[House Report 112-469]
[From the U.S. Government Publishing Office]
112th Congress Rept. 112-469,
HOUSE OF REPRESENTATIVES
2d Session Part 1
_______________________________________________________________________
SEQUESTER REPLACEMENT
ACT OF 2012
__________
R E P O R T
of the
COMMITTEE ON THE BUDGET
HOUSE OF REPRESENTATIVES
to accompany
H.R. 4966
A BILL TO AMEND THE BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT
OF 1985 TO REPLACE THE SEQUESTER ESTABLISHED BY THE BUDGET CONTROL ACT
OF 2011
together with
MINORITY AND DISSENTING VIEWS
May 9, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
-------------
U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2012
19-006
COMMITTEE ON THE BUDGET
PAUL RYAN, Wisconsin, Chairman
SCOTT GARRETT, New Jersey CHRIS VAN HOLLEN, Maryland,
MICHAEL K. SIMPSON, Idaho Ranking Minority Member
JOHN CAMPBELL, California ALLYSON Y. SCHWARTZ, Pennsylvania
KEN CALVERT, California MARCY KAPTUR, Ohio
W. TODD AKIN, Missouri LLOYD DOGGETT, Texas
TOM COLE, Oklahoma EARL BLUMENAUER, Oregon
TOM PRICE, Georgia BETTY McCOLLUM, Minnesota
TOM McCLINTOCK, California JOHN A. YARMUTH, Kentucky
JASON CHAFFETZ, Utah BILL PASCRELL, Jr., New Jersey
MARLIN A. STUTZMAN, Indiana MICHAEL M. HONDA, California
JAMES LANKFORD, Oklahoma TIM RYAN, Ohio
DIANE BLACK, Tennessee DEBBIE WASSERMAN SCHULTZ, Florida
REID J. RIBBLE, Wisconsin GWEN MOORE, Wisconsin
BILL FLORES, Texas KATHY CASTOR, Florida
MICK MULVANEY, South Carolina HEATH SHULER, North Carolina
TIM HUELSKAMP, Kansas KAREN BASS, California
TODD C. YOUNG, Indiana SUZANNE BONAMICI, Oregon
JUSTIN AMASH, Michigan
TODD ROKITA, Indiana
FRANK C. GUINTA, New Hampshire
ROB WOODALL, Georgia
Professional Staff
Austin Smythe, Staff Director
Thomas S. Kahn, Minority Staff Director
C O N T E N T S
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Page
Introduction..................................................... 3
The Sequester................................................ 3
Why it is Necessary to Replace the Sequester................. 4
The Path to Prosperity Approach: Reprioritize Savings Through
Reconciliation............................................. 6
Sequester Replacement Act of 2012............................ 6
Summary of Proposed Changes...................................... 7
Legislative History.............................................. 8
Section by Section............................................... 11
Hearings......................................................... 12
Votes of the Committee........................................... 13
Committee Oversight Findings..................................... 16
Performance Goals and Objectives................................. 16
Constitutional Authority Statement............................... 16
Committee Cost Estimate.......................................... 17
Advisory Committee Statement..................................... 18
Applicability to the Legislative Branch.......................... 18
Federal Mandates Statement....................................... 18
Advisory on Earmarks............................................. 18
Changes in Existing Law Made by the Bill as Reported............. 18
Views of Committee Members....................................... 20
Appendix: H.R. 4966, Sequester Replacement Act of 2012........... 37
112th Congress Rept. 112-469,
HOUSE OF REPRESENTATIVES
2d Session Part 1
======================================================================
SEQUESTER REPLACEMENT ACT OF 2012
_______
May 9, 2012.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Ryan of Wisconsin, from the Committee on the Budget, submitted the
following
R E P O R T
together with
MINORITY AND DISSENTING VIEWS
[To accompany H.R. 4966]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Budget, to whom was referred the bill
(H.R. 4966) to amend the Balanced Budget and Emergency Deficit
Control Act of 1985 to replace the sequester established by the
Budget Control Act of 2011, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.
The amendment is as follows:
In the amendment made by section 4(b), strike
``251(c)(2)(A)'' each place it appears and insert
``251(c)(2)''.
Introduction
----------
The Path to Prosperity budget that passed the U.S. House of
Representatives on March 29, 2012 set in motion a process to
reprioritize certain across-the-board spending reductions
(enforced by a sequester) enacted as part of the Budget Control
Act of 2011 [BCA].
The budget resolution called for enactment of two pieces of
legislation to replace a $98 billion sequester of discretionary
programs on January 2, 2013. First, it called on six committees
to achieve at least $78 billion of these savings through
reforms to mandatory spending programs. Second, it proposed to
achieve $19 billion in discretionary savings by lowering the
discretionary cap from $1.047 trillion to $1.028 trillion for
fiscal year 2013.
On April 27, 2012 Chairman Ryan introduced H.R. 4966, the
Sequester Replacement Act of 2012 [SRA]. In combination with
reconciliation legislation that the Budget Committee plans to
report, this bill will replace the arbitrary and harmful
sequester and provide for an orderly process for the enactment
of appropriations legislation and long-overdue reforms in
mandatory spending.
This reconciliation legislation is designed to produce $78
billion in deficit reduction. In fact, this reconciliation
legislation far exceeds that goal, achieving over $300 billion
in mandatory savings over a 10-year period.
This second piece of legislation, the SRA addresses the
sequester and implements the budget resolution's $19 billion in
savings from discretionary spending.
The SRA lowers the fiscal year 2013 discretionary cap from
$1,047.0 billion down to $1,027.9 billion by providing for a
$19.1 billion reduction in the discretionary spending cap for
fiscal year 2013 on Jan. 2, 2013, reflecting the level of
discretionary spending called for in the House-passed budget
resolution. The SRA provides that the bill only takes effect
once the reconciliation bill has been enacted into law,
guaranteeing that no room will be granted under the caps unless
the savings are made permanent.
Additionally the SRA clarifies that the Department of
Veterans Affairs is exempt from any sequester under the BCA.
The SRA replaces the fiscal year 2013 discretionary sequester
and the defense mandatory sequester with the savings from the
lower discretionary cap and the reconciliation bill.
The Sequester
On January 2, 2013, unless the BCA is amended, there will
be a sequester (across the board cut) from non-exempt programs
of $54.7 billion from defense programs and $54.7 billion from
non-defense programs. Because defense programs are primarily
funded through annual appropriations, $54.6 billion of the
defense sequester will come from discretionary programs, i.e.,
military personnel, operations and maintenance, military
construction, procurement, and research and development.
Approximately $19 million will come from defense direct
spending programs. The President has the authority to exempt
military personnel from the sequester, but the rest of the
defense budget must still generate these savings. If the
President chooses to exempt military personnel, the rest of DOD
spending would be reduced by an estimated 13%.
The sequester will reduce non-defense discretionary
programs by $43 billion and non-defense direct spending
programs by $11.7 billion. The BCA limited the reduction in
Medicare spending to 2 percent ($6.3 billion) with other non-
defense discretionary and mandatory programs making up the
difference. In addition, the law exempts from sequester many
means-tested entitlement programs, e.g., Medicaid, resulting in
the brunt of the non-defense direct spending sequester falling
on agriculture programs.
After fiscal year 2013, the BCA achieves the budget
authority reductions in a different way. For discretionary
spending, the BCA lowers the annual caps on discretionary
spending by the amounts necessary to meet the goal. By the
Congressional Budget Office's [CBO] current calculation this
results in an average reduction of $90.4 billion in the
discretionary cap in each year from 2014 to 2021. Unless these
lowered caps are breached in the annual appropriations process,
there would be no discretionary sequesters after fiscal year
2013.
For direct spending, the BCA continues to impose sequesters
each year, which CBO estimates will average $19.0 billion from
fiscal years 2014-21.
The Office of Management and Budget [OMB] will determine
the exact amounts that will come from discretionary and direct
spending at the start of each calendar year based on the
relative proportions of discretionary and direct spending in
the baseline. To date OMB has refused to provide an official
estimate of the spending reductions that would occur under
current law.
Why it is Necessary to Replace the Sequester
Intended as a mechanism to force action, there is
bipartisan agreement that the sequester going into place would
undercut key responsibilities of the federal government.
As the Administration makes clear in its own budget, ``By
design, the sequester is not good policy and is meant to force
Congress to take action: it would lead to significant cuts to
critical domestic programs such as education and research and
cuts to defense programs that could undermine our national
security. * * * [C]uts of this magnitude done in an across the
board fashion would be devastating both to defense and non-
defense programs.''\1\ At a committee hearing on replacing the
sequester, a witness from OMB testified that ``If allowed to
occur, the sequester would be highly destructive to national
security and domestic priorities, and core government
functions. The Administration believes that taking action to
avoid the sequester in full in a balanced and fiscally
responsible manner must be the primary focus of Congress's
deliberations in the coming months.''\2.
---------------------------------------------------------------------------
\1\``Fiscal Year 2013 Budget of the U.S. Government,'' Office of
Management and Budget, February 2012. http://www.whitehouse.gov/sites/
default/files/omb/budget/fy2013/assets/cutting.pdf
\2\Testimony of Danny Werfel, Controller of the Office of
Management and Budget, Committee on the Budget, U.S. House of
Representatives, April 25, 2012.
---------------------------------------------------------------------------
Of particular concern is the impact sequestration, if
allowed to occur, would have on our national security.
The sequestration cuts would be on top of the savings in
discretionary defense spending that are already being
implemented pursuant to the debt limit agreement last August.
The House Armed Services Committee has analyzed the impact
of the sequestration, and found that if left in place,
sequestration would cut the military to its smallest size since
before the Second World War--all while we are still a nation at
war in Afghanistan, facing increased threats from Iran and
North Korea, unrest in the Middle East, and a rising China.
Secretary Panetta and the professional military leadership
have also looked at the impact of sequestration and reached
similar conclusions:
Secretary Panetta stated, ``If the maximum sequestration is
triggered, the total cut will rise to about $1 trillion
compared with the FY 2012 plan. The impacts of these cuts would
be devastating for the Department * * * Facing such large
reductions, we would have to reduce the size of the military
sharply. Rough estimates suggest after ten years of these cuts,
we would have the smallest ground force since 1940, the
smallest number of ships since 1915, and the smallest Air Force
in its history.''\3.
\\---------------------------------------------------------------------------
\3\Leon Panetta, U.S. Secretary of Defense, ``Letter to Senator
John McCain,'' November 14, 2011. http://armedservices.house.gov/
index.cfm/files/serve?File_id=ae72f319-e34f-4f78-8c88-b8e7c9dee61f
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General Dempsey, Chairman of the Joint Chiefs of Staff,
stated, ``[S]equestration leaves me three places to go to find
the additional money: operations, maintenance, and training.
That's the definition of a hollow force.''\4.
