H.R. 1314, Bipartisan Budget Act of 2015

H.R. 1314

Bipartisan Budget Act of 2015

October 28, 2015 (114th Congress, 1st Session)

Staff Contact

Floor Situation

On Wednesday, October 28, 2015, the House will consider the House amendment to the Senate amendment to H.R. 1314, the Bipartisan Budget Act of 2015, under a rule.   The Senate amended the text of the previously-passed House version of H.R. 1314, the Ensuring Tax Exempt Organizations the Right to Appeal Act, on May 22, 2015, with language regarding Trade Promotion Authority (TPA).  The House subsequently enacted TPA using a different legislative vehicle.  The House amendment, offered by House Speaker John Boehner (R-OH) replaces the Senate changes to H.R. 1314 with the text of the Bipartisan Budget Act of 2015.

Bill Summary

H.R. 1314 encompasses a two-year bipartisan, bicameral, budget agreement with the Administration to secure long-term savings through structural entitlement reforms, protect the economy by ensuring the country does not default on its debt, strengthen national security and protect U.S. Armed Forces, bring certainty to the congressional appropriations process, and protect more people from the President’s health care law, without raising taxes and by offsetting additional spending with mandatory spending cuts and other savings.

Select provisions of the bill include:

Budget Enforcement:  The bill increases spending caps included in current law for defense and non-defense discretionary spending by $50 billion in fiscal year 2016 and $30 billion in fiscal year 2017, equally divided between defense and non-defense spending each year.  Under the agreement, the discretionary budget number will be $1.067 trillion in fiscal year 2016 and $1.070 trillion in fiscal year 2017.  The bill also extends for one year, through fiscal year 2025, implementation of the current two-percent sequester on certain direct spending.

Defense Spending:  The budget adjustments in the bill will increase base discretionary defense spending to approximately $548 billion in fiscal year 2016 (compared to $523 billion under current law) and $551 billion in fiscal year 2017 (compared to $536 billion under current law).

Non-defense Spending:  The budget adjustments in the bill will increase non-defense discretionary spending to approximately $518 billion in fiscal year 2016 (compared to $493 billion under current law) and $518 billion in fiscal year 2017 (compared to $503 billion under current law).

Temporary extension of the public debt limit:  The bill provides for the temporary suspension of the limit on public debt through March 15, 2017.  The following day, the public debt limit will be increased by the amount of borrowing above that level during the period in which the limitation was suspended. The bill prohibits obligations unless their issuance were necessary to fund commitments incurred by the federal government requiring payment prior to that date and precludes the accumulation of cash above normal operating balances to prevent abuse of the suspension authority.

Social Security Disability:  The bill includes numerous reforms to Social Security and preserves the solvency of the Social Security Disability Insurance (SSDI) program.  The bill prevents the pending depletion of the SSDI Trust Fund so that the program can continue paying disabled workers their full benefits instead of incurring a nearly 20 percent reduction in benefits.  The bill does so, in part, by: closing loopholes in Social Security’s rules about deemed filing, dual entitlement, and benefit suspension that allow certain beneficiaries to collect larger benefits than Congress intended; requiring a medical review before awarding benefits; preventing evidence submitted by unlicensed or sanctioned physicians and health care providers from being considered when determining disability; making conspiracy to commit Social Security fraud a felony with penalties of up to five years in prison and fines up to $250,000, or both; and, implementing a work incentives demonstration program to ensure program integrity.

Medicare Part B:  The bill prevents a 52 percent Medicare Part B premium increase by maintaining a hold-harmless provision in current law and preventing a significant premium increase for those not currently held harmless.  Consequently, individuals protected from premium increases under current law will be shielded from any increase in 2016, while beneficiaries not currently held harmless will have a set monthly premium of $120.  The bill authorizes a loan of general revenue from the Treasury to the Medicare Part B Trust Fund, and to repay the Treasury, requires beneficiaries not held harmless to pay an additional $3 in their monthly Part B premium starting in 2016.  Medicare beneficiaries who currently pay higher income-related premiums would pay more than $3, the amount of which would increase for beneficiaries in each higher income bracket in proportion to income-related premiums under current law.  This provision would also apply in 2017 if there is no Social Security Cost-of-Living-Adjustment (COLA) increase in that year.

