Legislative update: FY 2016 budget proposal, House Budget Committee chair

FY 2016 budget proposal, House Budget Committee chair

The chairman of the House Budget Committee today released a fiscal year (FY) 2016 budget resolution that recommends short-term and long-term federal revenue and spending levels.

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The FY 2016 budget resolution and related documents are available on the House Budget Committee website.

A document released by the House Budget Committee Republicans describes the proposed budget as calling for among the following:

  • Comprehensive tax reform that includes:
    • Lower rates for individuals, corporations, and passthrough entities (with a goal or reducing the top individual and corporate tax rates to 25%)
    • Repeal of the alternative minimum tax
    • Transitioning away from a worldwide tax system to “a more competitive international tax system”
    • “Broadening the tax base by closing special interest loopholes that distort economic activity”
  • Repeal of “Obamacare” in its entirety, including all the tax increases, mandates, and subsidies included in that legislation

The draft budget resolution—a policy document that includes directives to various committees of jurisdiction—calls on the Ways and Means Committee to report legislation within its jurisdiction that would have the effect of reducing the deficit $1 billion over 10 years (using macroeconomic estimates), but without increasing revenue relative to current law.

KPMG observation

Note that the Ways and Means Committee has jurisdiction over significant matters other than tax (such as health, social security, and trade). Therefore, Ways and Means would have significant flexibility as to how to achieve its revenue goal.

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).

Next, the House and Senate each considers a budget resolution—a non-binding, internal directive to congressional committees for their consideration as they write legislation implementing the coming year’s budget. This resolution typically is initiated in the budget committee of each chamber. The budget resolution also can set in motion “reconciliation”—a process that limits the Senate’s unrestricted debate rules and allows it to pass the budget-related bills by a simple majority vote (but involves various special rules that can affect the content of legislation).

If the House and Senate agree on spending and revenue targets, their concurrent resolution would establish spending and revenue targets for the substantive committees in each chamber, commencing the reconciliation process.

What’s next?

The House Budget Committee is expected to begin to mark up the House budget resolution later this week.

The chairman of the Senate Budget Committee is expected to unveil a Senate budget proposal soon, as possible as later this week.

It is not clear when the full House and Senate would take up their respective budget resolution bills and when the two chambers would begin to work out any differences between their bills.

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