Definition: Each year, the House and Senate Appropriations Committees receive an overall funding allocation for the coming federal fiscal year. The House and Senate Appropriations Committees then, respectively, decide on how to apportion the overall amount to each of their corresponding 12 subcommittees. The amount assigned to each of the 12 subcommittees is known as a 302(b) allocation and taken together the 12 assigned amounts are known as 302(b) allocations. From this funding allocation starting point, the House and Senate Appropriations Subcommittees distribute federal spending authority throughout the specific departments, agencies, and programs under their jurisdiction.
Used in a sentence:“[Senator] Mikulski said that she and [Congressman] Rogers have discussed allotments, which appropriators call ‘302(b) allocations,’ for their section in the 1974 budget act. ‘I know what his are, but ours will be different,’ she said.”
History: The Congressional Budget and Impoundment Control Act of 1974 is a law that modifies Congress’ role with respect to the federal budgeting process. (Government Printing Office Public Law 93-344) The main provisions of the law created a process whereby both chambers of Congress agree on a single concurrent budget resolution. which is not signed by the President. Additionally, during budget debates members may raise budget points of order to have specific language removed from underlying legislation. (Senate Budget Committee) The final agreed upon Concurrent resolution passed in both chambers sets an overall top level spending figure (302(a) allocation) to guide appropriators as they craft the 12 individual appropriations bills. The chairs of the Appropriations Committees of the House and Senate then each release a document setting their respective top line numbers for each of the 12 appropriations bills, known as 302(b) allocations, named after section 302(b) of the Congressional Budget Control Act. The 302(b) allocations outline the maximum spending levels for each of the 12 individual spending measures. It is not uncommon for the House and Senate to apportion funding differently and for the 302(b) allocations between the chambers to diverge. These differences usually get resolved during either a formal or informal conference committee between House and Senate Appropriators.
Definition: Outlays refers to the actual disbursement of funds by the U.S. Treasury to meet obligations incurred by the federal government. They are typically referred to as spending or expenditures.
Used in a sentence: “The U.S. government posted the widest monthly budget surplus in more than five years in June, as spending plunged 47 percent and a stronger economy lifted tax receipts, the Treasury Department said.
Receipts exceeded outlays by $116.5 billion last month, the biggest surplus since April 2008, compared with a $59.7 billion deficit in June 2012, the Treasury said today in Washington. The result exceeded the $115 billion median estimate in a Bloomberg survey of 21 economists.” -Bloomberg
History: Article I, Section 9, Clause 7 of the United States Constitution states:
“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of all public Money shall be published from time to time.”
In a textbook budget process, the President proposes a budget to Congress on a yearly basis in the beginning February. Subsequently, both the House and Senate propose and pass their own budgets and reconcile them to set “top-line” numbers for the relevant accounts within the federal government. These “budgets resolutions,” are not signed by the President, and do not carry the force of law. From these numbers, the House and Senate appropriations committees divide the allocations among the 12 subcommittees, thus determining the actual funding levels for each agency and program. These bills are signed by the President and carry the force of law. From this process the federal government is authorized to produce expenditures or outlaysto pay for the programs necessary to continue government operations.
Definition:OCO funding ismoney set aside in the federal budget for expenses connected to overseas operations such as: crisis response, infrastructure and coalition support for operations in Iraq/Afghanistan, humanitarian assistance in the Middle East and North Africa, and embassy security among other needs abroad.
Used in Sentence: “‘I have received some questions about the willingness to do OCO as a pay-for,” Fisher wrote. “Chairman Wyden is VERY OPEN to considering OCO as a pay-for. If that is the position of your organization, please include that in your support letters … [and] convey this sentiment in your meetings with senators.’ The email sheds light on the status of negotiations over a permanent “doc fix.” Lawmakers are closer than ever to repealing the SGR, but deciding how to offset the reform is proving a major challenge.