\\---------------------------------------------------------------------------
\4\Testimony of Service Chiefs before House Armed Services
Committee, February 14, 2012. http://armed-services.senate.gov/
Transcripts/2012/02%20February/12-02%20-%202-14-12.pdf
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The individual branch service chiefs echoed General
Dempsey:
``Cuts of this magnitude would be catastrophic to
the military * * * My assessment is that the nation would incur
an unacceptable level of strategic and operational risk.''--
General Ray T. Odierno, Chief Of Staff, United States Army
``A severe and irreversible impact on the Navy's
future,''--Admiral Jonathan W. Greenert, Chief of Naval
Operations
``A Marine Corps below the end strength that's
necessary to support even one major contingency,''--General
James F. Amos, Commandant of the Marine Corps
``Even the most thoroughly deliberated strategy
may not be able to overcome dire consequences,''--General
Norton A. Schwartz, Chief of Staff, United States Air Force
According to an analysis by the House Appropriations
Committee, the sequester will also have a significant impact on
non-defense discretionary programs as well, including:
Automatically reducing Head Start by $650 million,
resulting in 75,000 fewer slots for children in the program;
Automatically reducing the National Institutes of
Health (NIH) by $2.4 billion, an amount equal to nearly half of
total NIH spending on cancer this year; and
A reduction of approximately 1,870 Border Patrol
Agents (a reduction of nearly 9 percent of the total number of
agents).
Leaders of both parties agree that sequester savings should
be reprioritized. On August 4, 2011, then-director of the
Office of Management and Budget (now White House Chief of
Staff) Jack Lew wrote that the sequester was not intended to be
implemented: ``Make no mistake: the sequester is not meant to
be policy. Rather, it is meant to be an unpalatable option that
all parties want to avoid.''\5.
\\---------------------------------------------------------------------------
\5\Jack Lew, ``Security Spending in the Deficit Agreement,'' August
4, 2011. http://www.whitehouse.gov/blog/2011/08/04/security-spending-
deficit-agreement (accessed March 19, 2012).
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The Path to Prosperity Approach:
Reprioritize Savings Through Reconciliation
The Path to Prosperity budget that passed the U.S. House of
Representatives in April of 2012 set in motion a process to
reprioritize certain across the board spending reductions
enacted as part of the BCA. It achieves this outcome through
enactment of two pieces of legislation. The first piece of
legislation will be generated through the reconciliation
process, which is triggered by the budget resolution and gives
expedited consideration to bills enacting the spending,
revenue, and debt policies contained in the budget resolution.
To trigger these expedited procedures, The Path to
Prosperity included reconciliation instructions calling on six
House committees to achieve specified amounts of savings in
programs within their jurisdictions. The Sequester Replacement
Reconciliation Act consists of the legislation they have
reported to achieve the same level of spending reductions
enacted in the BCA, but without the haphazard cuts--especially
to national security--that an across the board approach would
entail.
Those six House Committees have advanced legislation that
will:
1. Stop Fraud, by Ensuring that Individuals are Actually
Eligible for the Taxpayer Benefits They Receive;
2. Eliminate Government Slush Funds and Stop Bailouts;
3. Control Runaway, Unchecked Spending;
4. Restrain Spending on Government Bureaucracies; and
5. Reduce Waste and Duplicative Programs.
The savings from these reforms, which would be enacted
through the SRRA, will replace the arbitrary discretionary
sequester cuts and lay the groundwork for further efforts to
avert the spending-driven economic crisis before us.
The Sequester Replacement Act of 2012
Chairman Ryan introduced the SRA as called for by section
202 of the budget resolution in order to prioritize the
spending reductions enacted as part of the BCA. These spending
reductions are replaced but only on the enactment of other
reductions which are included in the SRRA. By targeting fraud,
eliminating slush funds, restraining runaway spending,
reforming bureaucracies, and ending wasteful and duplicative
programs, the SRRA provides a responsible way to reprioritize
all of the spending reduction enacted as part of the BCA.
With--and only with--the enactment of this targeted, carefully
prioritized spending reduction, Congress can move to the second
part of this task: replacing the across the board sequester
before it does any damage.
The SRA would achieve this task by amending the BCA to
replace the discretionary sequester for fiscal year 2013 with
the spending reductions enacted through the Reconciliation Act.
To safeguard against an end-run around the Reconciliation Act,
the SRA stipulates that it would only take effect upon
enactment of the reconciliation bill.
The SRA takes additional steps to protect the U.S. military
and veterans and to lock in spending savings for the American
taxpayer:
It clarifies that Department of Veterans Affairs'
programs are not subject to sequester.
It lowers the BCA's discretionary caps to levels
set in the Path to Prosperity budget.
It closes a potential loophole that would
otherwise allow Congress to enact large direct spending
increases by counting SRRA savings as an offset.
It eliminates the fiscal year 2013 sequester of
mandatory spending on national defense.
With passage of the SRRA and the SRA, the House will have
taken the responsible step of offsetting the cost
(approximately $78 billion) of replacing the automatic across
the board discretionary spending cuts that are scheduled to
occur on January 2, 2013 through sequestration. The additional
savings achieved through reconciliation beyond the $78 billion
(over $180 billion in the next ten years) would further reduce
the deficit. The SRA reduces the total level of discretionary
spending limits for fiscal year 2013 from $1,047 billion to
$1,028 billion which will save $19 billion for that fiscal
year. And this approach provides a blueprint for replacing the
rest of the sequester with responsible, targeted spending
reduction in the years ahead.
Summary of Proposed Changes
This bill is designed to amend the provisions of the BCA to
avert an impending sequestration, which will be implemented on
January 3, 2013.
The reconciliation bill the Budget Committee will report
reduces the deficit by more than $300 billion over the next
decade, this is approximately four times the savings of the
portion of the fiscal year 2013 sequester that is being
eliminated. As a companion to the reconciliation bill and in
response to the directive in section 202 of the budget
resolution (H. Con. Res. 112), the Sequester Replacement Act of
2012:
Provides that the bill only takes effect upon
enactment of the reconciliation bill, ensuring that there will
be no relief from the sequester unless the Reconciliation Act's
savings are enacted.
Exempts the Department of Veterans Affairs from
any sequesters under the BCA.
Re-sets the fiscal year 2013 discretionary cap at
$1,047.0 billion and provides for a $19.1 billion reduction in
the discretionary spending cap for fiscal year 2013 on Jan. 2,
2013, achieving the level of discretionary spending called for
in the House-passed budget resolution ($1,027.9 billion).
Makes technical and conforming changes to the
operation of section 314 of the Congressional Budget Act of
1974 and provides for the appropriate treatment of the
reconciliation legislation on the Statutory Pay-Go-As-You-Go
scorecard.
Replaces the fiscal year 2013 discretionary
sequester and the defense mandatory sequester with the savings
from the lower discretionary cap and the reconciliation bill.
Legislative History
The ``sequestration'' procedure was first established
pursuant to the Balanced Budget and Emergency Deficit Control
Act of 1985 [BBEDCA], initially intended to reduce deficits
established by annual maximum deficit limits. Sequestration
involves automatic across-the-board spending reductions
required to be ordered by the President under certain
circumstances. The orders under the terms of BBDECA occur
within 15 days after the end of a session of Congress.
The Budget Enforcement Act of 1990 [BEA] significantly
revised BBEDCA (the BEA is included as Title XIII of Public Law
101-508, the Omnibus Budget Reconciliation Act of 1990). It
replaced the maximum spending limits with annual limits on
discretionary spending and controls over increases in direct
spending or decreases in revenues, termed ``pay-as-you go
(PAYGO).'' Though the original BEA was scheduled to expire at
the end of fiscal year 1995, it was extended by the Omnibus
Budget Reconciliation Act of 1993, and again by the Balanced
Budget Act of 1997 [BBA], in each case for five years.
The discretionary spending limits expired on September 30,
2002. The PAYGO requirement, which applied to the out-year
effects (through fiscal year 2006) of legislation enacted on or
before September 30, 2002, effectively expired at the same time
due to the enactment of legislation (Public Law 107-312)
setting the balances for all years on the Pay-As-You-Go
Scorecard to zero.
The Committee on the Budget of the House reported
legislation to modify the discretionary spending limits for
fiscal year 2002 on December 13, 2001 (House Report 107-338,
Interim Budget Control and Enforcement Act of 2001, to
accompany H.R. 3084). Though the committee approved the measure
by voice vote, the House did not consider it. It was instead
included in the conference report on the Department of Defense
and emergency Supplemental Appropriations measure signed into
law on January 10, 2002 (Public Law 107-117). The law revised
the discretionary spending limits and levels in the budget
resolution to increase spending to respond to the September
11th terrorist attacks and was passed on a bipartisan basis.
On March 19, 2004, the Committee on the Budget of the House
reported the Spending Control Act of 2004 (H.R.3973; House
Report 108-442). This measure would have reestablished, though
2009, the discretionary spending limits. The limits were set
for budget authority and outlays--though the legislation
reported did not specify the five-year limits, which were to be
entered later. The bill also extended the pay-as-you-go
procedure, but applied it only for direct spending. This
specific bill was not considered on the floor of the House.
On June 25, 2004, the House considered another bill titled
the Spending Control Act, H.R. 4663, which failed of passage by
a recorded vote of 146-268 (Roll Call Number 318--108th
Congress). This bill was similar to the Spending Control Act of
2004 reported by the Committee on the Budget on March 19, 2004,
but the discretionary spending limits were reduced from five
years to two: Instead of spending limits through fiscal year
2009, they were set only for fiscal years 2005 and 2006. The
spending-only pay-as-you-go procedures would have remained in
force through fiscal year 2009 as in the March-reported
Spending Control Act of 2004.
The Committee on the Budget of the Senate reported S. 3521,
the Stop Over Spending Act of 2006. This measure was an omnibus
budget process bill including a number of different enforcement
reforms. Included among these was extension of the
discretionary spending limits for three years--through fiscal
year 2007. It did not include pay-as-you-go provisions but did
institute maximum deficit amounts, similar to the original
BBEDCA. These limits were set as a percentage of gross domestic
product, frozen after fiscal year 2012.
No further significant congressional action was taken on
re-establishing statutory controls on spending and revenue
until 2010, when on February 10 of that year, the Statutory
Pay-As-You-Go Act of 2010 was signed as part of Public Law 111-
139, which raised the statutory limit on the public debt.
While it was similar to the expired pay-as-you-go law, and
included references to certain sections of the BBEDCA, it did
not bring that law back into force. It did amend certain
sections of that Act such as the sequestrable base. It did not
establish new discretionary spending limits for any period of
time.
Enacted on August 2, 2012, the BCA authorized an increase
in the public debt limit. Added to this increase were statutory
controls on spending, primarily in the form of making BBEDCA
permanent and re-establishing the discretionary spending limits
from fiscal year 2012 through fiscal year 2021. These
discretionary spending limits for fiscal years 2012 and 2013
were divided into security and non-security categories. The
remaining years were set as a single discretionary general
category. These initial spending limits have been supplanted,
though, since the BCA also included additional procedures that
had the effect of altering the caps as set out in the statute.
The Congressional Budget Office estimated that the
discretionary spending caps of the BCA would reduce the
deficit, including savings from debt service, by $917 billion
over the 10 fiscal years covering 2012 through 2012.\6.
\\---------------------------------------------------------------------------
\6\Congressional Budget Office letter to the Honorable John Boehner
and the Honorable Harry Reid regarding CBO Analysis of the Budget
Control Act as posted on the House Committee on Rules website on August
1, 2011. http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/123xx/
doc12357/budgetcontrolactaug1.pdf
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The BCA also established a Joint Select Committee on
Deficit Reduction which was tasked with reporting a bill to
reduce the federal deficit by an additional $1.5 trillion over
a 10-year period ending in fiscal year 2021. Legislation from
the Joint Committee would have been considered under procedures
limiting amendment and debate. Under the terms of the BCA, if
legislation from the Joint Committee reducing the deficit by at
least $1.2 trillion were not enacted, then a procedure would be
set in motion to reduce spending by adjusting the discretionary
caps downward and calculating an amount of reductions in direct
spending necessary to achieve the $1.2 trillion (or a portion
thereof were legislation from the Joint Committee achieving
some deficit reduction was enacted).
