H.Con.Res. 112 (112^th): Establishing the budget for the United States Government for fiscal year 2013 and setting forth appropriate budgetary levels for fiscal years 2014 through 2022.

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Library of Congress Summary

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress.

House Republican Conference Summary

The summary below was written by the House Republican Conference, which is the caucus of Republicans in the House of Representatives.

This summary can be found at http://www.gop.gov/bill/112/2/hconres112.

Background

H.Con.Res. 112 would set the federal government’s budget policies for FY 2013 and project spending, revenues, and deficits over a ten-year budget window between Fiscal Years 2013 and 2022. The budget sets the total limits of spending, revenue and debt for specific years and outlines programmatic assumptions to achieve those levels, but does not provide funding and does not impose binding policies for agencies or programs. The budget also includes reconciliation instruction for six committees to replace the first year of the automatic sequester triggered under the Budget Control Act (BCA). For additional information and supplementary materials on the FY 2013 Budget Resolution, including a detailed report on the budget, please see the House Budget Committee website.

Spending levels

The budget would provide for $3.53 trillion in spending outlays in FY 2013 and assume revenues of $2.734 trillion, resulting in a deficit of $797 billion. The resolution would provide $1.028 trillion in discretionary budget authority in FY 2013, the same amount as called for in the last House-approved budget (H.Con.Res. 34). The discretionary budget authority level for FY 2013 is $19 billion below the spending ceiling established by the BCA. FY 2013 spending under H.Con.Res. 112 would be $187 billion lower than under the president’s budget and $55 billion below CBO’s current law baseline. Over ten years, spending under H.Con.Res. 112 would total $40.13 trillion. Over ten years, H.Con.Res. 112 would reduce spending by $5.3 trillion compared to the president’s budget and by $4.15 trillion compared to CBO’s current law baseline.

As a percentage of GDP, spending would decrease from 23.4 percent (according to CBO) in FY 2012 to 22.2 percent in FY 2013 under this budget resolution. By FY 2016, this budget would bring government spending down to 19.7 percent of GDP and spending would not grow beyond 20 percent of the economy for the remainder of the budget window. In the final year of the budget, spending would be equal to 19.8 percent of GDP. Over ten years, spending as a percentage of GDP would average 20 percent from FY 2013 through FY 2022. Under CBO’s current law baseline, spending as a percentage of GDP would average 22 percent from FY 2013 through FY 2022. Under the president’s budget, spending as a percentage of GDP would average 22.5 percent from FY 2013 through FY 2022. The historic annual average of government spending as a percentage of GDP from the end of World War II to today (1946–2012) is 19.8 percent.

H.Con.Res. 112 would also provide recommended limitations on federal outlays in the decades subsequent to the budget’s ten-year window. The budget would recommend that the appropriate level of federal outlays as a percentage of GDP in subsequent decades would be 20.25 percent in FY 2030, 18.75 percent in FY 2040, and 16 percent in FY 2050.

Revenue Levels

H.Con.Res. 112 would project $2.734 trillion in revenues in FY 2013, which would be $7 billion lower than the president’s budget and $235 billion below CBO’s current law baseline. Over ten years, revenues under H.Con.Res. 112 would total $37 trillion. H.Con.Res. 112 would reduce revenues over ten years (primarily from blocking tax increases) by $2 trillion compared to the president’s budget and by $4.4 trillion compared to CBO’s current law baseline.

As a percentage of GDP, H.Con.Res. 112 projects that revenues would total 17.2 percent in FY 2013 and 18.7 percent in FY 2022. Over the ten year budget window, revenues would average 18.3 percent of GDP under H.Con.Res. 112. Under the president’s budget, revenue as a percentage of GDP would be 17.2 percent in FY 2013 and would grow to 20.1 percent of GDP in FY 2022. Under CBO’s current law baseline, revenues as a percentage of the economy would be 18.7 percent in FY 2013 and rise to 21.2 percent of GDP by FY 2022. Revenue would average 19.4 percent of GDP over ten years under the president’s budget and 20.5 percent of GDP under CBO’s current law baseline.

