. They are:

  • Tax Reform: This is definitely the biggest question mark in all three budgets. According to the Tax Policy Center, the Ryan budget specifies tax reform parameters -- 10 and 25 percent rates, Alternative Minimum Tax repeal, Affordable Care Act tax increase repeal, and a 25 percent corporate tax rate -- which would reduce revenue over ten years by $5.7 trillion. Since the budget maintains current law revenue levels, that means there is a $5.7 trillion hole that would have be filled with tax expenditure reductions and eliminations or other revenue sources. Both the Murray and Van Hollen budgets call for revenue -- $975 billion and $1.2 trillion, respectively -- from reducing tax expenditures for high earners and corporations. While this is a more easily reachable goal than the Ryan budget's, Howard Gleckman of TPC notes that political reality may make this goal more difficult than it seems. Still, it is in reach as long as policymakers are willing to put the largest tax expenditures on the table. Murray's budget specifically mentions a broad-based limitation on deductions.
  • Doc Fix: Senator Murray's budget, to her credit, fully represents the cost of repealing the Sustainable Growth Rate (SGR) formula ($138 billion over ten years) in her budget. By contrast, both the Ryan and Van Hollen budgets call for repeal of the SGR in the context of a deficit-neutral reserve fund. This means that the details of how to offset the doc fix are left up to lawmakers, but they are able to count those offsets in their budget. Granted, both budgets call for health savings that are greater than the cost of the doc fix, but dipping into those pool of savings would obviously increase their deficit numbers. Which brings us to...
  • Health Savings: Both the Murray and Van Hollen budgets call for about $275 billion of gross health savings but does not explicitly endorse any policies. The Van Hollen budget does say that those savings could include expanding Medicaid rebates to low-income beneficiaries in Medicare Part D and using recommendations from the Government Accountability Office (GAO) and MedPAC for reducing overpayments and altering mis-aligned incentives. CBO scored the drug policy itself last year, saying that it would raise $137 billion in the 2013-2022 period. Assuming the estimate hasn't changed drastically, that would get the budget half way to its target. The Murray budget is more vague about where the health savings would come from, mostly discussing expanding on the delivery system reforms in the Affordable Care Act and increasing program integrity spending in health care spending to root out waste, fraud, and abuse. As of yet, there aren't savings to be attached to the things mentioned in Murray's budget because they are not specific enough.
  • Other Mandatory Savings: All three budgets call for other mandatory savings that are not fully specified. Both Van Hollen and Murray have holes of only about $75 billion to fill, about a third of which is taken up by reductions in farm subsidies. The Van Hollen budget also mentions reforms to the Pension Benefit Guaranty Corporation (PBGC) and eliminating duplications mentioned in GAO reports. The Murray budget mentions selling excess federal property, reducing improper payments, and taking a look at the President's budget's "Cuts, Consolidations, and Savings" section. The Ryan budget calls for $962 billion of other mandatory savings over ten years relative to current law. Its detailed committee report provides specific savings for a number of policies -- block granting food stamps, increasing federal employee retirement contributions, repealing the Social Services Block Grant, reforming the Postal Service, and reducing farm subsidies -- that total about $325 billion, leaving another $635 billion. The budget does mention other policies like reforming the PBGC, reforming or repealing financial regulations, and winding down Fannie Mae and Freddie Mac, and although the savings and policies are not exactly specified, they most likely would not total $635 billion. The budget also calls for reforms to education programs and other means-tested entitlements, but it is unclear how much they would save without more details.

Budget resolutions are not necessarily supposed to be fully completed documents, but this blog shows that if one of these resolutions was accepted, policymakers would still have plenty of work to do to figure everything out.