The Joint Committee was unable to report any proposal
reducing the deficit by any amount and no legislation to that
purpose was enacted by the required January 15, 2012 deadline.
On this date, not only did the Joint Committee cease to exist,
the automatic spending reduction process was triggered.
The process that began on January 15, 2012 had the
following ramifications: The statutory discretionary caps were
replaced by new caps with new definitions of security and
nonsecurity--now effectively defense and nondefense, though the
previous terms are still used. These categories have replaced
the discretionary general category through 2021.
The process has two components: sequestration and
discretionary spending limits reduction. In order to achieve
the $1.2 trillion in deficit reduction, spending reductions
will occur absent a change in law. OMB is charged with
calculating the amount in spending reduction required to
achieve the specified deficit reduction.
Since the Joint Committee didn't achieve any deficit
reduction, the calculation begins with a spending reduction of
the full $1.2 trillion from fiscal year 2013 through fiscal
year 2021. According to the BCA formula, that number is reduced
by 18 percent to account for the reduced cost of debt service
attributable to the lower level of spending. The remaining
amount is divided by nine to account for each of fiscal years
2013 through 2021. This amount is then divided by two so that
it is evenly distributed between reductions in defense and
nondefense accounts.
The spending reductions are further divided between direct
spending and discretionary spending within the defense and
nondefense accounts.
The implementation of the spending reductions is distinct
from the calculation of the amounts. Once the amount is
calculated, the BCA requires reductions through 1)
sequestration and 2) reductions to the revised discretionary
spending limits.
The sequestration order affects both discretionary and
mandatory spending for fiscal year 2013. This means that
discretionary amounts appropriated for fiscal year 2013 are to
be sequestered by the calculated amount no matter how much is
appropriated--it is not sequestered as a function of the
discretionary spending limit for that fiscal year. In addition,
for all fiscal years 2013 through 2021, a direct spending
sequester of nonexempt accounts is ordered.
This is distinct from the spending reductions for the
discretionary spending limits for fiscal year 2014 through
fiscal year 2021--these reductions occur through revising the
spending limits downward for each of those fiscal years.
DISCRETIONARY SPENDING CAPS
[Billions of $ budget authority]
----------------------------------------------------------------------------------------------------------------
2013 2014 2015 2016 2017 2018 2019 2020 2021
----------------------------------------------------------------------------------------------------------------
Pre-Sequester Cap.............. 1,047 1,066 1,086 1,107 1,131 1,156 1,182 1,208 1,234
Defense...................... 546 556 566 577 590 603 616 630 644
Non-Defense.................. 501 510 520 530 541 553 566 578 590
Reductions..................... -98 -93 -92 -91 -91 -90 -89 -88 -88
Defense...................... -55 -55 -55 -55 -55 -55 -55 -55 -55
Non-Defense.................. -43 -38 -38 -37 -36 -36 -35 -33 -33
Post-Sequester Cap............. 949 973 994 1,016 1,040 1,066 1,093 1,120 1,146
Defense...................... 491 501 511 522 535 548 561 575 589
Non-Defense.................. 458 472 482 493 505 517 531 545 557
----------------------------------------------------------------------------------------------------------------
Source: CBO March 2012 Baseline
The spending reductions under the BCA process begin on
January 2, 2013 and will occur for each year through fiscal
year 2021 as a matter of law unless changed by statute.
Section by Section
SECTION 1. SHORT TITLE
This section provides for the short title of the bill:
``Sequester Replacement Act of 2012.''
SECTION 2. CONTINGENT EFFECTIVE DATE.
This section requires enactment of the reconciliation bill
required by section 201 of H. Con. Res. 112 (112th Congress),
the concurrent resolution on the budget for fiscal year 2013,
before the Sequester Replacement Act would have any force or
effect.
SECTION 3. PROTECTING VETERANS PROGRAMS FROM SEQUESTER.
This section repeals section 256(e)(2)(E) of the Balanced
Budget and Emergency Deficit Control Act of 1985 [BBEDCA]. That
subparagraph provides for a special rule related to Veterans
Medical care and how it would be treated under an across the
board cut in spending ordered under the Statutory Pay-As-You-Go
Act of 2010 or the Balanced Budget and Emergency Deficit
Control Act of 1985. However, under current law, all programs
administered by the Department of Veterans Affairs are exempt.
This section clarifies that the latter provision prevails
should any ambiguity arise.
SECTION 4. ACHIEVING $19 BILLION IN DISCRETIONARY SAVINGS.
Subsection (a) amends paragraph (2) of section 251(c) of
the Balanced Budget and Emergency Deficit Control Act of 1985
(BBEDCA) to replace the discretionary spending limit in that
paragraph so that it would consolidate the security and non-
security categories in current law to one total discretionary
category. The level of the new spending limit with respect to
fiscal year 2013 is $1.047 billion in new budget authority.
This eliminates the applicability of section 251A(2)(A) of
BBEDCA which replaced the previous security and non-security
categories in section 251(c) on January 15, 2012.
Subsection (b) amends section 251A(7)(A) of the Balanced
Budget and Emergency Deficit Control Act of 1985. This
provision would require that, on January 2, 2013, the new
discretionary category will be adjusted downward by
$19,104,000,000 in budget authority. It also provides for an
additional supplemental sequestration report for fiscal year
2013, to be issued on January 15, 2013, to ensure that the
lower discretionary spending limit would be observed and any
spending above that limit reduced through across the board
spending reductions.
SECTION 5. CONFORMING AMENDMENTS TO SECTION 314 OF THE CONGRESSIONAL
BUDGET AND IMPOUNDMENT CONTROL ACT OF 1974.
This section amends section 314(a) of the Congressional
Budget Act of 1974 to return the language to the form prior to
the enactment of the Budget Control Act of 2011. The change
merely conforms the matter to be adjusted under the terms of
that section in the same way it had been for many years prior
and clarifies what the matter is to be adjusted.
SECTION 6. TREATMENT FOR PAYGO PURPOSES.
This section specifies that the budgetary effects of this
Act and any amendment made by it, and the budgetary effects of
the Act provided for by section 201 of H. Con. Res. 112 (112th
Congress), shall not be entered on either PAYGO scorecard
maintained pursuant to section 4(d) of the Statutory Pay-As-
You-Go Act of 2010.
SECTION 7. ELIMINATION OF THE FISCAL YEAR 2013 SEQUESTRATION FOR
DEFENSE DIRECT SPENDING.
Under current law, on January 2, 2013, a sequestration
order will be issued by the President under the Balanced Budget
and Emergency Deficit Control Act of 1985 to carry out
reductions to direct spending for the defense function (050)
for fiscal year 2013. This section renders that order as it
pertains to defense direct spending ineffective.
Hearings
On April 25, 2012, the Committee on the Budget of the House
held a hearing on the Budget Control Act of 2011 and how the
application of an across-the-board cut in both direct spending
and discretionary spending is to occur on January 2, 2013 by
Presidential order.
Those testifying were Daniel I. Werfel, Controller, Office
of Federal Financial Management at the Office of Management and
Budget, and Susan A. Poling, Deputy General Counsel at the
Government Accountability Office. The Office of Management and
Budget is the lead agency responsible for implementing any
sequester. At the hearing, Mr. Werfel declined to provide
specific information in response to Members' questions relating
to what the administration's specific proposal is to avoid the
sequester and how the administration would implement the
sequester if legislation is not enacted by January 2, 2013. The
Chairman of the Committee on the Budget wrote to Acting OMB
Director Zients on April 26, requesting additional information
by May 4 on how the administration would execute the sequester
required by the Budget Control Act. To date, Acting Director
Zients has not responded.
Votes of the Committee
Clause 3(b) of House Rule XIII requires each committee
report to accompany any bill or resolution of a public
character to include the total number of votes cast for and
against each roll call vote, on a motion to report and any
amendments offered to the measure or matter, together with the
names of those voting for and against.
Listed below are the actions taken in the Committee on the
Budget of the House of Representatives on the Sequester
Replacement Act of 2012.
On May 7, 2012, the committee met in open session, a quorum
being present.
Chairman Ryan asked unanimous consent to be authorized,
consistent with clause 4 of House Rule XVI, to declare a recess
at any time during the committee meeting.
There was no objection to the unanimous consent request.
Chairman Ryan asked unanimous consent to dispense with the
first reading of the bill and the bill be considered as read
and open to amendment at any point.
There was no objection to the unanimous consent request.
The committee adopted and ordered reported the Sequester
Replacement Act of 2012.
The committee took the following votes:
AMENDMENT OFFERED BY CHAIRMAN RYAN
1. This amendment proposed making a technical correction to
a citation in section 4(b) by striking ``251(c)(2)(A)'' and
inserting ``251(c)(2)(A)''.
The amendment was adopted by voice vote.
AMENDMENT OFFERED BY MR. VAN HOLLEN
1. This amendment proposed replacing the $1.2 trillion
sequester with an increase in taxes on domestic oil companies,
U.S. businesses with international operations, and individuals
with annual income greater than $1,000,000. The amendment
proposes to reduce spending by eliminating unspecified waste
and duplicative programs; eliminating direct payments to
farmers; reforming the Federal Flood Insurance Program; and
selling unspecified federal property. The amendment also
proposes to increase spending on education, science,
infrastructure, and the Internal Revenue Service to close the
``tax gap.''
The amendment was not agreed to by a roll call vote of 11
ayes and 22 noes.
ROLLCALL VOTE NO. 1
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
RYAN X VAN X
(WI) HOLLEN
(Chair (MD)
man) (Rankin
g)
------------------------------------------------------------------------
GARRETT X SCHWARTZ X
(NJ) (PA)
------------------------------------------------------------------------
SIMPSON X KAPTUR X
(ID) (OH)
------------------------------------------------------------------------
CAMPBEL X DOGGETT X
L (CA) (TX)
------------------------------------------------------------------------
CALVERT X BLUMENAU X
(CA) ER (OR)
------------------------------------------------------------------------
AKIN X McCOLLUM X
(MO) (MN)
------------------------------------------------------------------------
COLE X YARMUTH X
(OK) (KY)
------------------------------------------------------------------------
PRICE X PASCRELL
(GA) (NJ)
------------------------------------------------------------------------
McCLINT X HONDA
OCK (CA)
(CA)
------------------------------------------------------------------------
CHAFFET X RYAN X
Z (UT) (OH)
------------------------------------------------------------------------
STUTZMA X WASSERMA
N (IN) N
SCHULTZ
(FL)
------------------------------------------------------------------------
LANKFOR X MOORE
D (OK) (WI)
------------------------------------------------------------------------
BLACK X CASTOR X
(TN) (FL)
------------------------------------------------------------------------
RIBBLE X SHULER
(WI) (NC)
------------------------------------------------------------------------
FLORES X BASS X
(TX) (CA)
------------------------------------------------------------------------
MULVANE X BONAMICI X
Y (SC) (OR)
------------------------------------------------------------------------
HUELSKA X ........
MP
(KS)
------------------------------------------------------------------------
YOUNG X ........