H.Con.Res. 112 would also provide recommended limitations on revenues in the decades subsequent to the budget’s ten-year window. The budget would recommend that the appropriate level of federal revenue as a percentage of GDP in subsequent decades would be 19 percent in FY 2030, FY 2040, and FY 2050.

Deficit levels

H.Con.Res. 112 would project a deficit of $797 billion in FY 2013, which would be $180 billion below the president’s budget and $180 billion above CBO’s current law baseline (CBO assumes increase revenue from the expiration of current tax rates). Over ten years, projected deficits under H.Con.Res. 112 would total $3.1 trillion. Under the president’s budget deficits would total $6.3 trillion from FY 2013 through FY 2022. H.Con.Res. 112 would reduce deficits projected under the president’s budget by $3.26 trillion.

As a percentage of GDP, the deficit would be 5 percent in FY 2013 and would average 1.7 percent over the ten-year budget window. Under the president’s budget, the deficit would be 6.1 percent of GDP in FY 2013 and deficits would average 3.2 percent of GDP over the budget window. Under CBO’s baseline, the FY 2013 deficit would be 3.8 percent of GDP and deficits would average 1.4 percent over the budget window (lower deficits in CBO’s current law baseline reflect increased revenue from scheduled tax increases). The historic average of annual government deficits as a percentage of GDP from the end of World War II to today (1946–2012) has been roughly 2 percent.

H.Con.Res. 112 would also provide recommended limitations on deficits and surpluses in the decades subsequent to the budget’s ten-year window. The budget would recommend that the appropriate level of federal deficits and surpluses as a percentage of GDP in subsequent decades would be a deficit of 1.25 percent in FY 2030, a surplus of 0.25 percent in FY 2040, and a surplus of 3 percent in FY 2050.

Reconciliation

In an effort to reprioritize savings and achieve additional deficit reduction, H.Con.Res. 112 would include a replacement for the first year of the discretionary sequester triggered under the Budget Control Act (BCA). The budget would achieve these savings through non-defense discretionary and mandatory savings that will be achieved through the reconciliation process. H.Con.Res. 112 would give six House committees reconciliation instructions to produce actual legislation that achieves the sequester savings without the haphazard cuts that the sequester entails. The resolution would give reconciliation instructions to the committees on Agriculture, Energy and Commerce, Financial Services, Judiciary, Oversight and Government Reform, and Ways and Means that in aggregate would require these committees to produce at least $18.3 billion of deficit reduction in the first year, $116 billion in deficit reduction from FY 2013 through FY 2017, and $261 billion in deficit reduction over ten years.

H.Con Res. 112 would include reconciliation instructions for committees to achieve savings as follows:

• Agriculture: Reduce the deficit by $8.2 billion through FY 2013 and $33.2 billion through FY 2022.
  
• Energy and Commerce: $3.75 billion through FY 2013 and $96.76 billion through FY 2022.
  
• Financial Services: $3 billion through FY 2013 and $29.8 billion through FY 2022.
  
• Judiciary: $100 million through FY 2013 and $39.7 billion through FY 2022.
  
• Oversight and Government Reform: $2.2 billion through FY 2013 and $78.9 billion through FY
  2022.
  
• Ways and Means: $1.2 billion through FY 2013 and $53 billion through FY 2022.

Reserve funds

Generally, budget resolutions provide for adjustments to specific spending allocations subsequent to adoption of the resolution. H.Con.Res. 112 includes reserve funds to allow for allocation adjustments under certain circumstances. 

Reserve Fund for Repeal of the 2010 Health Care Laws: H.Con.Res. 112 would allow allocations to be revised for any legislation that repeals the Patient Protection and Affordable Care Act or the Health Care and Education Reconciliation Act of 2010 (ObamaCare).

Reserve Fund for the Sustainable Growth Rate of Medicare: H.Con.Res. 112 would allow revisions to allocations, aggregates, and other appropriate levels for the budgetary impact provisions relating to the system of Medicare payments to doctors (the so-called “doc fix”), so long as it does not increase the deficit over the period of FY 2013 through FY 2022.

Reserve Fund for Deficit-Neutral Revenue Measures: H.Con.Res. 112 would allow allocation adjustments for any legislation to decrease revenues, so long as it does not increase the deficit over the period of FY 2013 through FY 2022.

