Fiscal Year 2006 Federal Budget Presentation

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Fiscal Year 2006 Federal Budget Presentation

• Russ Sullivan
• Democratic Staff Director
• Senate Finance Committee

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Components of the Federal Budget

• Presidents Budget Request
• The Congressional Budget Resolution
• How the Budget is Enforced in the Senate
• Budget Reconciliation

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The Presidents Budget Request

• President submits the Budget to Congress in
  February
• The Budget tells Congress

(1) how much money the federal government should
spend (2) how much it should take in as tax
revenues and (3) how much of a deficit (or
surplus) the federal government should run.
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Federal Revenue
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Federal Spending
19 Defense
21 Social Security
13 Medicare
15 Other
7 Medicaid
7 Interest
18 Domestic and International
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The Congressional Budget Resolution

• Whats in the Budget Resolution?

A set of numbers that state revenue and spending
targets for each of the next five or more years.
The difference between the two totals for each
year the spending ceiling and the revenue floor
represents the deficit (or surplus) expected
for that year.
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How is the Budget Enforced?

• A Point of Order can be raised against a bill
  or an amendment.
• The Point of Order must assert that the
  legislation exceeds a spending cap or cuts taxes
  below a floor set in the budget resolution.
• In the Senate a Point of Order can be waived only
  if it receives 60 votes.

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Reconciliation

• What is a reconciliation bill? 

A reconciliation bill is a bill with special
Senate floor protectionslimited debate,
germaneness requirements, and requires only 51
votes to pass. Originally designed to help
Congress reduce deficits. Now can be used to cut
or increase spending, to cut or increase taxes,
or to increase the debt limit.
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Budget Issues Important To Rural America

• Spending Cuts
• - Agriculture
• - Medicaid
• - Rural Low Income Area Proposals

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Proposed Cuts in Congressional Budgets

• House Senate
• Education 5 bln 5 bln
• Agriculture 6 bln 3 bln
• Medicaid 20 bln 0
• Non-Defense 12 bln 2 bln
• Discretionary Funding
• Other 26 bln 7 bln
• Total 69 billion 17 billion

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Agricultural Programs

• The House Budget Resolution contains a total of
  6 billion in agricultural program cuts.
• The Senate Budget Resolution contains 3 billion
  in agricultural program cuts.

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Medicaid (House)

• The House Budget Resolution instructs the House
  Energy and Commerce Committee to cut spending on
  programs within its jurisdiction by 20 billion
  over five years
• The President opposes cuts to Medicare
• Outside of Medicare, 94 of the House Energy and
  Commerce Committees spending is on Medicaid
  (i.e., the bulk of 20 billion in spending cuts
  will fall on Medicaid)

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Medicaid (Senate)

• Senator Smith offered an amendment to strike the
  reconciliation instructions for Medicaid cuts.
• This amendment passed 52-48.
• The Conference Budget Resolution will direct
  Congress to make cuts in Medicaid or other
  entitlement programs

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Rural Programs

• Creates opportunity zones
• Consolidates
• - Empowerment Zones
• - Enterprise Communities
• - New Market Tax Credits
• - Work Opportunity And Welfare to Work Tax
  Credits

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Opportunity Zones Proposal

• The Presidents Budget contains an opportunity
  zone proposal not present in the House or Senate
  Budget Resolutions
• Creates one program
• - 40 Opportunity Zones (28 urban, 12 rural)
• - Incentives available

• 25 tax exclusion for small business
• Additional small business expensing
• Community revitalization deduction
• Wage credit

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Whats Next

• The House Budget resolution passed 218-214
• The Senate Budget resolution passed 51-49
• Both bodies will meet in Conference to reconcile
  differences in the bills
• Final version?

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2005 Other Legislation

• Welfare Reform
• Transportation Legislation Increased spending
  for highways and transit
• Energy Legislation
• Tax Cuts Extends expiring provisions and
  dividends/capital gains preferences
• Social Security