By Larry Jones
April 2, 2007

Before leaving town on March 30 for a two-week Easter recess, the House and Senate completed work on separate budget plans that would significantly increase spending on many domestic programs in fiscal year 2008 that starts October 1. Both proposals call for nearly $3 trillion in spending in the new fiscal year and would eliminate the federal deficit by fiscal year 2012. The House proposal would also generate a $153 billion surplus over the next five years. The Senate Budget Committee approved a plan that would have generated a $132 billion surplus over the same period. But the funds were carved away during Senate floor considerations when members adopted an amendment by a vote of 97 – 1 to use the surplus to finance an extension of middle-class tax cuts, the continuation of the estate tax cuts at the reduced 2009 level, and increased spending on children health care.

The House approved its version of the bill, H Con Res 99, on March 29 by a vote of 216 – 210, mostly along party lines. The measure rejects cuts proposed by President Bush across a range of domestic programs and adds about $25 billion more than the President requested for discretionary spending. It also recommends major increases for veterans’ benefits, education, homeland security, health care and environmental initiatives. The Senate adopted it’s version of the bill, S Con Res 21, on March 23 also mostly along party lines by a vote 52 – 47. The Senate measure also rejects cuts proposed by the President, allows for inflationary increases for most domestic programs, and recommends additional spending for education and veterans’ benefits.

Both proposals would allow up to $50 billion more in spending for the State Children Health Insurance Program (SCHIP) over the next five years. The House measure would, however, require cuts in other programs or new taxes to offset the increase. The Senate measure assumes that $15 billion would be spent on SCHIP over the next five years and it would allow a 61 cents – per pack increase in federal tobacco taxes to pay for a $35 billion expansion of the program.

House and Senate conferees are expected to meet some time after April 15, following the Easter recess, to begin working on a compromise budget resolution that can be adopted by both chambers. The budget resolution does not set specific funding levels for programs. Instead, it sets binding limits on discretionary spending and serves as a guide for Congressional action on annual spending and tax bills.