Deficit-Neutral Reserve Fund for Rural Counties and Schools: H.Con.Res. 112 would allow allocation adjustments for legislation that makes changes to or provides for the reauthorization of the Secure Rural Schools and Community Self Determination Act of 2000 or the Payments in Lieu of Taxes Act of 1976, so long as it does not increase the deficit in FY 2013, over the FY 2013 through FY 2017 period, or over the FY 2013 through FY 2022 period.

Deficit-Neutral Reserve Fund for Transportation: H.Con.Res. 112 would allow allocations to be adjusted for any legislation that maintains the solvency of the Highway Trust Fund, but only if such measure would not increase the deficit over the period of fiscal years 2013 through 2022.

Budget Enforcement

Limitation on Advance Appropriations: H.Con.Res. 112 would prohibit any bill from providing advance appropriations with the exception of $54.4 billion for fiscal year 2014 for Veterans Medical Services, Veterans Medical Support and Compliance, and Veterans Medical Facilities. It also allows up to $28.8 billion in additional advanced appropriations for other veterans health programs. Any other advanced appropriations would be subject to a point of order.

Adjustments of Aggregates and Allocations: H.Con.Res. 112 would provide a special enforcement mechanism for legislation reducing revenues. Under the resolution, any measure that reduces revenue relative to the March 2012 CBO baseline would be subject to a point of order. This section would establish a special adjustment process for certain revenue measures that may cause a net revenue loss relative to the CBO baseline, but the aggregate level of revenue loss caused by those specified measures may not drop the level below the revenue floor. Under the resolution, the Chairman of the Committee on the Budget would be authorized to make allocation adjustments for the budgetary effects of the following provisions:

• The budgetary effects of extending the Economic Growth and Tax Relief Reconciliation Act of 2001;
• The budgetary effects of extending the Jobs and Growth Tax Relief Reconciliation Act of 2003;
• The budgetary effects of adjusting the Alternative Minimum Tax (AMT) exemption amounts to prevent a larger number of taxpayers as compared with tax year 2008 from being subject to the AMT;
• The budgetary effects of extending the estate, gift, and generation-skipping transfer tax provisions of title III of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010;
• The budgetary effects of measures providing a 20 percent deduction in income to small businesses;
• The budgetary effects of measures implementing trade agreements;
• The budgetary effects of measures repealing the tax increases in the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010.
• The budgetary effects of measures reforming the government takeover of healthcare.
• The budgetary effects of measures repealing the government takeover of healthcare’s individual mandate.  
• The budgetary effects of measures reforming the tax code and lowering tax rates.

Limitation on Long-Term Spending: H.Con.Res. 112 would prohibit the consideration of any legislation that would increase spending by more than $5 billion in any ten-year period over the 40 year period following the final year of the budget window (2023). Any such legislation would be subject to a point of order.

Budgetary Treatment of Certain Transactions: H.Con.Res. 112 would provide that the administrative expense of the Social Security and the United States Post Office are reflected in the allocation to the Committee on Appropriations. In addition, the resolution would clarify that allocations to the Committee on Appropriations of the House would be enforced using estimates of the budgetary effects of a measure that include any off-budget discretionary amounts. This section of the legislation would also allow allocation adjustments for legislation that reforms the federal retirement system without causing a net increase in the deficit.

Application and Effect of Changes in Allocations and Aggregates: H.Con.Res. 112 would stipulate that any change in allocation or aggregates made pursuant to the resolution would apply while that measure is under consideration, take effect upon the enactment of that measure, and be published in the Congressional Record as soon as practicable.

Fair Value Estimates: H.Con.Res. 112 would provide the Chairman or Ranking Member of the Committee on the Budget the authority to request a supplemental estimate scored using “fair value”—which generally incorporates market risk—for any program under the term “credit reform.”

Transfers from the General Fund to the Highway Trust Fund: H.Con.Res. 112 would stipulate that any legislation that transfers funds from the general fund of the Treasury to the Highway Trust Fund shall be counted as new budget authority and outlays equal to the amount of the transfer in the fiscal year the transfer occurs.