Wyden, the Finance Committee’s newly installed chief, is hardly the first lawmaker to suggest war spending as a way to fund an SGR fix. The idea has been proposed by House Democrats and has support from major players in the medical community. -The Hill
History: Following the terror attacks of 2011, President George W. Bush’s administration requested Congress provide specific funds to pursue the “Global War on Terror.” Beginning in 2009 the administration of President Barack Obama changed from using the “Global War on Terror” terminology to instead employing the nomenclature of “Overseas Contingency Operations” and the funds to support the effort became known as OCO. Due to the reduced U.S. military presence in Iraq and Afghanistan, the need for OCO funding is declining. In Fiscal Year (FY) 2013 OCO outlays/expenditures were $93 billion and the President’s request for OCO in FY 2015 has decreased to $85 billion. Currently, there is a debate in Congress about the possibility of using the OCO funds as “savings” to pay-for other expenses (i.e. SGR)—Democrats contend that reallocating OCO funds would account for actual savings, while Republicans claim that since the monies have not actually been spent it is not real savings, just money the nation no longer needs to spend.
Election year politics already have arrived at the Capitol. Members of the House and Senate in both parties have their eyes on November 4th and are putting forward agendas and proposals to position themselves favorably in the eyes of the electorate. Look and listen for a lot of rhetoric—and possibly some action—on jobs and the economy. With a significant number of Democratic Senate retirements and numerous competitive races, conventional wisdom is that control of the Senate is in play and that Republicans have a solid chance of taking the chamber in the November election. Pundits agree that the House remains solidly in Republican control and the Democrats will remain in the minority for the next two years.
With the budget deal struck by Senator Patty Murray (D-WA) and Representative Paul Ryan (R-WI) late last fall, much of the Congressional work on the budget and federal appropriations already has been predetermined for the year. Treasury Secretary Jack Lew recently announced the nation will hit its debt ceiling on February 27th; so before the deadline, the Congress is expected to enact a measure to increase the nation’s borrowing authority without the previous political jockeying and drama.
Senate Finance Committee Chairman Max Baucus (D-MT) was confirmed as U.S. Ambassador to China late last week—causing a Senatorial game of musical chairs with respect to the chairmanship of numerous committees. The Senate Finance Committee, which has tax policy writing authority, will soon be led by Ron Wyden (D-OR), who has expressed an interest in rewriting the tax code. Changes he wishes to make include increasing the standard deduction, using the tax code to incentivize businesses to invest overseas earnings in domestic infrastructure, and bringing closer in line the taxation of investment income and ordinary income.
The latest in the implementation of the Affordable Care Act: on Monday, February 10th the White House announced it again was modifying the requirement for businesses with between 50 and 99 employees—they now have until 2016 to provide health insurance to full-time workers (those working at least 30 hours a week) or pay a penalty. This requirement already had been delayed a year; such businesses have one more year without being subject to the mandate. Beginning this year, businesses with more than 100 full-time workers are required to offer coverage to at least 70 percent of their full-time workers or face a penalty; starting next year they must offer health care to 95 percent of their full-time workforce.
Meanwhile, Republicans in the House of Representatives are seeking to change the Affordable Care Act definition of full-time workers from 30 hours a week to 40; earlier this week, the proposal gained some momentum with three Democrats signing on as cosponsors of the measure. However, with the Democrats still in control of the Senate, at least through this calendar year, it is highly unlikely such a measure would be brought up for a vote in that chamber. Should the Republicans sweep in November, it is likely that starting in 2015, the President will be sent numerous measures related to repealing or replacing provisions of the Affordable Care Act; if such legislation is attached to other proposals, President Obama will be put in a difficult position of deciding whether or not to enact or veto them. Only time and the election will tell what the future holds with respect to the long term viability of health care reform.
As the year winds to a close, the House and Senate have both approved a bipartisan budget deal, which sets allocations for the remainder of Fiscal Year (FY) 2014 and for FY 2015. The President is expected to sign the deal.
