|Date||July 29, 2011 (112th Congress, 1st Session)|
|Staff Contact||Andy Koenig|
On Thursday, July 28, the House is scheduled to begin consideration of an amendment in the nature of a substitute to S. 627, known as the Budget Control Act of 2011. The bill is scheduled to be considered under a rule providing two hours of general debate with one hour equally divided and controlled by the chair and ranking minority member of the Committee on Rules, 30 minutes equally divided and controlled by the chair and ranking minority member of the Committee on Ways and Means, and 30 minutes equally divided and controlled by the chair and ranking minority member of the Committee on the Budget.
The Budget Control Act of 2011 would create and enforce discretionary spending caps to cut and restrain spending over the next ten years. According to CBO, the bill would reduce total spending by $917 billion between FY 2012 and FY 2021, relative to CBO’s current baseline, and provide for a $900 billion increase in the statutory debt limit, subject to a Congressional disapproval process. The bill would cut a total of $22 billion in spending in FY 2012. In addition, the bill would require that a Balanced Budget Amendment be approved in the House and Senate and sent to the states for ratification before the debt limit could be raised under procedures established in the bill. The bill would establish a Joint Select Committee on Deficit Reduction to identify $1.8 trillion in deficit reduction and allow for an additional increase of the debt limit of $1.6 trillion (subject to disapproval), if the deficit reduction plan set forth by the joint select committee is enacted and the Balanced Budget Amendment is sent to the states. The bill would also provide mandatory savings through enhanced program integrity and address the Pell Grant shortfall, offset by making reforms to the student loan program.
TITLE I—TEN YEAR DISCRETIONARY CAPS WITH SEQUESTER
Enforcing Discretionary Spending Limits: The Budget Control Act of 2011 would establish discretionary spending limits for fiscal years 2012 through 2021 and provide for automatic reductions in discretionary spending (sequestration) if annual spending limits in the bill are breached. The bill would also prohibit the House and Senate from considering legislation that would increase spending beyond the discretionary limits in the bill, subject to a point of order. Under the bill, 15 days after Congress adjourns at the end of a session, a sequestration would occur to automatically reduce spending by any amount over the cap. The bill would stipulate that each discretionary account would be reduced by an equal percentage necessary to eliminate the breach. The bill would provide the president with the authority to exempt spending for military personnel from sequestration, resulting in an across-the-board sequestration to the remainder of Department of Defense accounts in an amount necessary to make up for the lack of reductions in the military personnel account.
Under the legislation, if there is a continuing resolution providing funding for only a portion of the year in effect during the 15 day period following the end of a session, then the amount of sequestration would be based on the annualized amount of discretionary funding under the partial bill or from a full-year appropriation when one is approved. In addition, if an appropriation were approved while the fiscal year was in progress and breached the spending cap, the bill would include a “look-back” provision to sequester the amount of the breach from that fiscal year, or from the next fiscal year’s funding. The Budget Control Act of 2011 would require the Congressional Budget Office (CBO) to provide the Office of Management and Budget (OMB) with an estimate of new discretionary budget authority for the current year when Congress completes action on any discretionary appropriation. Within seven days of receiving the estimate, the OMB would be required to send Congress the estimate provided by CBO, an additional estimate provided by OMB, and an explanation of any difference between the two estimates.
Adjustments to Discretionary Spending Limits: The Budget Control Act of 2011 would limit adjustments to discretionary spending limits to emergency appropriations, appropriations to reduce net federal waste and abuse in security and health care programs, and appropriations for the global war on terrorism. The bill limits the definition of the term “emergency” spending as unanticipated funding provided for “the prevention or mitigation of, or response to, loss of life or property, or a threat to national security.” In order for appropriations exceeding the caps to be designated as “emergency” spending, the bill would require the concurrence of the president and Congress. In addition, the bill would provide Members the opportunity during the legislative process to strike an emergency designation and to offset the spending with other cuts.
Discretionary Spending Limit: The legislation would establish discretionary spending limits, subject to the sequestration process previously described. It sets separate discretionary limits for defense programs (function 050) for FY 2012 and FY 2013, which would effectively establish a funding range for defense spending. The bill would also prohibit the House and Senate from considering legislation that would increase spending beyond the discretionary limits in the bill, subject to a point of order. According to CBO, these spending limits would reduce discretionary outlays relative to CBO’s current baseline by $756 billion over ten years, including a reduction of $25 billion in FY 2012. Discretionary budget authority relative to CBO’s current baseline would be reduced by $840 billion over ten years and $44 billion in FY 2012.
