LEGISLATIVE BULLETIN | June 3, 2008

Conference Report to Accompany S. Con. Res. 70, the Fiscal Year 2009 Budget Resolution

Summary and Background 

The Fiscal Year 2009 Budget Resolution Conference Report (S. Con. Res. 70) outlines the proposed federal budget for next year, as well as proposed budget levels for Fiscal Year 2008 and Fiscal Years 2010 through 2013. Upon adoption of the budget by the House and Senate, the Conference Reportwill serve as a blueprint that guides subsequent congressional consideration of legislation. This fiscally-responsible budget will create a surplus while cutting taxes for the middle class, funding critical national priorities, and creating good-paying jobs here at home. 
 

TheConference Report: 

• Makes investments in energy, education, and infrastructure that will promote economic growth;
• Makes our country safer by proving robust funding for national defense and ensuring that resources are available to address the most critical threats facing the nation;
• Provides tax relief for the middle class;
• Addresses long-term fiscal challenges; and
• Maintains strong budget enforcement tools to help return the country to a sound fiscal course. 

By carefully targeting and reallocating resources, theConference Report would accomplish all of this without raising taxes.In addition,theConference Reportrejects the failed fiscal policies of the past seven years and achieves a balanced budget and a return to surplus in 2012 and 2013. When the Conference Report is adopted, it will mark the first time Congress has passed a budget during an election year since 2000. 

The Senate is expected to take floor action on S. Con. Res. 70 in June 2008. This Legislative Bulletin provides a description ofmajor provisions,legislative history, the Administration position, and related reading resources.

 

Major Provisions 

Investments for Economic Growth 

Energy investments to create green jobs, reduce our dependence on oil, and help with soaring energy costs. The Conference Report:

• Provides for energy tax relief;
• Includes $2.8 billion over the President's budget in discretionary funding for energy in 2009;
• Rejects the President's budget cuts to energy programs by providing for significant increases in programs such as weatherization assistance, renewable energy, and energy efficiency; and
• Includes a deficit-neutral reserve fund for energy legislation.
   

Education and innovation investments to prepare the workforce to compete in a global economy, make college more affordable, and improve student achievement.The Conference Reportincludes: 

• Significant increases over the President's budget in discretionary funding for the Department of Education and Head Start in 2009;
• A deficit-neutral education reserve fund for school construction and Higher Education reauthorization over five years; and
• Additional funding for general science, space, and technology programs.

 

Infrastructure investments to repair crumbling roads, bridges, transit systems, airports, and schools.TheConference Report includes: 

• A deficit-neutral reserve fund to allow for major infrastructure legislation;
• $2.5 billion more than the President for key discretionary transportation accounts in 2009;
• Full funding of Highway and Transit programs as authorized in the highway bill (SAFETEALU); and
• Funding for the Airport Improvement Program.

 

Resources to Address the Most Critical Threats Facing Our Nation 

The Conference Report makes our country safer by providing robust funding for national defense and ensuring that resources are available to address the most critical threats facing our nation. Within the core defense budget, the Conference Report places a higher priority than the President's budget on programs such as Cooperative Threat Reduction ("loose nukes") and other nuclear nonproliferation programs, and improving the quality of life for our troops and their families. 

The Conference Report also ensures that veterans get the quality health care they need and deserve by providing $3.3 billion more in discretionary funding for 2009 than the President's budget and $39 billion more over five years for veterans programs. TheConference Report also protects our nation by providing higher funding levels for homeland security. And it rejects the President's cuts and provides additional resources for law enforcement, the COPS program, firefighters, and other first responders.

 

Middle-Class Tax Relief 

TheConference Report supports significant tax relief, including: 

•AMT relief for the Middle Class to prevent the spread of the Alternative Minimum Tax (AMT), so that it does not impose higher taxes on middle-class families. Under the Conference Report, in 2008, the number of taxpayers subject to the AMT would not be allowed to increase - protecting more than 21 million taxpayers from being subjected to the AMT; 

•Tax reduction for middle-class families, including extension of the child tax credit, 10 percent bracket, and marriage penalty relief; 

•Targeted tax relief to address the current crisis in the housing market, to make college more affordable, and to promote alternative energy technologies; and 

•Extension of key tax provisions including the research and experimentation tax credit, deduction for college tuition and the deduction for state and local sales taxes. 

TheConference Reportalso includes several deficit-neutral reserve funds that provide for a wide range of tax policies. At the same time, the Conference Report provides sufficientrevenue to meet the nation's most urgent needs and to put the budget on a more sustainable long-term fiscal path.

 

Steps to Address Long-Term Fiscal Challenges 

Given that health care costs are rising much faster than wages and inflation, combined with the impending retirement of the baby boom generation, the United States faces a significant long-term imbalance between revenues and spending. While the Conference Report achieves the important near-term goal of returning the budget to balance by 2012, this represents only a first step in the difficult path of restoring our long-term fiscal security. 