Strategic Petroleum Reserve:  The bill authorizes the sale 58 million barrels of oil from the Strategic Petroleum Reserve (SPR) from fiscal year 2018 to 2025.  The bill prohibits such sales if they would limit the ability of SPR to meet its strategic purpose of preventing and reducing the adverse impacts of severe domestic energy supply interruptions. The bill requires the proceeds of such sales to be deposited in Treasury’s General Fund to reduce the deficit.

Affordable Care Act:  The bill repeals Section 18A of the Fair Labor Standards Act, as added by Section 1511 of the Affordable Care Act, which requires employers with more than 200 employees to automatically enroll new full-time equivalents into a qualifying health plan if offered by that employer, and to automatically continue enrollment of current employees.

Standard Reinsurance Agreement:  The bill amends the Federal Crop Insurance Act to require the Standard Reinsurance Agreement[1] (SRA) to be renegotiated no later than December 1, 2016, and at least once every five years thereafter.  The bill also establishes an 8.9 percent cap on the overall rate of return for insurance providers under the agreement.  The current rate of return is approximately 14.5 percent.  The SRA is a cooperative financial assistance agreement between the Federal Crop Insurance Corporation (FCIC) and an insurance company that establishes the terms under which FCIC provides reinsurance and subsidies on eligible crop insurance contracts sold by the insurance company.

Spectrum:  The bill requires the identification, reallocation and auction of certain spectrum by no later than July 1, 2024, and expands the eligible uses of the Spectrum Relocation Fund to include the development of spectrum technologies and systems to improve government spectrum efficiency and increase the federal government’s ability to identify opportunities for spectrum reallocation and sharing with commercial systems.

For more information, click here for a section-by-section summary of the bill provided to the House Committee on Rules.

[1] See CRS Report—“Federal Crop Insurance: Background,” August 13, 2015, at 18, for an explanation of Standard Reinsurance Agreements.


Budget Control Act

The Budget Control Act (BCA; Public Law 112-25) included a mechanism to increase the debt limit and provisions to reduce the deficit through spending limits and reductions.  The savings in the BCA were primarily achieved through two mechanisms:  (1) statutory discretionary spending caps[2] covering 10 years that came into effect in 2012 and (2) a requirement for an additional $1.2 trillion in savings to be achieved through legislation or an automatic spending reduction process (sometimes referred to as the “sequester”) covering nine years. Combined, these provisions were projected to reduce the deficit by roughly $2 trillion between fiscal year 2012 and 2021.[3]

The BCA has been modified twice since its enactment.  The American Taxpayer Relief Act of 2012 (ATRA; Public Law 112-240) “postponed the start of fiscal year 2013 spending reductions until March 1, 2013.”[4]  The law also reduced spending reductions in that fiscal year “by $24 billion, to roughly $85 billion, equally divided between defense and non-defense.”[5]  Although ATRA reduced total spending cuts achieved through the BCA’s automatic process, the changes were offset by other spending cuts and revenue increases.[6]

The Bipartisan Budget Act of 2013 (BBA; Public Law 113-67) “replaced a portion of the automatic spending process reductions for fiscal year 2014 ($45 billion) and fiscal year 2015 ($18 billion) with other savings.”[7]  The law increased discretionary spending levels relative to the levels allowed under the BCA caps after the caps had been adjusted downward to account for the prior automatic spending reductions.  The savings to offset the additional spending included various provisions affecting civilian and military retirement, higher education, and transportation.  The law also extended the BCA’s sequester of mandatory spending by two years, through fiscal year 2023.[8]

Debt limit

The debt limit places a statutory limit on the amount of money that the U.S. Treasury may borrow to fund federal government operations. The current debt limit is $18.1 trillion. [9]  On October 15, 2015, the Treasury announced that extraordinary measures currently being used to avoid exceeding the current debt limit would be exhausted no later than November 3, 2015, [10] although a relatively small cash reserve would remain on hand.[11]

The national debt consists of both debt held by the public and debt held by the government. Debt held by the public consists of securities the Treasury has issued to investors and currently amounts to $13 trillion. The balance is debt held by the government in the form of non-marketable Treasury securities, the majority of which, $2.8 trillion, is held by the Social Security Trust Funds.