(IN)
------------------------------------------------------------------------
AMASH X .........
(MI)
------------------------------------------------------------------------
ROKITA X .........
(IN)
------------------------------------------------------------------------
GUINTA X .........
(NH)
------------------------------------------------------------------------
WOODALL X
(GA)
------------------------------------------------------------------------
AMENDMENT OFFERED BY MS. MCCOLLUM AND MR. SHULER
2. This amendment proposed turning off the FY 2013
sequester for Medicare and increasing revenues by eliminating
certain deductions for domestic oil and gas companies.
The amendment was not agreed to by a roll call vote of 11
ayes and 22 noes.
ROLLCALL VOTE NO. 2
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
RYAN X VAN X
(WI) HOLLEN
(Chair (MD)
man) (Rankin
g)
------------------------------------------------------------------------
GARRETT X SCHWARTZ X
(NJ) (PA)
------------------------------------------------------------------------
SIMPSON X KAPTUR X
(ID) (OH)
------------------------------------------------------------------------
CAMPBEL X DOGGETT X
L (CA) (TX)
------------------------------------------------------------------------
CALVERT X BLUMENAU X
(CA) ER (OR)
------------------------------------------------------------------------
AKIN X McCOLLUM X
(MO) (MN)
------------------------------------------------------------------------
COLE X YARMUTH X
(OK) (KY)
------------------------------------------------------------------------
PRICE X PASCRELL
(GA) (NJ)
------------------------------------------------------------------------
McCLINT X HONDA
OCK (CA)
(CA)
------------------------------------------------------------------------
CHAFFET X RYAN X
Z (UT) (OH)
------------------------------------------------------------------------
STUTZMA X WASSERMA X
N (IN) N
SCHULTZ
(FL)
------------------------------------------------------------------------
LANKFOR X MOORE
D (OK) (WI)
------------------------------------------------------------------------
BLACK X CASTOR X
(TN) (FL)
------------------------------------------------------------------------
RIBBLE X SHULER
(WI) (NC)
------------------------------------------------------------------------
FLORES X BASS
(TX) (CA)
------------------------------------------------------------------------
MULVANE X BONAMICI X
Y (SC) (OR)
------------------------------------------------------------------------
HUELSKA X ........
MP
(KS)
------------------------------------------------------------------------
YOUNG X ........
(IN)
------------------------------------------------------------------------
AMASH X .........
(MI)
------------------------------------------------------------------------
ROKITA X .........
(IN)
------------------------------------------------------------------------
GUINTA X .........
(NH)
------------------------------------------------------------------------
WOODALL X
(GA)
------------------------------------------------------------------------
3. Mr. Garrett made a motion that the committee report the
bill as amended and that the bill do pass.
The motion was agreed to by a roll call vote of 21 ayes and
13 noes.
ROLLCALL VOTE NO. 3
------------------------------------------------------------------------
Name & Answer Name & Answer
State Aye No Present State Aye No Present
------------------------------------------------------------------------
RYAN X VAN X
(WI) HOLLEN
(Chair (MD)
man) (Rankin
g)
------------------------------------------------------------------------
GARRETT X SCHWARTZ X
(NJ) (PA)
------------------------------------------------------------------------
SIMPSON X KAPTUR X
(ID) (OH)
------------------------------------------------------------------------
CAMPBEL X DOGGETT X
L (CA) (TX)
------------------------------------------------------------------------
CALVERT X BLUMENAU X
(CA) ER (OR)
------------------------------------------------------------------------
AKIN X McCOLLUM X
(MO) (MN)
------------------------------------------------------------------------
COLE X YARMUTH X
(OK) (KY)
------------------------------------------------------------------------
PRICE X PASCRELL
(GA) (NJ)
------------------------------------------------------------------------
McCLINT X HONDA
OCK (CA)
(CA)
------------------------------------------------------------------------
CHAFFET X RYAN X
Z (UT) (OH)
------------------------------------------------------------------------
STUTZMA X WASSERMA X
N (IN) N
SCHULTZ
(FL)
------------------------------------------------------------------------
LANKFOR X MOORE
D (OK) (WI)
------------------------------------------------------------------------
BLACK X CASTOR X
(TN) (FL)
------------------------------------------------------------------------
RIBBLE X SHULER
(WI) (NC)
------------------------------------------------------------------------
FLORES X BASS X
(TX) (CA)
------------------------------------------------------------------------
MULVANE X BONAMICI X
Y (SC) (OR)
------------------------------------------------------------------------
HUELSKA X ........
MP
(KS)
------------------------------------------------------------------------
YOUNG X ........
(IN)
------------------------------------------------------------------------
AMASH X ........
(MI)
------------------------------------------------------------------------
ROKITA X ........
(IN)
------------------------------------------------------------------------
GUINTA X ........
(NH)
------------------------------------------------------------------------
WOODALL X
(GA)
------------------------------------------------------------------------
Mr. Garrett made a motion that, pursuant to clause 1 of
rule XXII, the Chairman be authorized to offer such motions as
may be necessary in the House to go to conference with the
Senate, and staff be authorized to make any necessary technical
and conforming changes to the bill.
The motion was agreed to without objection.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee on the Budget's
oversight findings and recommendations are reflected in the
body of this report.
Performance Goals and Objectives
With respect to the requirement of clause 3(c)(4) of rule
XIII of the Rules of the House of Representatives, the
performance goals and objectives of this legislation are to
provide both the President and the Congress improved tools to
reconsider spending.
Constitutional Authority Statement
Pursuant to clause 7 of rule XII of the Rules of the House
of Representatives, the committee finds the constitutional
authority for this legislation in Article I, section 9, clause
7.
Committee Cost Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the committee report incorporates the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to sections 402 and 423 of the
Congressional Budget Act of 1974.
Congressional Budget Office,
U.S. Congress,
Washington, DC, May 8, 2012.
Hon. Paul Ryan, Chairman,
Committee on the Budget, U.S. House of Representatives, Washington, DC
20515.
Dear Mr. Chairman: The Congressional Budget Office has prepared the
enclosed cost estimate for H.R. 4966, the Sequester Replacement Act of
2012.
If you wish further details on this estimate, we will be pleased to
provide them. The CBO staff contact is Avi Lerner, who can be reached
at 226-2880.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure.
cc: Hon. Chris Van Hollen, Ranking Member.
______
congressional budget office cost estimate
may 8, 2012
H.R. 4966: Sequester Replacement Act of 2012
As ordered reported by the House Committee on the Budget on May 7, 2012
H.R. 4966 would eliminate certain automatic spending reductions
scheduled to take effect in January 2013, as well as reduce the overall
limit on discretionary budget authority for fiscal year 2013. Because
the provisions of the bill are contingent on enactment of
reconciliation legislation as specified in section 201 of H. Con. Res.
112, the budget resolution for fiscal year 2013 as passed by the House,
CBO estimates that enacting H.R. 4966, by itself, would have no impact
on the federal budget.
However, if the contingency in H.R. 4966 is met, CBO estimates that
enacting the bill would increase direct spending by about $72 billion
over the 2013-2022 period, relative to the current baseline projections
that assume automatic spending reductions under the Budget Control Act
of 2011 go into effect as currently scheduled. That total reflects the
cost of avoiding sequestration (cancellation of budgetary resources)
from unobligated balances for defense programs and from advance
appropriations for 2013 for nondefense programs other than those under
the Department of Veterans Affairs. At this point in time, no other
appropriations have been provided for fiscal year 2013. If additional
discretionary appropriations are enacted for 2013, more resources would
be available to be sequestered, and reversing the specified automatic
reductions would result in an increase of up to $97 billion in direct
spending over the 2013-2022 period, CBO estimates (instead of the $72
billion figure cited above).
Those estimates reflect the proposed elimination of the scheduled
January 2013 reductions under the Budget Control Act in spending for
discretionary programs and in mandatory defense spending. Under H.R.
4966, the scheduled reductions in mandatory nondefense spending would
remain in effect.
H.R. 4966 would also remove the separate limits on defense and
nondefense discretionary budget authority for 2013. Furthermore, the
act would specify a cap on total discretionary budget authority that is
$19.1 billion lower than the total funding level of $1,047 billion that
could be provided under current law; however, because any effect of
that adjustment would be subject to future appropriation actions, there
would be no impact on direct spending from that change in the cap on
2013 funding.
H.R. 4966 contains no intergovernmental or private-sector mandates
as defined in the Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Avi Lerner. The estimate
was approved by Theresa Gullo, Deputy Assistant Director for Budget
Analysis.
Advisory Committee Statement
No advisory committee within the meaning of section 5(b) of
the Federal Advisory Committee Act was created by this
legislation.
Applicability to the Legislative Branch
The committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act (Public Law
104-1).
Federal Mandates Statement
The committee adopted the estimate of Federal mandates
prepared by the Director of the Congressional Budget Office
pursuant to section 423 of the Unfunded Mandates Reform Act
(Public Law 104-4).
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 3521 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of rule XXI.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF 1985
* * * * * * *
PART C--EMERGENCY POWERS TO ELIMINATE DEFICITS IN EXCESS OF MAXIMUM
DEFICIT AMOUNT
* * * * * * *
SEC. 251. ENFORCING DISCRETIONARY SPENDING LIMITS.
(a) * * *
* * * * * * *
(c) Discretionary Spending Limit.--As used in this part,
the term ``discretionary spending limit'' means--
(1) * * *
[(2) with respect to fiscal year 2013--
[(A) for the security category,
$686,000,000,000 in new budget authority; and
[(B) for the nonsecurity category,
$361,000,000,000 in new budget authority;]
(2) with respect to fiscal year 2013, for the
discretionary category, $1,047,000,000,000 in new
budget authority;
* * * * * * *
as adjusted in strict conformance with subsection (b).
SEC. 251A. ENFORCEMENT OF BUDGET GOAL.
Unless a joint committee bill achieving an amount greater
than $1,200,000,000,000 in deficit reduction as provided in
section 401(b)(3)(B)(i)(II) of the Budget Control Act of 2011
is enacted by January 15, 2012, the discretionary spending
limits listed in section 251(c) shall be revised, and
discretionary appropriations and direct spending shall be
reduced, as follows:
(1) * * *
* * * * * * *
(7) Implementing discretionary reductions.--
[(A) Fiscal year 2013.--On January 2, 2013,
for fiscal year 2013, OMB shall calculate and
the President shall order a sequestration,
effective upon issuance and under the
procedures set forth in section 253(f), to
reduce each account within the security
category or nonsecurity category by a dollar
amount calculated by multiplying the baseline
level of budgetary resources in that account at
that time by a uniform percentage necessary to
achieve--
[(i) for the revised security
category, an amount equal to the
defense function discretionary
reduction calculated pursuant to
paragraph (5); and
[(ii) for the revised nonsecurity
category, an amount equal to the
nondefense function discretionary
reduction calculated pursuant to
paragraph (6).]
(A) Fiscal year 2013.--
(i) Fiscal year 2013 adjustment.--
On January 2, 2013, the discretionary
category set forth in section 251(c)(2)
shall be decreased by $19,104,000,000
in budget authority.
(ii) Supplemental sequestration
order.--On January 15, 2013, OMB shall
issue a supplemental sequestration
report for fiscal year 2013 and take
the form of a final sequestration
report as set forth in section
254(f)(2) and using the procedures set
forth in section 253(f), to eliminate
any discretionary spending breach of
the spending limit set forth in section
251(c)(2) as adjusted by clause (i),
and the President shall order a
sequestration, if any, as required by
such report.
