budget 2008

A Joe Tracker

Passing a budget is a year long event. (For an overview of the tortuously tedious process, see our budget process page.) Here we'll keep track of the details and debates on the budget as it trudges its way through the chambers of Capitol Hill...

In brief

President Bush kicked off the process way back in February, unveiling his recommendations for spending in '08 - but those recommendations didn't hold up much when the democratic Congress passed its budget resolution in May. With their budget blueprint in hand, the House spent the summer knocking out the details of its twelve spending bills; the Senate got a much later start and only managed to get five in the bag by October 1, when FY 2008 began. Congress passed a couple of "continuing resolutions" to keep the government rolling at '07 spending level before they passed a final bill in December.

The president promised to veto earlier versions of the budget for exceeding his spending recommendation. The Dems put up a good fight to pass a budget that kept at least some of their budget increases, but by mid-December they were ready to throw in the towel.

The final budget came in at the president's pricetag, but also included $11 billion in emergency funding for farm disaster relief, border security and low income heating. It also tacked on $70 billion in bridge funding (with no strings) for the Iraq war.

Although education, health and conservation programs all saw cuts - from the Dems' original bill - the damage was buffered by $5 billion that Congress shifted from defense programs to cover domestic programs. (WP, WP)

The president okayed the final bill, but he was thinking of ordering agencies not to fund many - or all - of the 11,000 earmarks lawmakers tucked into the bill (which would be kind of legal, but no one's really sure) (WP). In the end, he let the earmarks fly, but promised to take a hard stand on next year's budget - which, however, he probably won't be around to do (NYT & WP).

The President's Budget

The president unveiled his budget on February 5. When there was a Republican majority on the hill, Congress took some of his recommendations to heart but avoided his more controversial cuts. Even more so this year, with Dems in control, many - if not all - of his recommendations will be ignored.

How much it'll cost: The president's five year plan predicts that deficits will dwindle over the next four years and there will be a budget surplus of $61 billion in 2012, but those numbers assume that we'll be out of Iraq by the end of 2009 and that $100 billion will be shaved off of Medicare and Medicaid, while at the same time the country's economy will continue to see strong growth. Under the CBO's predictions (which include the Bush tax cuts being extended), there'd still be a $146 billion deficit in 2012. (WP)

Among his recommendations are:

  • Medicare & Medicaid: The president's budget would slow the growth of Medicare by charging higher premiums on drug coverage for high income seniors, using the same threshold that's now used for regular Medicare - $80,000 for singles and $160,000 for couples. His plan would also keep the threshold from rising with inflation, meaning more seniors would have to pay higher premiums as time goes by. Combined with other cost-cutting proposals Medicare spending would only rise 5.6% a year, down from 6.5%. Medicaid would also see trimming, slowing its growth to 7.1%, from 7.3%. The grand savings come to $70 - $102 billion over five years.(NYT & WP)

  • SCHIP: The president would also slice off 4% from the State Children's Health Insurance Program (down to $5.4 billion), which he says states are using to cover children above the originally intended income level (which is 200% of poverty). (NYT)

  • Low Income Heat: The proposed budget cuts 18% from a program paying for heat for the poor - down to $2.2 billion. (NYT)

  • Energy: His budget would add $9 billion more in loan guarantees to businesses developing alternative energy (CongressDaily), as well as increases for the Strategic Petroleum Reserve, funding for the Global Nuclear Energy Partnership. Funding for nuclear waste clean up would see small cuts. (WP)

  • Defense: The president requested $481 billion in defense spending - a 10% increase from last year. For the first time, the president also included full funding for the Iraq and Afghanistan wars. The armed forces would also be permanently increased by 92,000 troops over the next five years. (WP)

  • Department of State: A 20% increase in DOS's budget, up to $35 billion. (WP)

  • Environment: A public/private venture to boost spending on national parks by $3 billion over the next decade. (WP)

  • Education: The president's plan would increase Pell grants and add $1.2 billion to elementary and secondary education (mostly for high school testing) at the same time as cutting loan programs for technical education and loan subsidies to private lenders.
    (WP)

  • Criminal Justice: The Justice Department and FBI would see slight budget increases, but funding for local police would get $1.7 billion in cuts. (WP)

  • Homeland Security: Homeland Security would get an increase of $2 billion to $34 billion, with $1 billion for better communications systems, $2 billion for a "virtual fence" along the border and $224 million more for airport security - while state grants would fall by $1.2 billion and the Coast Guard would see its budget cut from $1.1 billion to $800 million. (WP)

  • Communities: Eliminating the Community Services Block Grant which helps pay for child care and other services for low income families. (CongressDaily)

The Washington Post summed up the president's budget suggestions in this chart (which we just copied and pasted from here).