Separate Allocation for Overseas Contingency Operations:  H.Con.Res. 112 would stipulate that there shall be a separate 302(a) allocation to the Committee on Appropriations for overseas contingency operations and the global war on terrorism.

Policy Statements

 Policy Statement on Medicare: H.Con.Res. 112 includes a number of House findings regarding the Medicare program including the following: the Medicare Trustees Report has repeatedly recommended that Medicare's long-term financial challenges be addressed soon, the Hospital Insurance Trust Fund will be exhausted in 2022 and unable to pay scheduled benefits, and failing to address this problem will leave millions of American seniors without adequate health security and younger generations burdened with enormous debt to pay for spending levels that cannot be sustained. The budget states that it is the policy of this resolution to protect those in and near retirement from any disruptions to their Medicare benefits and offer future beneficiaries the same health care options available to Members of Congress.

In order to address the Medicare crisis, H.Con.Res. 112 assumes Medicare reform which would ensure that:

• Current Medicare benefits are preserved for those in and near retirement, without changes.
• For future generations, when they reach eligibility, Medicare is reformed to provide a premium support payment and a selection of guaranteed health coverage options from which recipients can choose a plan that best suits their needs.
• Medicare will provide additional assistance for lower-income beneficiaries and those with greater health risks.
• Medicare spending is put on a sustainable path and the Medicare program becomes solvent over the long-term.

Policy Statement on Social Security: H.Con.Res. 112 assumes reform in the form of a trigger which would require that in any year the Social Security Trustees issue a report that shows that the 75-year actuarial balance of the Social Security Trust Fund is in deficit, the Trustees should report recommendations for achieving a positive 75-year actuarial balance to the president. The president would then be required to submit legislation to Congress in the same calendar year and include recommendations to achieve actuarial balance and the House and Senate should also introduce legislation upon receipt of the president’s bill. H.Con.Res. 112 would stipulate that the legislation should be reported by appropriate committees and considered in Congress within 60 days under expedited procedures. In addition to achieving actuarial balance, the president’s proposal should: 1) protect those in or near retirement, 2) preserve the safety net for those who rely on Social Security, including survivors and those with disabilities, 3) improve fairness for participants, and 4) reduce the burden and ensure certainty for future generations.  

Policy Statement on Deficit Reduction Through the Cancellation of Unobligated Balances: H.Con.Res. 112 would direct committees to identify and achieve savings through the cancellation or rescission of unobligated balances that neither abrogate contractual obligations of the federal government nor reduce or disrupt federal commitments under programs such as Social Security, veterans’ affairs, national security, and Treasury authority to finance the national debt.  The resolution also states that Congress, with the assistance of the Government Accountability Office, the Inspectors General, and other appropriate agencies should make it a high priority to review unobligated balances and identify savings for deficit reduction

Recommendations to Eliminate Waste, Fraud, and Abuse: H.Con.Res. 112 would direct each authorizing committee to annually include in its Views and Estimates letter required under section 301(d) of the Congressional Budget Act of 1974 recommendations to the Committee on the Budget of programs within the jurisdiction of such committee whose funding should be reduced or eliminated. Such recommendations shall be made publicly available.

While the text of the budget resolution does not provide specific policy for every aspect of the federal budget, the House Budget Committee has outlined certain policy principles for meeting the spending and revenue projections outlined in the resolution. The following summaries of policy assumptions are courtesy of the House Budget Committee.

Medicare Reform: The future of the nation’s health and retirement security programs is increasingly based on empty promises from a government unwilling to advance solutions that save and strengthen them. This budget strengthens health and retirement security by taking power away from government bureaucrats and empowering patients with control over their care. This budget repeals the new health care law’s unaccountable board of bureaucrats empowered to cut Medicare in ways that would raise costs and jeopardize seniors’ access to care. This budget saves Medicare for current and future generations, with no disruptions for those in and near retirement. For younger workers, when they become eligible, Medicare will provide a premium-support payment and a list of guaranteed coverage options—including a traditional fee-for-service option—from which recipients can choose a plan that best suits their needs. Program growth would be determined by a competitive bidding process – with choice and competition forcing providers to reduce costs and improve quality for seniors. Premium support, competitive bidding, and more assistance for those with lower incomes or greater health care needs will ensure guaranteed affordability for all seniors.