* * * * * * *
SEC. 256. GENERAL AND SPECIAL SEQUESTRATION RULES.
(b) * * *
* * * * * * *
(e) Community and Migrant Health Centers, Indian Health
Services and Facilities, and Veterans' Medical Care.--
(1) * * *
(2) The accounts referred to in paragraph (1) are
as follows:
(A) * * *
* * * * * * *
[(E) Veterans' medical care (36-0160-0-1-
703).]
* * * * * * *
----------
CONGRESSIONAL BUDGET ACT OF 1974
* * * * * * *
TITLE III--CONGRESSIONAL BUDGET PROCESS
* * * * * * *
ADJUSTMENTS
Sec. 314. [(a) Adjustments.--After the reporting of a bill
or joint resolution or the offering of an amendment thereto or
the submission of a conference report thereon, the chairman of
the Committee on the Budget of the House of Representatives or
the Senate may make appropriate budgetary adjustments of new
budget authority and the outlays flowing therefrom in the same
amount as required by section 251(b) of the Balanced Budget and
Emergency Deficit Control Act of 1985.]
(a) Adjustments.--
(1) In general.--The chair of the Committee on the
Budget of the House of Representatives or the Senate
may make adjustments as set forth in paragraph (2) for
a bill or joint resolution, amendment thereto or
conference report thereon, by the amount of new budget
authority and outlays flowing therefrom in the same
amount as required by section 251(b) of the Balanced
Budget and Emergency Deficit Control Act of 1985.
(2) Matters to be adjusted.--The chair of the
Committee on the Budget of the House of Representatives
or the Senate may make the adjustments referred to in
paragraph (1) to--
(A) the allocations made pursuant to the
appropriate concurrent resolution on the budget
pursuant to section 302(a);
(B) the budgetary aggregates as set forth
in the appropriate concurrent resolution on the
budget; and
(C) the discretionary spending limits, if
any, set forth in the appropriate concurrent
resolution on the budget.
* * * * * * *
Views of Committee Members
Clause 2(l) of rule XI requires each committee to provide
two days to Members of the committee to file Minority,
additional, supplemental, or dissenting views and to include
such views in the report on legislation considered by the
committee. The following views were submitted:
MINORITY VIEWS
REPUBLICANS REJECT A BALANCED APPROACH TO DEFICIT REDUCTION
Democrats and Republicans agree on the importance of
reducing the deficit, but we disagree on how to do it.
Democrats remain focused on creating more jobs now to support
the fragile economy while pursuing a plan to reduce the deficit
in a balanced way. That's why this Spring, House Democrats
offered a budget that preserves the Medicare guarantee, helps
create more jobs now, makes us stronger through investments
that build long-term growth, abides by the tight spending caps
established last summer--which save nearly $1 trillion over ten
years--and reduces the deficit through shared responsibility.
In contrast, the House-passed Republican budget resolution for
fiscal year 2013 reflects the Majority's unbalanced approach to
deficit reduction: it provides costly additional tax breaks for
millionaires while finding savings by ending the Medicare
guarantee for seniors, slashing investments that strengthen our
economy, and shredding the social safety net. Because
Republicans reject a balanced approach and refuse to ask
millionaires to contribute one cent to deficit reduction, their
budget hits everyone and everything else.
House Republicans are attempting to use the fast-track
procedures provided under budget reconciliation to hasten
consideration of some of their budget resolution's harmful
priorities. Their resolution directed six committees to make
recommendations for legislative changes that reduce the deficit
by $261.5 billion over the 2012-2022 period. The results are
shown in the table below.
[Cuts in billions of dollars]
----------------------------------------------------------------------------------------------------------------
Budget Resolution Target Reconciliation Measure\2.
\\ Committee -----------------------------------------------------------------------
2012-2013 2012-2017 2012-2022 2012-2013 2012-2017 2012-2022
----------------------------------------------------------------------------------------------------------------
Agriculture\1\.......................... 7.710 19.700 33.200 7.779 20.443 35.830
Energy & Commerce....................... 3.750 28.430 96.760 3.870 47.970 115.480
Financial Services\1\\3\................ 3.490 16.700 29.800 4.386 19.740 36.006
Judiciary............................... 0.100 11.200 39.700 0.108 13.575 48.623
Oversight & Government Reform........... 2.200 30.100 78.900 2.269 30.785 83.301
Ways & Means............................ 1.200 23.000 53.000 1.360 24.830 68.258
Gross Reconciliation Savings...... 18.450 129.130 331.360 19.764 156.470 382.577
Remove overlap.................. -0.100 -12.800 -69.900 -0.108 -14.429 -49.556
-----------------------------------------------------------------------
Net Total Reconciliation Savings.. 18.350 116.330 261.460 19.664 142.913 337.943
----------------------------------------------------------------------------------------------------------------
*The rule ``deeming'' the House-passed budget resolution as the concurrent budget resolution shifted $490
million from Agriculture to Financial Services. The 2012-2013 Agriculture target was originally $8.2 billion,
while the Financial Services target was $3.0 billion. The 2012-2017 and 2012-2022 amounts, as well as the
totals, were not changed.
\2\Assuming July 1 enactment, as reported by the Budget Committee on May 7, 2012.
\3\The Financial Services score includes $4.9 billion from floor insurance savings, per scoring direction from
the Budget Committee.
In addition, the Sequester Replacement Act of 2012, which
the Budget Committee marked up on May 7, formalizes the plan
laid out in the Republican budget resolution. The bill
eliminates most of the roughly $100 billion across-the-board
sequester of spending--50 percent from defense and 50 percent
from non-defense programs--scheduled for 2013. The bill leaves
in place only the non-defense sequester of mandatory programs,
which will affect programs such as Medicare. In place of the
rest of the 2013 sequester, the bill uses both the multi-year
savings from the permanent mandatory spending cuts included in
the reconciliation package, and the savings from lowering the
discretionary spending cap for fiscal year 2013 by $19 billion
below the level set in the bipartisan Budget Control Act of
2011 (BCA).
Sequestration is a meat-ax approach to deficit reduction
that does not make sense for our country. It was included in
the BCA as a last resort intended to pressure Congress to
develop a bipartisan alternative to achieve long-term deficit
reduction. But because House Republicans continue to resist the
balanced approach to deficit reduction that has been
recommended by every bipartisan group that has looked at the
budget challenge, on January 2, 2013, this ``Sword of
Damocles'' will go into effect. The sequestration would impose
indiscriminate cuts of almost $1 trillion over the next ten
years--50 percent from defense and 50 percent from non-defense
programs.
Unfortunately, instead of looking for a balanced solution,
the Republican reconciliation package targets programs that
help the less powerful while protecting the tax breaks of
powerful special interests. In fact, the reconciliation package
makes deep cuts to food and nutrition programs for low-income
families and Medicaid--both programs that would have been
entirely exempt from any sequestration cuts.
This unbalanced approach to deficit reduction--focused only
on cutting investments rather than also closing tax loopholes--
is the wrong choice for America.
DEMOCRATS OFFERED BETTER, BALANCED DEFICIT REDUCTION PLANS
The deep spending cuts coming through the Republican
reconciliation instructions and the sequestration of spending
scheduled under the BCA are neither the right nor only ways to
reduce the deficit. In fact, Democrats have proposed to achieve
greater deficit reduction from targeted, balanced policy
choices, rather than the slash-and-burn approach taken by an
across-the-board sequester or the deep cuts made in the
Republican reconciliation proposal. The President provided
Congress with specific policies to reduce the deficit last fall
and in his 2013 budget. This spring, the House Democratic
budget would have replaced meat-ax spending cuts under
sequestration with a combination of mandatory spending cuts and
revenues from eliminating tax loopholes and asking millionaires
to return to the same top tax rate they paid during the Clinton
Administration, a time of strong economic growth and fiscal
responsibility.
Finally, in the Budget Committee mark-up this week,
Democrats offered amendments to replace the Republican plans
for deficit reduction in 2013 and beyond with a balanced
approach that includes both spending cuts and revenues.
Democrats offered an amendment that would have replaced both
the reconciliation cuts and the entire multi-year sequester
with at least $1.2 trillion of deficit reduction through a
balanced approach. The deficit reduction would come through
legislation that increases revenues without increasing the tax
burden on middle-income Americans, that decreases spending
while maintaining the Medicare guarantee and protecting Social
Security and the social safety net for vulnerable Americans,
and that promotes economic growth and jobs. In addition,
Democrats offered a targeted amendment to replace the remaining
2013 sequester of Medicare with greater deficit reduction from
ending a tax break for the ``Big 5'' oil and gas companies.
Republicans defeated both of these amendments on party-line
votes.
Part I of Mark-up: Sequester Replacement Reconciliation Act of 2012
The Republican reconciliation package includes many cuts to
vital services that will affect Americans in many harmful ways.
Budget Committee Democrats offered motions to achieve similar
savings by cutting tax breaks and subsidies to special
interests.
Rejecting the elimination of the Social Services
Block Grant while ending taxpayer subsidies to ``Big Oil.'' The
Social Services Block Grant gives states and localities the
flexibility to target funding for essential services. Overall,
it helps 23 million children, seniors, and disabled Americans
become self-sufficient and economically independent. It
provides states with flexible funds that support a range of
services, such as providing Meals on Wheels, preventing child
abuse and neglect for at-risk children, and helping low-income
parents return to work by providing child care and related
assistance. During the Budget Committee reconciliation mark-up
this week, Democrats offered a motion to preserve the Social
Services Block Grant and to replace cuts with even greater
savings from repealing tax breaks for the ``Big 5'' oil
companies. This motion was defeated on a party-line vote.
Protecting food and nutrition support for
struggling children and families while cutting taxpayer direct
payments to agricultural Interests. The Republican proposal
cuts the Supplemental Nutrition Assistance Program (SNAP),
which helps struggling households purchase adequate food and
nutrition. The legislation reduces assistance to every single
household receiving SNAP benefits almost immediately and cuts
1.8 million people off of food assistance entirely. In
addition, nearly 300,000 children will lose free school meals,
on top of losing the benefits that provide food at home. During
the Budget Committee reconciliation mark-up this week,
Democrats offered a motion to preserve the food and nutrition
assistance, and instead reduce the deficit through reform of
agricultural commodity payments and risk management programs.
This motion was defeated on a party-line vote.
Protecting health care coverage for at least
300,000 low-income children and lowering the deficit by
eliminating certain tax subsidies for Big Oil. The Republican
proposal allows states to cut their support for Medicaid and
the Children's Health Insurance Program (CHIP) by covering
fewer people, and repeals bonuses to states for enrolling
additional low-income children in the program. The first
provision will result in a sharp increase in the number of
uninsured Americans--100,000 children and adults in 2013 and at
least 300,000 children in 2015, according to CBO. The second
provision eliminates incentives for states to increase their
enrollment of children, also likely increasing the number of
uninsured children. Further, the legislation eliminates funding
for state insurance exchanges that will take effect in 2014 to
help uninsured people find affordable coverage. States will
either have to raise their own funds for these exchanges or
rely on the federal government to run their exchange. During
the Budget Committee reconciliation mark-up this week,
Democrats offered a motion to preserve the Medicaid and CHIP
payments, and to replace the proposed deficit reduction with
savings from ending a wasteful tax break that encourages the
``Big 5'' oil and gas companies to produce oil in foreign
countries rather than here at home. This motion was defeated on
a party-line vote.