The U.S. Government reached the current debt limit of $18.1 trillion on March 16, 2015. Since that time, the Treasury has employed so called ‘‘extraordinary measures’’ to avoid exceeding the debt limit.[12] These measures temporarily forestall the need to exceed the ceiling by shuffling funds among accounts and suspending certain payments and programs (e.g. suspending portions of payments to federal government employee retirement plans). By law, these retirement benefit plans will be made whole once the debt limit is increased.

According to the Congressional Research Service, there are a number of potential adverse economic consequences related to inaction or delayed action in raising the debt ceiling including:[13]

  • reduced ability of Treasury to borrow funds on advantageous terms, thereby further increasing federal debt;
  • substantial negative outcomes in global economies and financial markets caused by anticipated default on Treasury securities or failure to meet other legal obligations;
  • acquisition of interest penalties from delay on certain federal payments and transfers; and
  • downgrades of U.S. credit ratings, which could negatively impact capital markets.

“Possible economic and fiscal consequences of the debt limit are not confined to scenarios where the debt limit is binding. Protracted deliberation over raising the debt limit may also affect the U.S. financial outlook if it changes household and business behavior. A number of observers have suggested that debate over the debt limit which preceded the passage of the Budget Control Act in August 2011 reduced economic expansion in the second half of that year.”[14]

Social Security Disability

Social Security is financed through two separate and legally distinct trust funds. The Disability Insurance (DI) trust fund “finances the benefits of disabled workers and their dependents, and the Old-Age and Survivors Insurance (OASI) trust fund finances the benefits of retired workers and their dependents as well as survivors of deceased workers.”[15]

In its most recent annual report, the Social Security Trustees projected that, under current law, “the Disability Insurance (DI) trust fund will be exhausted in the fourth quarter of 2016, after which tax revenue would be sufficient to pay 81 percent of scheduled DI benefits.”[16] The trustees project that the OASI fund will be exhausted in 2035. Under current law, the two funds cannot borrow from one another.

The Social Security Act “provides no guidance on the payment of benefits once a trust fund’s reserves have been depleted and current revenues are insufficient to meet current outlays”[16]  Although individuals who meet DI’s eligibility requirements are legally entitled to benefits, a provision in the Antideficiency Act “prohibits a federal agency from spending in excess of available funds.”[18] Therefore, since the Social Security Act stipulates that DI payments shall be made only from the DI trust fund, without a change in the law, payments to DI beneficiaries would be delayed or reduced.[19]

Medicare Part B

Medicare, which is administered by the Centers for Medicare and Medicaid Services (CMS), is a federal insurance program that pays for covered health care services of most people age 65 and older and for certain disabled individuals.  The program currently covers approximately 55 million people, about one-in-six Americans, at a cost of $649 billion annually.  Medicare consists of four parts, Parts A through D, each of which is financed differently.[20]

Medicare Part B covers a broad range of medical services and supplies, including physician services, laboratory services, durable medical equipment, and outpatient hospital services. Each year, the CMS actuaries estimate total per capita Part B costs for beneficiaries aged 65 and older for the following year and set the Part B premium to cover 25 percent of these expected expenditures.  The standard monthly Part B premium for 2015 is $104.90. Higher-income beneficiaries, currently defined as individuals with incomes over $85,000 per year or couples with incomes over $170,000 per year, pay graduated premium rates of $146.90, $209.80, $272.70, or $335.70 per month, depending on their income levels.