Function

2007 2008 Pct. change
Veterans benefits and services $72.4 $83.4 15.1%
General government 18.8 20.7 10.5%
Net interest 239.2 261.3 9.3%
General science, space and technology 24.9 26.6 7.1%
Transportation 74.6 79.3 6.3%
National defense 571.9 606.5 6.1%
Medicare 372.3 391.6 5.2%
Health 268.5 280.6 4.5%
Social Security 586.5 612.5 4.4%
Income security 365.4 380.8 4.2%
Administration of justice 45.3 47.0 3.7%
International affairs 35.1 36.1 3.1%
Agriculture 20.1 19.9 -1.2%
Natural resources and environment 35.2 32.9 -6.5%
Education, training, employment, and social services 94.0 82.7 -12.0%
Energy 1.8 1.4 -23.5%
Community and regional development 32.6 24.7 -24.4%
Commerce and housing credit .210 -2.0 -1,071.4%

Congress's budget resolutions

Ideally, Congress starts piecing together a budget by first outlining a "budget resolution" - which sets the broad framework before budget committees get down to the nitty gritty details. The Senate and House passed separate resolutions in March - and hammered out a joint resolution in May.

The Senate plan

  • Total bucks: The Senate plan would spend $18 billion more than the president's proposal on discretionary spending - for a total of $1.1 trillion, which includes $145 billion for war spending.

  • Healthcare: Instead of cutting growth in Medicare spending by $66 billion over five years, as in Bush's plan, senators would trim Medicare spending by $15 billion over five years (WP).
    The Senate plan would also increase spending on the State Children's Health Insurance Program (SCHIP) by $50 billion, to a total of $75 billion, over the next five years (WP) - and cover $35 billion of those costs through a cigarette tax hike (WP).

  • Education: Senators tuck in $6 billion more toward education next year than Bush's plan would. (WP) Congress may also decide to trim subsidies to college tuition lenders.

  • Taxes: The Senate budget would put the Alternative Minimum Tax (AMT) on hold for two years at a cost of $200 billion. (NYT)
    It would also extend some of Bush's "middle class" tax cuts past their 2010 expiration date (including the child credit, the marriage penalty fix and the 10% tax bracket). (WP) Finally, it would let taxpayers in states without income taxes, deduct their sales taxes instead.

  • Fudging the numbers: The one similarity with the president's bill is how the Senate budget fudges the overall budget numbers. The five year outlook predicts the budget will eventually be running a surplus, but that's making assumptions that many budget watchers find improbably, such as: only $50 billion will be spent on the Iraq war in '09 and the unpopular AMT tax will only be fixed for two years. Senators say some of the shortfall will be filled by better tax collection, but both the New York Times and Washington Post suspect that revenue will have to be found elsewhere (for example, by not extending some of the Bush tax cuts which are set to expire in 2010). (WP & NYT)

The House Plan

Info on the House plan - which passed at the end of March - is a little sketchier, but the gist of the reporting out there is that it's not much different from the Senate's resolution. Here's a bit more on what is being reported:

  • Total Bucks: The House budget resolution adds $22 billion on top of the president's request for a total of $3 trillion.

  • Taxes: Unlike the Senate, the House plan doesn't factor in any extension of the Bush tax cuts (after they expire in 2010), even though Democrat leaders suggest they'll be extending that tax bridge when they get there. (Even though budgets only decide how much is being spent in the year ahead, they make five year projections.) (WP)

The Final Budget Resolution

The House and Senate agreed on a final budget resolution in May.

  • Deficits: The budget assumes a deficit of $252 billion in FY '08, working down to a small surplus in '12 (even though a budget only really set one year's spending, it's supposed to project out over five years). (WP)

  • Taxes: The budget would axe, in part, the Alternate Minimum Tax, but in future years it would let the capital gains and dividends tax go up, as well as taxes for the wealthiest Americans. It would keep in place Bush's middle class tax cuts. To many, the budget doesn't fully explain how the AMT cut will be paid for. (WP)

  • Defense: Congress fully funded the president's request for defense spending, including $145 billion for the Iraq and Afghanistan wars in '08 and $50 in '09 (a first - in previous years, war spending was never included). (WP)

Appropriations - the 12 spending bills

With a budget resolution in place, Congress got down to the nitty gritty of drafting each of its twelve spending bills in June. The House took the lead - and passed all 12 bills over the summer. The Senate, as usual, took a little longer. In the end, Congress was only able to send the president one bill (defense) that wasn't vetoed; all of the others it bundled into an omnibus bill that it got to the president the week before Christmas.