Accordingly, the Conference Report includes a number of measures to address our long-term fiscal challenges, including: 

•Comparative Effectiveness Reserve Fund. Because excess growth in health care costs is the largest factor driving the spending growth in health care entitlement programs, it is crucial that we take steps to control those costs. The Conference Reportincludes a Comparative Effectiveness Research Reserve Fund to generate objective and credible evidence for patients and health care providers about which health care treatments, services, and items are most clinically effective. Access to better evidence about what works best will help patients and health care providers make better-informed decisions, reducing unnecessary or ineffective care and potentially lowering health care costs. 

•Point of Order against Long-Term Deficit Increases.Like last year's resolution, the Conference Report includes a point of order against legislation that would increase the deficit over the long term - specifically, in the four decades beyond the next ten years (2019-2028, 2029-2038, 2039-2048, and 2049-2058). Under the Conference Report, the long-term point of order will apply against legislation that would cause a net deficit increase of more than $5 billion (including changes in revenues and mandatory spending, but excluding debt service) in any of the four ten-year periods. 

•Program Integrity. In an effort to achieve savings over the long term, reduce fraud, and encourage government efficiency, the Conference Report includes funding for important program integrity initiatives in programs, such as Medicare, Medicaid, unemployment insurance, tax collections, and Social Security. This could include the processing of additional Continuing Disability Reviews and Social Security Income redeterminations or enhanced Internal Revenue Service tax enforcement to address the tax gap.

 

Budget Enforcement Tools 

While budget process alone cannot replace a bipartisan commitment to fiscal discipline, there are a number of budget enforcement provisions that can help to put us back on a sound fiscal path. The Conference Report would reinstate or update some of the most important of these enforcement provisions, including: 

•Discretionary Spending Caps. TheConference Reportwould strengthen fiscal responsibility by establishing discretionary spending limits for 2008 and 2009, and enforce them with a point of order in the Senate that could only be waived with 60 votes. For 2008, it provides a cap of $1,050.478 billion in budget authority and $1,094.944 billion in outlays. For 2009, it sets a cap of $1,011.718 billion in budget authority and $1,106.112 billion in outlays. For 2009, the Conference Report allows for an adjustment to the discretionary cap of up to $968 million in budget authority for program integrity initiatives. 

The strong paygo, or pay-as-you-go, rule that was re-established in the Fiscal Year 2008 Budget Resolution (S. Con. Res. 21), would remain in effect. Paygo requires that new mandatory spending and tax cuts be offset or get 60 votes. Paygo does not prohibit new mandatory spending or new tax cuts; the rule simply says that they should be paid for so that the deficit does not increase, or have 60 votes to waive the point of order. The Conference Report wouldalso continue the rule that reconciliation may not be used to increase the deficit. .

 

Legislative History 

S. Con. Res. 70 was approved by the Senate Committee on the Budget by a party-line vote of 12-10 on Thursday, March 6, 2008, and reported as an original measure by Chairman Conrad in the Senate on March 7, 2008.S. Con. Res. 70 was agreed to in Senate with amendments by a 51-44 vote (Record Vote Number 85) on March 14, 2008. 

On May 15, 2008, the Senate appointed the following conferees: Senators Conrad, Murray, Wyden, Gregg, and Domenici. 

The conference report was filed on May 20, 2008, and can be accessed here.

 

Amendments 

The consideration of a conference report is privileged and cannot be amended.

 

Administration Position 

As a concurrent resolution - a special legislative vehicle that applies only to the operations of the House and Senate - the ConferenceReport is not presented to the President for signature and does not have the force of law. Although the resolution does not require the President's signature, the Conference Report provides a blueprint for later congressional action and helps shape legislation that will be sent to the President.

 

Related Reading 

Senate Committee on the Budget,Floor Statement on Budget Conference Agreement, available here. 

Senate Committee on the Budget, Charts Used During Debate on Budget Conference Agreement, available here. 

Senate Committee on the Budget, Opening Floor Statement on Budget Conference Agreement, available here. 

Senate Committee on the Budget, Charts Used in Opening Floor Statement on Budget Conference Agreement, available here. 

CRS, The Alternative Minimum Tax For Individuals: Legislative Activity in the 110th Congress, available here.

CRS, The Alternative Minimum Tax for Individuals, available here. 

CRS, The Budget for Fiscal Year 2009, available here.

CRS, The Debt Limit: History and Recent Increases, available here. 

CRS, Expiration and Extension of the Individual Income Tax Cuts Enacted in 2001 Through 2007, available here. 

CRS, Federal Budget Process Reform in the 110th Congress: A Brief Overview, available here. 

CRS, Federal Research and Development Funding: FY2009, available here. 

Democratic Policy Committee, The Democratic Budget: Strengthening the Economy and the American Middle Class (March 10, 2008), available here.

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