Protecting the health of women and children
through the Prevention and Public Health Fund while closing tax
loopholes that reward corporations that ship American jobs
overseas. The Republican proposal repeals the Prevention and
Public Health Fund. The ACA appropriated funding to support
such programs as cancer screenings, immunizations, research on
prevention, and education and outreach. The goal of the fund is
to provide an expanded and sustained investment in these
programs to improve overall health and help restrain the rate
of growth in private- and public-sector health care costs. Some
of the funding to be cut is allocated for women's health,
including breast cancer and cervical cancer screening. During
the Budget Committee mark-up, Democrats offered a motion to
reject the Republican recommendation, and instead close
loopholes in the U.S. international corporate tax system that
encourage companies to ship jobs overseas. This motion was
defeated on a party-line vote.
Analysis of Republican Committee Proposals Included in Reconciliation
AGRICULTURE COMMITTEE RECONCILIATION RECOMMENDATIONS
The Agriculture Committee recommended reconciliation
legislation cutting $36 billion from SNAP (formerly known as
Food Stamps). The Committee chose to target all its cuts to
food and nutrition assistance to low-income Americans, largely
families with children, the disabled, and elderly, rather than
look for savings from any other programs supporting the
agriculture sector. All together, the recommendations make
changes to the SNAP program that will reduce benefits to all 47
million people currently receiving SNAP and entirely eliminate
benefits to almost 2 million people. The Republican plan makes
the following cuts:
Almost immediately sunsets the Recovery Act SNAP
enhancement. The enhancement is currently due to end on October
31, 2013. This enhancement has been shortened twice already,
most recently to provide an offset for the Child Nutrition
Reauthorization Act in 2010. This saves $6.0 billion under the
directed scoring ordered by the Committee (see below for more
details), and $4.4 billion without it.
Makes it more difficult to apply for and receive
SNAP benefits. The bill limits categorical eligibility--a
process that allows households who qualify for certain programs
to automatically be eligible for SNAP--to those receiving cash
assistance from Temporary Assistance for Needy Families,
Supplemental Security Income, or a state general assistance
program. This change not only stops households from receiving
SNAP benefits, it removes nearly 300,000 children from the
child nutrition program. The bill also eliminates the state
option to apply a Standard Utility Allowance in determining
SNAP benefits for anyone receiving LIHEAP benefits. Together
these provisions reduce SNAP by $25 billion while taking an
additional $0.5 billion from child nutrition.
Eliminates federal match for SNAP's employment
and training program. Republicans say that this is one of many
job training programs funded by the federal government and is
duplicative. However, many job programs are oversubscribed and
this one is geared to a very vulnerable population. Total
savings over the 11 years are $3.1 billion.
Ends the state bonus program. The program
provides additional funds to states that meet certain
administrative targets. Elimination saves $0.5 billion.
Removes automatic indexing from SNAP's nutrition
education and obesity prevention program. Over time, this
change gradually reduces the program's purchasing power. This
saves $0.5 billion over 11 years.
ENERGY AND COMMERCE COMMITTEE RECONCILIATION RECOMMENDATIONS
The Energy and Commerce Committee reported reconciliation
legislation that cuts $115 billion from health expenditures.
All of the cuts come from repeal of certain provisions of the
Affordable Care Act (ACA), cuts to Medicaid, and medical
malpractice reform, over which it shares jurisdiction with the
Judiciary Committee.
Title I--Repeals and defunds parts of the ACA
The recommendation impedes implementation of the ACA that
is already benefitting millions of Americans. Overall, the
changes cut $26.3 billion over the next decade.
Repeals the Prevention and Public Health Fund.
Repealing this fund and rescinding unobligated funding reduces
spending on prevention and public health by $11.9 billion. The
ACA appropriated a total of $5 billion for 2010 through 2014
and $2 billion for each subsequent year to support such
programs as cancer screenings, immunizations, research on
prevention, and education and outreach. The goal of the fund is
to provide an expanded and sustained investment in these
programs to improve overall health and help restrain the rate
of growth in private- and public-sector health care costs. Some
of the funding to be cut is allocated for women's health,
including breast cancer and cervical cancer screening. The
Middle Class Tax Relief and Job Creation Act of 2012 (the first
payroll tax cut extension bill) already reduced funding for
this fund by $5.0 billion.
Repeals funding for state health insurance
exchanges. The proposal strikes the mandatory funding for state
exchanges and rescinds unobligated funds, cutting $13.5
billion. Starting in 2014, these exchanges will allow
individuals and small businesses to compare health plans,
determine if they are eligible for tax credits for private
insurance or health programs like the CHIP, and enroll in a
health plan that meets their needs. As a result of this
proposal, states will either have to raise their own funds to
pay for setting up an exchange or rely on the federal
government to run their exchange.
Defunds the Consumer Operated and Oriented Plan
(CO-OP) program. The proposal reduces spending by $0.9 billion
by rescinding all unobligated funds for the CO-OP program,
which provides subsidized loans to qualified non-profit health
insurance plans.
Title II--Cuts Medicaid and CHIP
The recommendation cuts Medicaid spending and reduces the
deficit by $22.7 billion over the next decade, harming hundreds
of thousands of low-income Americans, including at least
300,000 children.
Repeals states' Medicaid and CHIP Maintenance of
Effort (MOE) requirements. The ACA requires states to maintain
their current Medicaid eligibility standards until 2014 (and
CHIP eligibility standards until 2019), when nationwide
Medicaid eligibility standards take effect and state-based
health insurance exchanges will begin operating. Repealing the
MOE provision would increase the number of Americans who are
uninsured, as states scale back eligibility for low-income
children, parents, seniors, and people with serious
disabilities. CBO estimates that the provision will increase
the number of uninsured children and adults by 100,000 in 2013
and increase the number of uninsured children by at least
300,000 in 2015. Repealing the MOE reduces the deficit by $0.6
billion.
Repeals CHIP performance bonus payments for
states that provide more low-income children with health care
coverage. The bonus payments, currently slated to end in 2013,
help states with the additional coverage-related costs in
Medicaid as well as CHIP; the more children a state enrolls
above the target, the larger the federal bonus payment.
Eliminating the bonuses reduces spending by $0.4 billion.
Rebases the Disproportionate Share Hospital (DSH)
allotment for uncompensated care to maintain the 2021 level of
reductions for an additional year, which reduces spending by
$4.2 billion. Current law includes annual aggregate DSH
allotment reductions for 2014 through 2021, to reflect the
expected reduction in uncompensated care that will result from
the ACA.
Repeals increased federal Medicaid funding cap
and match for territories. The proposal replaces the ACA's
increased Medicaid federal match and cap for the territories
with the levels in place prior to the ACA, reducing spending by
$6.3 billion, or 64 percent.
Reduces the state provider tax threshold to 5.5
percent, down from the current threshold of no higher than 6.0
percent of the net patient service revenues. States can use
these revenues from health care provider taxes to help finance
the state share of Medicaid expenditures. This proposal reduces
spending by $11.3 billion.
Title III--Medical Malpractice
Jurisdiction over medical malpractice is shared by the
Energy and Commerce and the Judiciary Committees. The medical
malpractice proposal approved by Energy and Commerce differs in
a few respects from the version approved by Judiciary. The
Energy and Commerce version generates $66.5 billion in on-
budget savings over ten years ($56 billion in reduced spending
and $10.5 billion in increased revenues). The Judiciary version
saves about $18 billion less. The Energy and Commerce version
saves more because it includes a provision to allow evidence of
income from collateral sources (such as life insurance payouts
and health insurance) at trial. Like the Judiciary bill, it
caps non-economic damages at $250,000, imposes a strict statute
of limitations on filing lawsuits, places restrictions on
punitive damages, replaces joint-and-several liability with a
``fair-share'' rule, provides a safe harbor from punitive
damages for products that meet FDA applicable safety
requirements, limits contingency fee payments, and applies the
legislation's provisions beyond medical malpractice to ``any
health care liability claim.'' Both the Judiciary and Energy
and Commerce bills override applicable state laws in all 50
states.
WAYS AND MEANS COMMITTEE RECONCILIATION RECOMMENDATIONS
The Ways and Means Committee recommended reconciliation
changes that save $68 billion. Instead of cutting tax loopholes
that encourage the outsourcing of jobs overseas, eliminating
egregious tax breaks, or eliminating additional tax breaks for
millionaires, the Committee chose instead to raise taxes on
families with children, eliminate valuable social services that
help to support child protection services and home-based
services, including Meals on Wheels, and make it harder to
purchase health insurance for those returning to work. Ways and
means Democrats attempted to offer the Buffett Rule as a
substitute for the cuts, but were ruled out of order. The
Republican proposal makes the following changes:
Eliminates the Social Services Block Grant, which
gives states and localities the flexibility to target funding
for essential services. Overall, the Block Grant helps 23
million children, seniors, and disabled Americans become self-
sufficient and economically independent through services funded
in whole, or in part, by the program. It provides home-based
services, such as Meals on Wheels, for 1.7 million seniors. It
helps prevent child abuse and neglect, providing child
protective services for 1.8 million at-risk children. It
supports low-income parents returning to work by providing
child care and related assistance for 4.4 million children. It
also provides services for nearly 1 million disabled
individuals, including respite care and transportation. Ending
the program saves $16.7 billion.
Attacks the ACA so another 350,000 Americans go
without health care coverage. Under the ACA, Americans whose
incomes are low but who are ineligible for Medicaid and do not
have employer-sponsored coverage can receive a subsidy to help
them afford private coverage. For them to receive real-time
assistance, the tax credit is paid in advance (and directly to
the insurer) based on prior-year income. However, if their
incomes increase later in the year, they are responsible for
repaying some or all of this subsidy through a process called
``true up.'' The ACA sensibly limits true-up payments to
encourage participation and avoid penalizing individuals and
families whose circumstances change mid-year. Congress already
raised the true-up limit twice. The Republican proposal
requires these families to repay everything even if they got
the subsidy they were eligible for at the time, saving $43.9
billion. The Joint Committee on Taxation estimates that, as a
result, 350,000 people will forgo purchasing health insurance--
mostly healthier people who are willing to take the risk. That
will leave these families at risk and drive up premiums for the
remaining less-healthy people purchasing health coverage
through insurance exchanges.
Denies refundable child tax credit to taxpayers
filing with Individual Taxpayer Identification Numbers (ITINs).
This provision requires a taxpayer to include his or her Social
Security number on tax returns to claim the refundable child
tax credit, saving $7.6 billion. This measure ends refundable
child tax credits for more than 3 million children in 2013
alone in families with an average income of about $20,000.
FINANCIAL SERVICES COMMITTEE RECONCILIATION RECOMMENDATIONS
The Financial Services Committee recommended cuts that save
$31.1 billion, assuming a July 1 enactment date, as the
Republicans requested (in its score, CBO noted that the
proposal would also increase the net income to the National
Flood Insurance Program by $4.9 billion). The reconciliation
instruction called for a total of $29.8 billion in net savings.
Each of the five components to the Committee's proposal is
controversial or raises scoring issues.