Below we list how much the House and Senate originally allocated to their budget subcommittees (as well as how much that compared to 2007's budget and how much it went over Bush's request) and any other tidbit Congress Daily or the mainstream press happen to be talking about. See below for an overview of what landed in the final bill.

Spending Bill House Senate
Agriculture $19b passed - up 6% (that's the discretionary amount - the full bill costs $91b) Okayed in Committee.
Commerce- Justice- Science $54b - up 7%, $3b above Bush's request. Passed. $18 billion for NASA. Adds $1 billion more than Bush's request to go to local law enforcement. Includes $2 billion for studying climate change.
Also defunds oversight of "issue ads."
$55b passed. $7 billion for the FBI.
Defense House and Senate negotiators sent the president a final $472b bill, padded with $6b in emergency spending for Katrina recovery (no joke). (WP)
Energy & Water $32b passed - up 4%. Bill underfunds (by half) Bush's nuclear energy initiative. $32b okayed in committee.
Financial Services & Gov't $21b - up 8%. Passed. Bill eases trade restrictions with Cuba and also eases up Sarbanes-Oxley reporting rules for small businesses. $22b okayed in committee.
Homeland Security $37b bill - up 14%, with $400 million for port security grants, $400 mill for public transit security, $2.5 bill for local security grants. Passed - but the president may veto. (NYT) $42b bill passed, including a $3b amendment for border security. (LAT)
Interior & Environment $28b allocated - up 5%. Passed. Includes $1 billion to address climate change and half a bill for biofuel research. Okayed in committee.
Labor & Health Human Services (& Education) A final $151 joint House-Senate bill was was vetoed by the president for being $10b over his request. Congress was unable to override the veto. In the vetoed bill, the Education department gets $61b, with $600m more than Bush requested for NCLB. Head Start got a 2% hike (to $7b), National Institutes of Health 3% ($30b), low income heating 12% ($2b) and Community Services Block Grants 6% ($665m). In post-veto drafts, Congress has cut out about $3.5b from their original request.
Legislative Branch $4b allocated - up 5%. Passed. Okayed in committee.
Military Construction & VA $65b allocated - up 30%, $4b more than Bush's request ($109 billion including mandatory spending_ Includes $37 bill for veterans' health and $8 bill to build homes for troops relocating from S. Korea and Europe. Passed. $109b total bill passed.
State & Foreign Operations $34b okayed in committee (up 9%). Passed. Includes a provision that gives contraceptives to groups that condone abortion. (WP) $34b passed (up 9%). Includes $17b for economic assistance, $5b in military assistance, $5b for fighting AIDS, $2b for Bush's Millenium Challenge and $11b for diplomacy. (Yeah, that's more than $34b we know - but those are CongressDaily's numbers) Also comes with the House's contraceptive provision.
Transportation & Housing $104b. Passed. Increases housing programs by 6%. Keeps Amtrak steady with funding. $105b passed.

The Final Budget

As often happens in December, a year's work of unfinished budget business gets packed into an omnibus bill that gets negotiated in the wee hours. What gets it - or gets left out - is sometimes a surprise to the lawmakers themselves. Here's an overview - cobbled together from Congress Daily and the mainstream press - of the final budget.

  • Total price tag: $1.04 trillion. $473 billion in the Defense bill and $555 billion for the omnibus bill, which also included $70 billion for the Afghanistan and Iraq wars.
  • Defense, veterans' programs, homeland security and foreign aid all got substantial increases.
  • Domestic programs on average got less than a 3% increase (less than inflation)
  • Even though the final bill kept to Bush's requested limit of $933 billion (not including Iraq and Afghanistan funding), it did add on $11 billion in "emergency" funding for border security, farm disaster aid, low income heating and foreign aid. (There's $14 billion that cJ can't account for in the final $1.04 trillion number, but that may have also gone toward Iraq funding.)

Updated February 2, 2008

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