The premiums of those receiving benefits through Social Security are deducted from their monthly payments. [21]  Once a person becomes eligible to receive Social Security benefits, “his or her monthly benefit amount is increased annually to maintain purchasing power of time.”[22]  The amount of this COLA is based on inflation as measured by certain consumer prices.[23]

In years in which the annual Social Security COLA is not sufficient to cover the standard Medicare Part B premium increase, “most beneficiaries are protected by a hold-harmless provision in the Social Security Act.”[24]  This hold-harmless provision ensures that “if in a given year the increase in the standard Part B premium would cause a beneficiary’s Social Security check to be less, in dollar terms, than it was the year before, then the Part B premium is reduced to ensure that the amount of the individual’s Social Security check does not decline.”[25]

The Medicare Trustees have estimated that, in 2016, Medicare Part B premiums will rise while there will not be a Social Security COLA increase.  Consequently, the hold-harmless provision will go into effect for approximately 70 percent of Part B enrollees who will pay the 2015 monthly premium of $104.90. The remaining 30 percent, however, could pay an estimated $159.30 per month, a 52 percent increase.[26]  Those expected not to be held harmless include “those eligible for premium assistance through their state Medicaid programs (about 19 percent); those who pay the high-income premiums (about 6 percent); those who do not receive Social Security benefits (3 percent), and new enrollees in 2016 (5 percent). (There is some overlap in categories—for example, some individuals may pay the high-income premiums and not yet receive Social Security benefits—therefore, these figures sum to more than 30 percent).[27]

According to Speaker Boehner, “This deal isn’t perfect by any means—but everyone should acknowledge what our alternative was.  If we didn’t reach a bipartisan budget agreement, we would have been forced to accept another “clean” debt ceiling increase.  Instead, we negotiated a plan that will also support our troops and deliver real entitlement reforms. In my view, this is the best possible deal at this moment for our troops, for taxpayers, and for the American people.”[28]

[2] See Table 1, Page 6, of this CRS Report for discretionary spending caps under the BCA.
[3] See CRS Report—“The Budget Control Act of 2011:  Legislative Changes to the Law and Their Budgetary Effects,” March 25, 2015 at 1.
[4] Id. at 6.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] See CRS Report, “The Debt Limit: History and Recent Increases”, October 1, 2015.
[10] See letter from Treasury Secretary Jack Lew to Speaker John Boehner, October 15, 2015.
[11] After November 3, 2015, the Treasury expects to have less than $30 billion on hand, which is less than the federal government’s net operating expenditures for certain days.
[12] See letter from Treasury Secretary Jack Lew to Speaker John Boehner, March 16, 2015.
[13] See CRS Report, The Debt Limit, October 16, 2015.
[14] Id.
[15] See CRS Insight—“The Projected Exhaustion of Social Security’s Disability Insurance (DI) Trust Fund,” July 30, 2015.
[16] Id.
[17] Id.
[18] Id.
[19] Id.
[20] See CRS Report—“Medicare: Part B Premiums,” September 29, 2015 at 1.
[21] Id. at Summary.
[22] Id. at 19.
[23] Id.
[24] Id. at 20.
[25] Id.
[26] Id.
[27] Id. at 21.  (Footnote 97)
[28] See Press Release—“Speaker Boehner’s Remarks to House Republicans on the Bipartisan Budget Act,” October 27, 2015.


The Congressional Budget Office (CBO) estimates that enacting H.R. 1314, as amended by the House amendments, fully offsets the BCA cap adjustments made in fiscal year 2016 and 2017.  Changes in direct spending, including spending reductions in Medicare and reforms to SSDI, reduce spending in the budget window by $47.56 billion.  Coupled with additional revenues and savings from enhanced program integrity reforms, offsetting another $33.4 billion, the $80 billion cap adjustment in the two fiscal years is fully offset.

Additional Information

For questions or further information please contact Jerry White with the House Republican Policy Committee by email or at 5-0190.