The agreement provides $1.012 trillion for FY 2014 and $1.014 trillion in FY 2015. While it does not completely address sequestration, the budget deal provides some relief from the sequester for discretionary spending; $63 billion for both years. For more information on the specifics of the deal click here: http://www.budget.senate.gov
So what happens next?
The House is now home for the holidays and the Senate will follow shortly. Appropriations Committee staff will be working overtime to try to draft language for the remainder of FY 2014 that Congress will consider when they return in the New Year. The current Continuing Resolution (CR) expires on January 15th.
There are a number of different scenarios as to how FY 2014 will play out:
An omnibus of all 12 bills
Large package including some bills and CR for others where there is not consensus
A CR with just a date change to carry the federal government to September 30, 2014 (least likely)
A few things to keep in mind:
The current CR expires on January 15th, which does not allow for much time to draft language and get consensus. We could see another short term (possibly just a few days) CR to buy Congress some more time to work on the funding bills.
Even though there has been agreement on FY 2014 and FY 2015 top line numbers and some sequestration relief, the debt ceiling will be another fight early in the New Year.
The budget deal included a three month fix to the SGR (or doc fix), however, discussions around finding a permanent fix to this expensive issue will continue in the early part of the New Year.
While the budget deal did provide some sequestration relief, the issue is certainly not resolved and will continue to plaque Congress going forward.
The sequestration relief that was provided only addresses the discretionary side of spending and in fact extended the sequester for mandatory spending—meaning that Medicare providers will see another 2 percent cut to their reimbursement in 2014.
The President’s budget for FY 2015 is usually delivered to Congress in mid-February but could be delayed until after the FY 2014 spending is resolved.
Elections – wild card. While the general feeling is that most lawmakers want to get FY 2014 resolved, it is hard to tell how primaries and elections will influence the playing field. This will be something to watch.
Senate and House negotiators reached an agreement yesterday, December 10, 2013, on top line numbers for Fiscal Year (FY) 2014 and FY 2015 spending and partial replacement of the sequester cuts.
It is being reported that the “bipartisan package includes $63 billion of ‘sequester relief,’ $85 billion of total savings, and $23 billion in net deficit reduction. The agreement would set the discretionary spending level for fiscal year 2014 at $1.012 trillion, and $1.014 trillion in FY 2015.” Click here to view the Politico article.
A summary, section by section, and legislative text of the budget deal can be found here.
The House is expected to consider the proposal as early as tomorrow, Thursday December 12th. While there are rumblings in the press that some conservatives and some Democrats are not happy with the deal it is too soon to know if that is the sign of a true compromise or trouble brewing in the wings.
On Wednesday, November 13, 2013, the Congressional Budget Office (CBO) released a 318-page report outlining 103 various options for decreasing federal spending. CBO does not advocate for specific policy proposals; rather this document represents a compendium of the major proposals it recently has scored. These reports are helpful because in addition to providing current cost estimates, CBO generally will include some language discussing the pros and cons of the specific policy option. CBO also released a handy summary table of the options contained in the report.
In terms of health care savings, the report identified 16 options including:
Overall savings for Medicare-related policies ranged from $230 billion to $869 billion over ten years. Included in the report are options related to converting Medicare to a premium support model ($22 to $275 billion), imposing restrictions on Medigap plans ($52 to $114 billion), increasing the age of eligibility for Medicare ($23 billion), increasing Medicare Part B and Part D premiums ($20 to $287 billion), imposing additional bundled payments on providers ($17 to $47 billion), and imposing rebates on prescription drug manufactures for Part D low-income beneficiaries ($123 billion).
Overall savings for policies related to health insurance exchanges and employer-sponsored coverage ranged from $476 billion to $823 billion over ten years. Included in this report are options related to eliminating the subsidies for moderate-income individuals who purchase coverage in the health insurance exchanges ($173 billion), adding a “public option” to choices available in the health insurance exchanges ($37 billion), and reducing the tax incentives for employer-based health insurance coverage ($266 to $613 billion).