Repeals regulators' authority to shut down a
failing large financial firm when that failure would threaten
the financial stability of the U.S. This proposal relies on a
budget gimmick to generate savings. The Dodd-Frank legislation
designed this authority to pay for itself over time, with any
initial up-front costs being recouped by selling assets and
imposing an assessment, after the resolution, on financial
institutions with more than $50 billion in assets. Thus, some
of the offsetting recoveries are estimated to come outside the
scoring window. Repealing the authority entirely eliminates the
appearance of costs in the ten-year window, and therefore shows
savings of $22.6 billion. But repealing the authority will
prevent regulators from managing the orderly wind down of a
failing firm--that inability could result in the disorderly
collapse of large financial institutions--making future
bailouts more likely and making it more likely that taxpayers
will again be stuck with the bill.
Eliminates the Home Affordable Modification
Program (HAMP). Dismantling HAMP eliminates virtually the only
federal assistance that helps homeowners who are struggling
with foreclosure and need loan modifications. Its elimination
saves $2.8 billion.
Jeopardizes consumers' rights and protections by
eliminating direct spending for the new Consumer Financial
Protection Bureau (CFPB) and making it subject to
appropriations, thereby further violating the discretionary
spending caps in the BCA. This latest attack on the CFPB will
likely lessen consumer protection while adding to the pressure
of keeping to a low discretionary spending cap. The proposal
scores $5.4 billion in savings from eliminating direct spending
for the CFPB, and makes the CFPB the only banking regulator to
be subject to appropriations. If the Budget Committee Chairman
exercises his authority to modify the discretionary caps to
reflect the shift of the CFPB spending from the mandatory to
the discretionary category, then there are no savings. If he
does not adjust the discretionary cap, then he is effectively
further lowering the discretionary cap by requiring more items
to be funded under the same limit. Republicans may use that
argument to further their efforts to slash spending for the
CFPB.
Elimination of the Office of Financial Research.
This office supports the Financial Stability Oversight Council
by collecting information on financial markets and conducting
research on financial stability issues. It is authorized to
collect fees from financial institutions with more than $50
billion in assets to offset its expenses. Eliminating the
office saves slightly over $250 million. Because the office's
fees also support the activities of the Financial Stability
Oversight Council, new appropriations of about $10 million per
year will be necessary to fund those activities, putting more
pressure on the discretionary spending cap.
Reforms the flood insurance program. The estimate
of $4.9 billion in savings relies on the provision in the
budget resolution directing CBO to treat the change in the
program's net income as if were deposited in the General Fund.
The provisions are the same as those in H.R. 1309, which passed
the House in July 2011.
JUDICIARY COMMITTEE RECONCILIATION RECOMMENDATIONS
The Judiciary Committee recommended medical malpractice
legislation that is substantively identical to the medical
malpractice provisions in H.R. 5 that the House passed in
March. CBO scores this legislation as saving a net total of
$48.6 billion, for total deficit reduction that exceeds the
Committee's instruction to find $39.7 billion in savings. The
legislation caps noneconomic damages at $250,000 and makes it
more difficult to recover punitive damages, replaces joint and
several liability for losses with a ``fair share'' rule,
imposes a strict statute of limitations for filing lawsuits,
provides a safe harbor from punitive damages for products that
meet FDA applicable safety requirements, and puts limits on
contingency fee payments. The provisions of the bill apply to
not only medical malpractice, but also to any ``health care
liability claims''--providing new protections for insurance
companies, drug and device manufacturers, and nursing homes.
Like the Energy and Commerce proposal on medical malpractice,
the Judiciary legislation also overrides applicable state laws
in all 50 states.
OVERSIGHT AND GOVERNMENT REFORM COMMITTEE RECONCILIATION
RECOMMENDATIONS
The Committee on Oversight and Government Reform passed on
a party-line vote reconciliation recommendations that generate
$83 billion by requiring all federal employees, including
postal workers, to pay more for their retirement benefits.
Consequently, each federal employee will, in effect, have their
pay cut an average of more than $30,000 over the next ten
years. These new cuts to federal employee pay come on top of
$60 billion in cuts resulting from the two-year pay freeze and
$15 billion in cuts resulting from increasing retirement
contributions on new federal employee enacted in H.R. 3630, the
Middle Class Tax Relief Act of 2012. Under the bill, most
existing employees under the Civil Service Retirement System
(CSRS) and the Federal Employee Retirement System (FERS) will
face a 5 percentage point increase in their retirement
contributions, which will be phased in over five years. The
increase for new FERS employees is smaller--2.7 percentage
points--because their contributions were already increased by
2.3 percentage points as part of the Middle Class Tax Relief
Act of 2012, which will go into full effect starting 2013. (The
table below shows all changes in employee contributions.)
[Contribution changes by employee category]
------------------------------------------------------------------------
Contribution Rate
--------------------------------
Beneficiary Proposed
Current Increase Proposed
% % Final %
------------------------------------------------------------------------
Existing:
Federal Employees (CSRS)........... 7 5 12
Federal LEO Employees (CSRS)....... 7.5 5 12.5
Members of Congress (CSRS)......... 8 8.5 16.5
Congressional Staff (CSRS)......... 7.5 7.5 15
Federal Employees (FERS)........... 0.8 5 5.8
Federal LEO Employees (FERS)....... 1.3 5 6.3
Members of Congress (FERS)......... 1.3 8.5 9.8
Congressional Staff (FERS)......... 1.3 7.5 8.8
Newly Hired:
Federal Employees (FERS+).......... 3.1 2.7 5.8
Federal LEO Employees (FERS+)...... 3.6 2.7 6.3
Newly Elected Members (FERS+)...... 3.1 2.7 5.8
Congressional Staff (FERS+)........ 3.1 2.7 5.8
------------------------------------------------------------------------
The proposal requires larger contributions from the
paychecks of current legislative employees than from other
federal employees. Current Members of Congress will have to pay
an additional 8.5 percent of their salaries for their
retirement benefit and current Congressional staff will have to
pay an additional 7.5 percent, increases that are also phased
in over five years. After full phase-in of the increases, most
FERS employees will pay 5.8 percent (6.3 percent if a law
enforcement employee) of their salaries toward their retirement
benefit, up from 0.8 percent (1.3 percent if law enforcement)
they pay this year. Current Members of Congress will pay 9.8
percent and congressional staff will pay 8.8 percent, up from
1.3 percent.
The bill also eliminates the FERS annuity supplement for
new employees, except those subject to mandatory retirement,
starting in 2013. However, any significant savings resulting
from this provision will not be realized until beyond the 10-
year budget window.
Part II of Mark-up: Sequester Replacement Act of 2012
In the second part of the reconciliation mark-up, the
Budget Committee marked up H.R. 4966, Chairman Ryan's Sequester
Replacement Act of 2012. When that legislation is combined with
the reconciliation cuts considered during the first part of the
mark-up, it fulfills the Majority's plan to repeal and replace
the sequester scheduled for 2013 under the BCA, as envisioned
by the Republican budget resolution. The Majority's complete
reconciliation package makes no changes to the BCA that affect
the discretionary requirements for 2014 and beyond. As a
result, the sequester of funding for both defense and non-
defense remains in place for those years.
Instead of the BCA's roughly $100 billion across-the-board
sequester of spending for 2013--50 percent from defense and 50
percent from non-defense programs--H.R. 4966 cancels the entire
defense sequester and the sequester of non-defense
discretionary spending under existing law. However, certain
non-defense mandatory programs--including Medicare--will still
be subject to sequester for 2013. In addition, it establishes a
temporary discretionary cap of $1.047 trillion for 2013--the
level set by the BCA--without any firewall between defense and
non-defense spending. Effective in January 2013, the bill
reduces that cap by $19 billion, limiting regular discretionary
spending to $1.028 trillion. Any discretionary spending above
that level would trigger a sequester.
REPUBLICAN APPROACH TO REPLACING THE SEQUESTER IS UNFAIR AND UNBALANCED
The Majority's legislation is another example of their
refusal to take a fair and balanced approach to reducing the
deficit. Every bipartisan commission has recommended and the
majority of Americans agree that we should take a balanced,
bipartisan approach to reducing the deficit that both increases
revenue and decreases spending. However, 98 percent of the
Majority's Representatives have signed a pledge that they will
not reduce the deficit by a single penny by cutting tax breaks
for the wealthy.
Instead, the Republican budget resolution and this
reconciliation mark-up took a lopsided approach to replacing
the sequester and reducing the deficit that shreds the social
safety net for vulnerable Americans, and that fails to protect
Medicare from sequester for even one year. Rather than asking
big corporations and wealthy special interests to give up tax
breaks they do not need, the Majority passed a plan that asks
hundreds of thousands of low-income children, women, seniors,
and other Americans to give up vital assistance that helps them
make it from day to day.
Two particularly egregious examples of their misguided
choices are basic nutrition assistance and health care
coverage. Although the Deficit Control Act of 1985 protects
nutrition assistance and health care coverage for lower-income
children and their families from sequester, the Republican
reconciliation package that replaces the sequester for just one
year specifically cuts funding for this important safety net
assistance. Furthermore, the Majority made these harmful
choices while protecting subsidies for agricultural businesses,
big oil companies, and tax breaks for the wealthiest Americans.
The Republican approach is not the fair and balanced approach
to deficit reduction that most Americans want.
DEMOCRATIC AMENDMENTS WOULD HAVE MADE THE RIGHT CHOICES FOR AMERICAN
FAMILIES AND REPLACED THE SEQUESTER FOR ALL 10 YEARS
During the Budget Committee's mark-up of H.R. 4966,
Democrats offered two amendments to change the Majority's
legislation so that it makes the right choices for American
families by taking a fair and balanced approach to reducing the
deficit. Democrats offered an amendment that would have
replaced the sequester for the entire 10-year period called for
under the BCA--not just one year, as the Republican plan does.
The amendment would have replaced the sequester with balanced
legislation that (1) cuts spending while maintaining the
Medicare guarantee and protecting Social Security and a strong
social safety net; (2) increases revenues without increasing
the tax burden on middle-income Americans; and (3) grows jobs
and the economy by, among other things, making strategic
investments in education, science, research, and critical
infrastructure necessary to compete in the global economy. This
amendment was defeated on a party-line vote.
Democrats also offered an amendment to exempt Medicare from
the 2013 sequester. This amendment would have prevented across-
the-board payment cuts to doctors, hospitals, nursing homes,
home health aides, and others that provide critical care to
Medicare beneficiaries. The Democratic amendment would have
paid for protecting Medicare from sequester by eliminating a
wasteful tax break for big oil and gas companies. This
amendment was defeated on a party-line vote.
Democratic Motions and Amendments Offered in Budget Committee Mark-Up
Motion #1: Protecting Health Care Coverage for At Least
300,000 Low-Income Children and Lowering the Deficit by
Eliminating Certain Tax Subsidies for Big Oil
A motion by Rep. Castor that the Committee on the Budget
direct its Chairman to request on behalf of the Committee that
the rule for consideration of the Sequester Replacement
Reconciliation Act of 2012 make in order an amendment that
would strike from Title II of the bill section 213, which
repeals the maintenance of effort requirements for children in
the Children's Health Insurance Program (CHIP) and children and
adults in Medicaid; and section 215, which repeals CHIP
performance bonus payments; and replaces them with a provision
that increases revenue by eliminating a wasteful tax break that
encourages big oil companies to produce oil in foreign
countries rather than here at home.
