Budget Alert: March 28, 2007

Senate Moves Toward Final Vote on War Supplemental;
President Reiterates Veto Threat;
House to Vote Thursday on 2008 Budget;
Bernanke Testifies on the Economy

BUDGET PROCESS: STEP-BY-STEP™

Wednesday, March 28:

Fed Chairman Ben Bernanke testifies at Joint Economic Committee.

Bernanke Testimony

Thursday, March 29:

House to vote on 3 Budget Alternatives and final passage of FY 2008 Budget Resolution.

Senate to complete action on FY 2007 War Supplemental (if not completed Wednesday night).

Week of April 2:

Senate and House in recess.

Week of April 9:

Senate reconvenes; House in recess for an additional week.

Week of April 16:

House-Senate Conferences on FY 2007 War Supplemental and FY 2008 Budget Resolution.

April 27:

House Appropriations Committee deadline for submission of FY 2008 earmark requests.

Late April:

House and Senate Appropriations Committees make critical discretionary spending allocations (known as 302(b) allocations) among their 12 subcommittees. This is a key step in setting Federal spending priorities.

SENATE MOVES TOWARD FINAL VOTE ON WAR SUPPLEMENTAL;
President Reiterates Veto Threat

Early Wednesday, the Senate voted unanimously, 97-0, to invoke cloture on H.R. 1591, the FY 2007 War Supplemental. The action reflects a tactical decision by the Senate Republican leadership not to filibuster the bill and instead let it proceed to the President's desk for a certain veto.

In a speech today, the President said : “The House and Senate bills have too much pork, too many conditions on our commanders, and an artificial timetable for withdrawal. And I have made it clear for weeks, if either version comes to my desk, I'm going to veto it .”

The Senate is now considering amendments and proceeding towards a final vote later tonight or tomorrow, followed by a House-Senate conference following the Easter/Passover Recess. Major conference issues will include : (1) whether to send the House Iraq language or the Senate language to the President (the House language is more binding in its withdrawal mandate); (2) the size of the small business tax relief package that accompanies the minimum wage increase (the Senate has a $12 billion tax relief package compared to the $1.3 billion House package); (3) the amount of Defense Operations and Maintenance funding (the House bill exceeds the Senate bill); (4) the amount of Military Construction funding (House exceeds Senate); (5) the amount of LIHEAP (Low Income Home Energy Assistance) emergency funding (Senate exceeds House by $240 million; and (6) the amount of farm disaster funds (Senate exceeds House by nearly $500 million).

Outlook: At some point in late April, the President and Congressional leaders will meet to discuss how to break the impasse on war funding. Neither the President nor Congress are willing to be responsible for holding up troop funding.

The likely outcome in the political stand-off is a bill that does not include a date for withdrawal, but instead includes a series of presidential reports on Iraqi progress in meeting specific benchmarks. Once an Iraq compromise is worked out, it is doubtful the White House will continue to threaten a veto over non-military funding for LIHEAP, children's health, farm disaster relief, homeland security or pandemic flu vaccines.

Text of the Senate Bill and Committee Report

A table comparing the President's request, House-passed bill, and Senate-reported bill is available on the WBR website:

FY 2007 Supplemental Comparison Table

HOUSE BEGINS ACTION ON 2008 BUDGET

The House began general debate today on the FY 2008 Budget Resolution. Prior to a vote on passage of the Budget on Thursday, the House will vote on three alternative budget plans:

The Congressional Black Caucus Budget that seeks to balance the budget in 2012, produce a cumulative deficit that is $339 billion lower than the President's Budget, does not extend the expiring tax cuts, and adds funding for health care, education, Gulf Coast reconstruction, veterans, and homeland security.

The Congressional Progressive Caucus Budget that calls for FY 2008 non-defense discretionary spending of $483 billion (compared to the House Budget Committee's proposed $451 billion); a balanced budget by 2010; calls for complete withdrawal from Iraq during 2007 and cancellation of Cold War weapons systems; repeals the Bush tax cuts for the top 1% of taxpayers; and provides additional funding for international assistance, alternative energy development, IDEA (Individuals with Disabilities Education Act), job training, SCHIP (State Children's Health Insurance Program), veterans health care, community development block grants, Katrina relief, community policing, and clean-up of underground storage tanks.

The Republican Caucus Budget that provides for a one-year extension of AMT relief, non-defense discretionary spending at the President's requested level (about $17 billion below the House Budget Committee level); freezes most programs at the 2007 dollar level; calls for $279 billion in budgetary savings from entitlement reforms over 5 years, and would establish a PAYGO requirement for spending only (that is, entitlement increases would have to be paid for, but not tax cuts).