Overall savings for veterans’ health care policies ranged from $99 billion to $150 billion over ten years. Included in the report were options related to adding out-of-pocket cost-sharing for TRICARE for Life ($31 billion), modifying TRICARE cost-sharing for working-age military retirees ($20 to $71 billion), and restricting Veterans’ Affairs (VA) Medical Care eligibility ($48 billion).
The remaining policy options included block granting Medicaid ($105 to $606 billion), limiting medical malpractice claims ($57 billion), reducing funding for National Institutes of Health (NIH) ($13 to $28 billion), and increasing the cigarette tax ($37 billion).
This compendium will prove useful as Congress continues to look for offsets to pay for various priority issues (like permanently addressing the SGR). Of course, many of these proposals have been scored by CBO over the years (e.g., increasing the age of eligibility and imposing Medicare premium support model) and the prevailing wisdom thus far seems to be that such policies would be politically challenging to enact absent some grand bargain on entitlement reform.
The government may be back up and running and funded under a short-term continuing resolution (CR), but the battle is far from over as Congress heads toward new deadlines to address budgetary matters. There has been some confusion about what the current budget agreement means in terms of sequestration’s annual cuts to discretionary and mandatory programs instituted in 2012. The law signed by the President to address the short-term continuing resolution and temporarily raise the debt ceiling does not provide federal agencies flexibility to administer new sequestration cuts at this time. With the government spending levels remaining at FY 2013 levels for the duration of the CR, a new round of sequester cuts are not set to kick in until January 2014.
The law established a short-term budget conference committee, with a set deadline of Dec. 13, 2013 to outline recommended spending levels and program cuts. Of note is that the committee deadline is set in advance of when the second year of the sequester will begin. The deadline provides a window of opportunity for the new budget conferees to address how the sequester cuts are applied in FY 2014. The conferees may contemplate making other adjustments to entitlement programs (Medicare and Medicaid) to address health care spending issues that will be negotiated during their deliberations. In addition, Medicare payments to physicians are set to be cut by approximately 25 percent if Congress does not address the cut by December 31, 2013 and offset the cut with a payfor that would likely include cuts to other health care entities. Any of these negotiations and decisions, if ultimately accepted by Congress, could impact the size of the Medicare sequester cuts in January FY 2014.
Last night the House and Senate passed, and the President signed, legislation to both fund the government and raise the federal debt limit – the shutdown has ended.
The deal contained a continuing resolution (CR) to fund the government through January 15, 2014 and a debt limit extension to February 7, 2014. The bill also contained language requiring verification of income for those eligible for the Affordable Care Act’s subsidies.
Another provision in the CR/debt ceiling legislation is a bicameral, bipartisan budget conference. This conference is to meet to discuss discretionary spending levels for fiscal year (FY) 2014 and develop a report, due December 13, 2013. The conference committee is chaired by Senate Budget Committee Chair Patty Murray (D-WA) and House Budget Committee Chair Paul Ryan (R-WI). House conferees include Representatives Diane Black (R-TN), Assistant Democratic Leader James Clyburn (D-SC), Tom Cole (R-OK), Appropriations Committee Ranking Member Nita Lowey (D-NY), Tom Price (R-GA), and Budget Committee Ranking Member Chris Van Hollen (D-MD). All Senate Budget Committee members were named as conferees.
The Senate passed the bill with a vote of 81-18 and the House then followed with a vote of 285-144. The bill passed the House with 87 Republicans and 198 Democrats.
Following the vote, the Senate adjourned until Monday, October 28th. The House is scheduled to be in session today, but no schedule has been announced.
While the deal is good news – federal employees can go back to work and will get paid, federal programs can continue, and national parks and monuments are reopened – with the short-term CR, we could be facing this all again in 90 days.