Repairing the Social Safety Net The unsustainable government programs aimed to bolster the safety net are failing to deliver on their promise to society’s most vulnerable citizens. The skewed incentives of federal safety-net programs foster dependence and leave lower-income Americans most at risk to consequences of the looming spending-driven debt crisis. This budget repairs the safety net by returning power over public-assistance programs to the states, directing assistance to those who need it most, and strengthening federal education and job-training programs to help Americans get back on their feet. This budget gives states the freedom and flexibility to tailor Medicaid programs that fit the needs of their unique populations. This budget better focuses other low-income assistance programs, including food stamps, to those that need them most, realigning incentives to ensure these programs can best meet their critical missions. This budget ensures higher-education assistance programs are put on a sustainable funding path, better focusing aid on those in need and better addressing the root drivers of tuition inflation for all students. This budget consolidates dozens of overlapping job-training programs into accountable career scholarships so that workers have the tools to thrive in the 21st century global economy.

 Pro-Growth Tax Reform: The tax code has become a broken maze of complexity and political favoritism, overgrown with special-interest loopholes and high marginal rates that stifle economic growth and job creation. This budget reforms the broken tax code to spur job creation and economic opportunity by lowering rates, closing loopholes, and putting hardworking taxpayers ahead of special interests. The pro-growth reforms ensure the tax code is fair, simple, and competitive. This budget consolidates the current six individual income tax brackets into just two low brackets of 10 and 25 percent and repeals the Alternative Minimum Tax. This budget reduces the corporate rate to 25 percent and shifts from a “worldwide” system of taxation to a “territorial” tax system that puts American companies and their workers on a level playing field with foreign competitors. This budget rejects the president’s call to raise taxes. Instead, it broadens the tax base to maintain revenue growth at a level consistent with current tax policy and at a share of the economy consistent with historical norms of 18 to 19 percent in the following decades.

Providing for the Common Defense: The safety and security of the American people is the first responsibility of the federal government. The U.S. military is threatened by an uncontrolled debt burden that weakens America – but defense spending is not the driver of that debt burden. Despite this fact, the president’s budget refuses to address runaway entitlement spending, and instead imposes nearly $500 billion in defense cuts over the next decade. This budget funds defense at levels that keep America safe by providing $554 billion for the next fiscal year – $6.2 trillion over the next decade – for national defense spending, an amount that is consistent with America’s military goals and strategies. This budget replaces the indiscriminate reduction in defense spending scheduled to take place under the sequester with targeted reductions in non-defense mandatory spending. This protects defense from cuts that would jeopardizes critical missions and the well-being of soldiers and their families. America’s troops and military families should not pay the price for Washington’s failure to take action.

Reprioritizing Sequester Savings: After the president initially asked for a blank check to keep borrowing, Congress forged a bipartisan agreement—The Budget Control Act—to ensure that any debt-limit increase was accompanied by a greater amount of spending reduction. The Budget Control Act called for deficit reduction in three stages – pre-sequester discretionary spending caps, a Joint Select Committee on Deficit Reduction (JSCDR), and an automatic spending reduction enforced by sequester in the event that the JSCDR failed. In the wake of the JSCDR’s failure to achieve its deficit-reduction goals, discretionary spending levels are scheduled to be reduced by $98 billion effective January 2, 2013.  There is bipartisan agreement on the devastation to America’s national security that would result if these deep cuts go into effect, and both parties have expressed a desire to avoid this outcome by reprioritizing the savings. Despite bipartisan agreement on the challenge, only House Republicans – through this budget – have proposed a solution to address it.  This budget reprioritizes sequester savings to focus on the problem, which is government spending, and to protect national security from deep and indiscriminate cuts. It achieves these goals by giving six House committees reconciliation instructions to produce legislation by a date certain that achieves the savings called for under the Budget Control Act without the haphazard cuts that the sequester entails.

Social Security: This budget establishes a mechanism that requires action by the president and leaders in Congress to shore up Social Security’s fiscal imbalance.

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