Caps on Discretionary Budget Authority:
Title II—VOTE ON THE BALANCED BUDGET AMENDMENT
Required Vote on the Balanced Budget Amendment: The Budget Control Act of 2011 would require that the House and Senate both vote on passage of a joint resolution proposing a balanced budget amendment to the Constitution. Each chamber would be required to vote on the Balanced Budget Amendment between September 30 and December 31, 2011. In addition, the bill would provide for expedited consideration of the Balanced Budget Amendment by the House and Senate.
TITLE III—DEBT CEILING DISAPPROVAL PROCESS
Presidential Modification of the Debt Ceiling: Upon enactment the Budget Control Act of 2011, if the president certifies that the national debt is within $100 billion of the statutory limit, the Treasury would be authorized to borrow an additional $900 billion, subject to a disapproval resolution in Congress. Under the bill, the debt limit would automatically be increased by $400 billion upon submission of a certification from the president, with the rest of the $900 billion subject to the outcome of the disapproval resolution. The legislation would authorize Congress to consider a resolution of disapproval of the debt limit increase and provide expedited procedures for consideration of the joint resolution of disapproval.
Expedited procedures in the House:
Expedited procedures in the Senate:
If a resolution of disapproval is not agreed to, or is vetoed by the president and the veto is not overridden, the debt limit would increase by $500 billion, for a total debt limit increase of $900 billion. If a resolution of disapproval against the increase is approved and becomes law, $400 billion (the amount of the initial debt ceiling increase) would be subject to pro rata sequestration with exceptions for Medicare, defense, veterans, and Social Security. If the joint committee established in Title IV produces legislation which is enacted and reduces the deficit by more than $1.6 trillion, the Budget Control Act of 2011 would authorize the Treasury Secretary to borrow an additional amount equal to $1.6 trillion, subject to presidential certification and Congressional disapproval. And not only would the second tranche of debt limit increase be dependent on $1.8 trillion in commission saving, the bill would require that a Balanced Budget Amendment is sent to the states before the debt ceiling. Under the bill, both the House and Senate are forced to pass a Balanced Budget Amendment to the Constitution and send it to the states for ratification before the debt limit is increased by an additional $1.6 trillion.
TITLE IV—JOINT SELECT COMMITTEE ON DEFICIT REDUCTION
The bill would establish a twelve member Joint Select Committee on Deficit Reduction, charged with a goal of reducing the deficit by $1.8 trillion between 2012 and 2021. The joint committee is required to provide recommendations (including legislative language) that will significantly improve both the short- and long-term fiscal imbalance of the federal Government. The joint committee would be comprised of 12 members appointed by the majority and minority leaders of the Senate, and the Speaker and minority leader of the House, who each must appoint three members. Members of the joint committee would have to be appointed within 14 calendar days after enactment.
Under the legislation, the joint committee would be required to vote on a report containing recommendations for reducing the deficit, accompanied by a CBO score and legislative text, by November 23, 2011. A majority of the members of the joint committee would have to approve the report and accompanying legislative language. The text of the report and accompanying legislative language would be made public promptly after the vote on adoption of those matters. The report and legislation would be presented to the President and Congress by December 2, 2011.
If approved by the joint committee, the legislative language accompanying their recommendations must be introduced on the next session or legislative day in the House or Senate, respectively. The Budget Control Act of 2011 would provide for an expedited process for consideration of the legislation recommended by the joint committee, requiring House committees to report the bill by December 9, 2011. The vote on passage of the joint committee bill must occur on or before December 23, 2011. The bill would provide for Senate consideration of the bill without amendment.
TITLE V—PELL GRANT AND STUDENT LOAN PROGRAM CHANGES
The Budget Control Act of 2011 would provide $17 billion in mandatory funding over the next two years to fund the shortfall for the federal Pell Grant program. These increases would be offset by eliminating the ability of graduate and professional students to take out subsidized Stafford loans and by eliminating the authority to provide incentives for on-time repayment of student loans. According to CBO, these offsets would reduce mandatory spending by $22 billion, thus the net impact of Title V would be a $5 billion reduction in direct spending.
According to CBO, The Budget Control Act of 2011 would reduce total outlays by $22 billion in FY 2012 and by a total of $917 billion over the FY 2012 through FY 2021 period, relative to CBO’s March 2011 adjusted baseline.