Legislative update: Congress begins consideration of budget proposals

Congress begins consideration of budget proposals

Congress this week begins consideration of the FY 2016 budget resolutions proposed and reported separately last week by the House Budget and Senate Budget committees.

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Under the budget process (described below), the House and Senate will each consider a budget resolution—an internal directive providing guidance to congressional committees as they write legislation implementing the coming year’s budget.

The House is scheduled to take up the House Budget Committee’s proposed budget resolution later this week (with a number of test votes expected). A final vote on the resolution is anticipated before the weekend.

Earlier this week, the Senate began consideration of the proposed budget resolution passed last week by the Senate Budget Committee. A final vote on the resolution is anticipated by the end of the week.

Overview of budget process

The budget process begins with the submission of the president’s budget proposal (submitted by the Obama administration in February 2015).

The next step is for the House and Senate each to consider a budget resolution. This resolution typically is initiated in the budget committee of each chamber.

Assuming passage of the budget resolutions by the House and Senate this week, the two chambers then would need to convene a joint conference to address and resolve differences between their bills. If successful, this conferencing process, which is anticipated to begin in April, would produce a Concurrent Resolution on the Budget (also referred to as a “Budget Conference Agreement”) that would then need to be passed by both the House and the Senate. The governing budget rules provide for final action on the resolution by April 15, although there are no consequences for failure to meet that deadline, and it is not unusual for the process to extend beyond this date.

If the House and Senate are able to agree on a Budget Conference Agreement and the agreement is passed by both, that agreement will establish spending and revenue targets for the substantive committees in each chamber. The president does not need to sign the Budget Conference Agreement; however, he would need to sign any substantive legislation—i.e., appropriations bills—passed by Congress to implement the directives provided in the budget resolution (or such legislation would need to be able to survive a presidential veto).

In addition, the budget resolution can set in motion “reconciliation”—a process that limits the Senate’s unrestricted debate rules and allows it to pass certain spending and revenue bills by a simple majority, provided that specific parameters set out in the approved resolution as well as extensive rule limitations are followed.

Tax implications

While the tax implications of the budget will not be clear until after a final budget agreement is approved, it is possible that tax reform would not be addressed through the reconciliation process. Without the filibuster protection provided by the reconciliation process, any attempt at tax reform during the coming year would not be protected from a Senate filibuster and, thus, would likely need to be able to meet the higher hurdle of garnering a minimum of 60 votes in the Senate.

Also, it is likely that the House version of the budget would contain language mirroring that chamber’s rule change implemented earlier this year that requires “macroeconomic scoring” of major tax legislation. That rule change, passed in January 2015, requires the Joint Committee on Taxation (JCT) to produce a “point” estimate of the revenue effects (as opposed to a range of possible results) of major tax legislation that takes into account macroeconomic changes, and that estimate would be the official estimate of revenue. 

It is unclear how the Senate budget resolution will address “macroeconomic scoring,” but, based on the proposed resolution approved by the Senate budget committee, it is possible that the Senate may be less definitive on this matter. Thus, macroeconomic scoring could become a subject of negotiation between the two houses in a conference committee process.

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