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Budget battles: What you need to know

As they prepare to take a two-week Easter break, Congress has been busy passing bills and resolutions on taxes and spending, but there are several budget paths converging all at once.  What does all the action really mean? Here’s a guide to what’s happening:

Both houses of Congress this week passed a $1.27 trillion spending bill to keep the government operating for the rest of the fiscal year, that is, until Sept. 30. Was that bill part of the process of designing a budget for the government?

No. That bill – passed by the House on Thursday and by the Senate on Wednesday – was a measure to keep non-entitlement spending at current levels until the end of fiscal year 2013. That bill is separate from the plan – called the budget resolution -- for the new fiscal year which begins on Oct. 1.

This week the House and Senate have each been working on their own budget resolutions for the coming fiscal year.

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What did that spending bill have to do with the spending reductions required by the Budget Control Act of 2011 – the so-called “sequester”?

That bill abides by the spending limits sets by the Budget Control Act. It does not try to undo those limits.

What exactly is the budget resolution which each house of Congress was working on Thursday and Friday?

The budget resolution is a blueprint for spending and for revenues. It does not specify exactly how much money will be spent in the coming fiscal year, for example, on the federal inspectors who check on meat, poultry, and eggs. Nor does the blueprint in itself appropriate money to be spent. Instead it sets broad targets and creates a framework within which Congress will consider separate revenue and spending bills.

Does the budget resolution apply only to the coming fiscal year that starts on Oct. 1?

No, it attempts to set goals for ten years, through 2023.

Can a budget blueprint that’s being voted on this week accurately reflect what economic conditions might be in 2016 or 2018 or 2023?

No. If, for instance, there were another recession in 2016, revenues would decrease since workers would lose their jobs and not be paying income taxes.

But Congress uses a budget “baseline,” a set of assumptions, prepared by the nonpartisan Congressional Budget Office to try to forecast what employment levels will be during the next ten years, what interest rates will be, etc. The CBO baseline also assumes that current laws – such as the tax law that Obama signed on Jan. 2 -- will remain in effect and will not subsequently be changed by Congress.

If the House and Senate each pass different budget resolutions, would they need to negotiate in a conference committee a compromise version of a budget?

Yes, but since their budget blueprints plans are so different they may not try to do that. If so, there would no official budget resolution for Fiscal Year 2014. Sarah Binder, an expert on Congress at George Washington University and the Brookings Institution, said Thursday, “There doesn’t seem to be any hope of going to conference and actually doing the real budget process.”

Did Congress pass a budget resolution last year?

No. The Senate has not passed a budget resolution in four years.

Without a budget resolution, will federal spending stop?

No, spending continues under either a temporary spending bill similar to the one now in effect, or by means of specific appropriations bills for the departments and agencies.

What are the main features of the blueprint which the House passed on Thursday – and how does that proposal differ from the Senate Democrats’ plan?

Under the leadership of House Budget Committee chairman Rep. Paul Ryan, the House passed a plan that would sharply reduce federal debt as a percentage of national income and would reduce Medicaid and other health care spending as a percentage of national income. Ryan’s proposal would also make fundamental changes in the Medicare program for people who’d become eligible for benefits in 2024 or later. Ryan’s plan would offer the choice of traditional fee-for-service Medicare along with private health care plans. His critics charge that this would lead to the demise of the traditional Medicare design.

Senate Democrats’ plan offered by Budget Committee chairman Sen. Patty Murray, D- Wash., would preserve the current design of Medicare. It would also instruct the Senate Finance Committee to come up with legislation by Oct. 1 that would raise $975 billion in new tax revenues over the next ten years. That legislation would not be subject to a Senate filibuster.

If a budget blueprint is more or less a statement of goals for a ten-year period, how much real significance does it have?

It’s a statement of the priorities the Senate or House majority has, for example, on education or defense.

But what’s especially important in the Senate is that the budget process can be used to circumvent the requirement that bills have 60 votes before advancing to final passage.

Using a process called “reconciliation,” the Senate can pass a budget measure with only 51 votes.

Given the current political lineup, in order to enact tax reform or entitlement reform into law, Senate Democrats would need their plan to be approved by a Republican-majority House.

How can the Senate budget debate be used to score points for the 2014 elections?

Over time the Senate has developed a process called the “vote-a-rama,” which allows senators to offer a theoretically unlimited number of amendments to the budget resolution.

Some of these amendments may be simple statements of belief or perhaps might be used to put senators up for reelection in 2014 in an awkward spot explaining why they voted against it.

For example, Sen. David Vitter, R- La., said Thursday he’ll be offering amendments to end automatic pay increases for members of Congress, to require photo identification for voting in federal elections, to set up an entry-exit system to determine whether foreign visitors to the United States leave when their visas expire, and to halt greenhouse gas regulations until the governments of China, India and Russia implement similar rules to reduce emissions in their countries. 

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