Motion #2: Protecting the Health of Women and Children While
Closing Tax Loopholes that Reward Corporations that Ship
American Jobs Overseas
A motion by Rep. Schwartz and Rep. Wasserman Schultz that
the Committee on the Budget direct its Chairman to request on
behalf of the Committee that the rule for consideration of the
Sequester Replacement Reconciliation Act of 2012 make in order
an amendment that would strike from Title II of the bill
section 202, which repeals the Prevention and Public Health
Fund under the Affordable Care Act, and replace that section
with changes in law to reduce the deficit by closing loopholes
in the U.S. international corporate tax system that encourage
companies to ship jobs overseas.
Motion #3: Rejecting the Elimination of the Social Services
Block Grant While Ending Taxpayer Subsidies to Big Oil
A motion by Rep. Doggett and Rep. Bonamici that the
Committee on the Budget direct its Chairman to request on
behalf of the Committee that the rule for consideration of the
Sequester Replacement Reconciliation Act of 2012 make in order
an amendment that strikes Subtitle C of Title VI--the
elimination of the Social Services Block Grant--of the bill,
and replaces that section with changes in law that reduce the
deficit by repealing the tax subsidies for the ``Big 5'' major
integrated oil companies.
Motion #4: Protect Food and Nutrition Support for Struggling
Children and Families While Cutting Taxpayer Direct Payments to
Agricultural Interests
A motion by Rep. Blumenauer and Rep. Yarmuth that the
Committee on the Budget direct its Chairman to request on
behalf of the Committee that the rule for consideration of the
Sequester Replacement Reconciliation Act of 2012 make in order
an amendment that (1) would strike Title 1, which reduces
spending in the Supplemental Nutrition Assistance Program, and
(2) replaces it with changes in law to reduce the deficit by
reforming agricultural commodity and crop insurance programs.
Amendment #1: Taking a Fair and Balanced Approach to Reducing
the Deficit and Replacing the Sequester
An amendment by Rep. Van Hollen that replaces the sequester
for the entire 10-year period called for under the Budget
Control Act with balanced, bipartisan legislation that:
increases revenues without increasing the
tax burden on middle-income Americans,
decreases spending while maintaining the
Medicare guarantee and protecting Social Security and
the social safety net for vulnerable Americans, and
promotes economic growth and jobs.
Amendment #2: Prevent Cuts to Medicare
An amendment by Rep. McCollum and Rep. Tim Ryan (OH) that
exempts Medicare from the 2013 sequester, preventing across-
the-board payment cuts to doctors, hospitals, nursing homes,
home health aides, and others that provide critical care to
Medicare beneficiaries. The amendment pays for protecting
Medicare from sequester by eliminating wasteful tax breaks for
big oil and gas companies.
Chris Van Hollen.
Bill Pascrell, Jr.
Marcy Kaptur.
Kathy Castor.
Karen Bass.
Betty McCollum.
Tim Ryan.
Allyson Y. Schwartz.
Suzanne Bonamici.
Gwen Moore.
Debbie Wasserman Schultz.
John Yarmuth.
Lloyd Doggett.
Michael M. Honda.
Earl Blumenauer.
Heath Shuler.
DISSENTING VIEWS
Chairman Ryan, Ranking Member Van Hollen, thank you for
giving me the opportunity to address these issues of great
importance to my district, as well as millions of communities
across this country. It is imperative that we use this
opportunity to discuss what should be the priorities of this
Congress: achieving economic growth through job creation,
expanding our middle class, and protecting our social safety-
net. However, the path that the Tea Party majority and Chairman
Ryan have put before us today rejects these priorities, and
seeks to double down the the failed policies that already
brought us massive income inequality, a weakened production
base and a shrinking middle class. In short, the majority's
choice is to cut $75 billion from programs that directly
benefit seniors, the middle class and poor, in order to protect
special interests and millionaires.
As a Member of the Committee on Ways and Means, I fought
against that committee's unfair reconciliation legislation that
inordinately placed the burdens of increased defense spending
and tax cuts for the very wealthy on seniors, the disabled and
middle class families. The Democratic minority put forth
multiple amendments that sought to ask those who have so much
already, to contribute a little more so we could avoid cuts to
important programs.
Unfortunately, the majority rejected these amendments, and
instead favored a path that took $47 billion in tax credits
that middle class families could use to purchase health
insurance. By removing the incentive to enter the healthcare
exchanges, not only does a middle class individual's tax
liability increase, but so do the general costs for the rest of
us who will have to shoulder the health costs of these
uninsured Americans. Additionally, we already made appropriate
adjustments to the caps on repayment in December of 2010, and
they were reasonable, unlike these changes that are being
considered today.
The majority also choose to limit the ability of families
to use the Child Tax Credit for some U.S. citizens, as well as
all but eliminate the Social Service Block Grant. In my home
state of New Jersey, there are almost three-hundred thousand
children living in poverty, and almost forty percent of their
families use an Individual Taxpayer Identification Number
(ITIN) to help bear the cost of raising these children. Denying
the Child Tax Credit to ITIN filers will take an average of
$1,800 out of the pockets of families who earn an average of
$21,000 a year. And by eliminating the Social Service block
grant for 2013, they prioritized oil companies and millionaires
over 23 million Americans, including the disabled and seniors,
who rely on programs ranging from transportation assistance to
Meals on Wheels.
Other committees have also enacted devastating cuts that
unfairly place the burden on the middle class, seniors, and our
most vulnerable citizens. The Agriculture Committee cut $33.2
billion from the Supplemental Nutrition Assistance Program
(SNAP) over ten years, money that goes to making sure children
and families who are struggling financially have access to
healthy food. The Energy and Commerce Committee made $25
billion in cuts to the Medicaid program in the form of
disproportionate share hospital (DSH) payment rebasing in 2022,
and changes to Medicaid eligibility rules, a slight decrease in
state provider taxes and the repeal of the Prevention and
Public Health Fund. This is an attack on public health efforts
and hospitals who treat low income patients.
There are other fair and balanced methods to reducing our
debt and deficit. This is why I support the Democratic
proposals that ask large oil and gas companies, millionaires
and companies that ship jobs overseas, to pay just a little
more to ensure that millions of seniors, middle class families
and our most vulnerable citizens are not left alone to bear the
burden of deficit reduction. Plain and simple, the majority is
choosing millionaires over women and children's access to
healthcare. They are choosing corporate welfare for outsourcing
jobs over helping the next generation of workers afford
college. And they are choosing oil and gas companies over
ensuring that our most vulnerable citizens, including seniors
and children, have access to important nutrition and healthcare
programs.
Once again we find ourselves debating extreme attempts by
Tea Party Republicans to hurt middle and lower income
Americans, while protecting special interests, under the guise
of deficit reduction. Not only will these choices fail to
produce economic growth and job creation, they do not reflect
the morals of our country. I reject the cynicisms that the
Republican majority has in the American people, because I
believe that together we can protect seniors and our most
vulnerable citizens, and lay the foundation for an economy that
provides future generations with the prosperity we have sought
for ourselves.
Bill Pascrell, Jr.
Appendix: Legislative Text
----------
The following legislative text incorporates both amendments
adopted in the Committee on the Budget and technical
corrections.
H.R. 4966
To amend the Balanced Budget and Emergency Deficit Control Act of 1985
to replace the sequester established by the Budget Control Act of 2011.
IN THE HOUSE OF REPRESENTATIVES
April 27, 2012
Mr. Ryan of Wisconsin introduced the following bill; which was
referred to the Committee on the Budget, and in
addition to the Committee on Rules, for a period to be
subsequently determined by the Speaker, in each case
for consideration of such provisions as fall within the
jurisdiction of the committee concerned
A BILL To amend the Balanced Budget and Emergency Deficit Control Act
of 1985 to replace the sequester established by the Budget Control Act
of 2011.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Sequester Replacement Act of
2012''.
SEC. 2. CONTINGENT EFFECTIVE DATE.
This Act and the amendments made by it shall take effect
upon the enactment of the Act provided for in section 201 of H.
Con. Res. 112 (112th Congress) and this Act and the amendments
made by it shall have no force or effect if such Act provided
for in such section is not enacted.
SEC. 3. PROTECTING VETERANS PROGRAMS FROM SEQUESTER.
Section 256(e)(2)(E) of the Balanced Budget and Emergency
Deficit Control Act of 1985 is repealed.
SEC. 4. ACHIEVING $19 BILLION IN DISCRETIONARY SAVINGS.
(a) Revised 2013 Discretionary Spending Limit.--Paragraph
(2) of section 251(c) of the Balanced Budget and Emergency
Deficit Control Act of 1985 is amended to read as follows:
``(2) with respect to fiscal year 2013, for the
discretionary category, $1,047,000,000,000 in new
budget authority;''.
(b) Discretionary Savings.--Section 251A(7)(A) of the
Balanced Budget and Emergency Deficit Control Act of 1985 is
amended to read as follows:
``(A) Fiscal year 2013.--
``(i) Fiscal year 2013
adjustment.--On January 2, 2013, the
discretionary category set forth in
section 251(c)(2) shall be decreased by
$19,104,000,000 in budget authority.
``(ii) Supplemental sequestration
order.--On January 15, 2013, OMB shall
issue a supplemental sequestration
report for fiscal year 2013 and take
the form of a final sequestration
report as set forth in section
254(f)(2) and using the procedures set
forth in section 253(f), to eliminate
any discretionary spending breach of
the spending limit set forth in section
251(c)(2) as adjusted by clause (i),
and the President shall order a
sequestration, if any, as required by
such report.''.
SEC. 5. CONFORMING AMENDMENTS TO SECTION 314 OF THE CONGRESSIONAL
BUDGET AND IMPOUNDMENT CONTROL ACT OF 1974.
Section 314(a) of the Congressional Budget Act of 1974 is
amended to read as follows:
``(a) Adjustments.--
``(1) In general.--The chair of the Committee on
the Budget of the House of Representatives or the
Senate may make adjustments as set forth in paragraph
(2) for a bill or joint resolution, amendment thereto
or conference report thereon, by the amount of new
budget authority and outlays flowing therefrom in the
same amount as required by section 251(b) of the
Balanced Budget and Emergency Deficit Control Act of
1985.
``(2) Matters to be adjusted.--The chair of the
Committee on the Budget of the House of Representatives
or the Senate may make the adjustments referred to in
paragraph (1) to--
``(A) the allocations made pursuant to the
appropriate concurrent resolution on the budget
pursuant to section 302(a);
``(B) the budgetary aggregates as set forth
in the appropriate concurrent resolution on the
budget; and
``(C) the discretionary spending limits, if
any, set forth in the appropriate concurrent
resolution on the budget.''.
SEC. 6. TREATMENT FOR PAYGO PURPOSES.
The budgetary effects of this Act and any amendment made by
it, and the budgetary effects of the Act provided for by
section 201 of H. Con. Res. 112 (112th Congress), shall not be
entered on either PAYGO scorecard maintained pursuant to
section 4(d) of the Statutory Pay-As-You-Go Act of 2010.
SEC. 7. ELIMINATION OF THE FISCAL YEAR 2013 SEQUESTRATION FOR DEFENSE
DIRECT SPENDING.
Any sequestration order issued by the President under the
Balanced Budget and Emergency Deficit Control Act of 1985 to
carry out reductions to direct spending for the defense
function (050) for fiscal year 2013 pursuant to section 251A of
such Act shall have no force or effect.