Budget Briefing Booklet: FY 2013 Budget Proposals by The Public Notice

budget Briefing Booklet fy 2013 budget proposals â&#x20AC;&#x201D; March 29, 2012 â&#x20AC;&#x201D;

WHAT’S IN SIDE 01

INTRO TO THE BUDGET: Congressional Budgeting 101

The Budget Process: A Timeline of Tardiness 07 graphic

LOOKING BACK AT Fiscal year 2011: A Case of Swollen Spending 11 graphic

Fiscal Year 2013: A Budget in the Works

FISCAL YEAR 2013: PRESIDENT’S BUDGET

Fiscal Year 2013: House REPUBLICANs’ BUDGET

Fiscal Year 2013: House DEMOCRATs’ BUDGET 27 graphic

01 INTRO TO THE BUDGET:

Congressional Budgeting 101 The airwaves are full of talk about the federal budget. Why all the hype? To the average onlooker, the federal budget process may be confusing. We attempt to explain. Why Have A Budget The current Congressional budget process was set forth in the Congressional Budget Act of 19741. This law establishes the parameters of the federal government with respect to spending, tax revenue, deficit, and debt policies. The Different Types of Spending In general, there are two types of spending: mandatory (i.e., entitlement) and discretionary. Mandatory spending is spending that’s on autopilot because it is required by law and is not subject to the annual Congressional appropriations process. Spending for things like Social Security, Medicare, and Medicaid fall under the mandatory spending category.2 Discretionary spending is spending for programs and agencies that occurs through yearly congressional action (called appropriations acts).3 Items like Department of Defense and Department of Education spending fall under this category. According to CRS, “In 2010, mandatory spending accounted for over half of total federal spending...4” The budget submitted by President Obama outlines both mandatory and discretionary spending, generally over a five-year period.

Why the Budget Needs Reform Passing a budget matters. It reveals Congress’s priorities for the upcoming year and sets the parameters for the upcoming appropriations debate. It puts members of Congress on record supporting or opposing various policy proposals such as income tax rate cuts or increases and entitlement program reforms. However, the actual budget resolution does not have the force of law, which means the budget resolution itself is primarily a messaging tool. Congress’s annual budget is passed as a form of a concurrent resolution. While it is supposed to be voted on yearly by both the House and the Senate, it is not signed by the President and does not have the force of law.5 As discussed below, since the process hasn’t worked for nearly three years, it’s easy to see why some believe the process needs to be reformed. Why the Budget Matters A budget sets the overall topline spending cap for discretionary spending. The House and Senate Appropriations Committees divide the total spending cap created by the budget among the 12 Appropriation subcommittees. Once the Appropriation Committees have made these allocations, spending caps are established for each of the 12 appropriation bills. In practice, this creates a cap on total spending and a cap for each of the 12 bills (i.e., Defense).6 A budget also may have instructions for reconciliation. These instructions can later be used to prohibit Senate filibusters in the future. Reconciliation can be used as a serious deficit reduction tool, but Congress has generally abandoned this practice.

03 According to the Congressional Research Service, “Reconciliation was used in the 1980s and into the 1990s as a deficit-reduction tool. Beginning in the latter part of the 1990s, some reconciliation measures were used principally to reduce revenues” (thereby increasing the deficit)7. Why Caps Matter If the federal budget resolution doesn’t have the force of law, then why would a cap matter? Some items in the budget, including the overall discretionary spending cap, are enforceable by points-of-order. Points-of-order are a parliamentary tool that can be raised on the floor by members of Congress after a violation of the budget resolution has occurred8, which can be used as a tool to prevent overspending. According to the Congressional Research Service, the budget enforcement process “is not an effective control on the spending that results from existing laws”9 although it generally works for new legislation. Context Notes For a budget to actually go into effect, the House and Senate have to pass the same version of the concurrent resolution, which means they have to pass the same budget (a concurrent resolution is different from a bill; the President does not sign a concurrent resolution). And for roughly three years, Congress hasn’t produced a budget. The last time the House and Senate agreed on a budget was on April 200910. Although the House passed a budget last year by a vote of 295– 19311, the Senate voted that particular budget down by a vote of 57–4012. Last year, the budget plan submitted by President Obama was also defeated in the Senate by a vote of 97–013.

So what happens when no budget is passed? Congress can pass a “deeming resolution” that sets the topline discretionary spending number or do what they did last year—insert the topline discretionary spending number14 in a piece of legislation (such as the Budget Control Act that raised the debt ceiling). The Budget Control Act also sets the topline discretionary spending number in the Senate for the current budgetary cycle.15 That is why Senate Majority Leader Harry Reid said on February 3: “We do not need to bring a budget to the floor this year.” The Budget Control Act set a $1.047 trillion limit for discretionary spending for fiscal year 201316. Since the number is already set for the Senate appropriators to spend, Senator Reid is very unlikely to go through the budgetary process.

05 The Budget Process: A Timeline of Tardiness

Before the government’s next fiscal year begins (runs from October 1, 2012 - until September 30, 2013), Congress and the President must fund some of government’s spending. The federal budget process has been muddied and been made confusing, so let’s examine exactly how it works. The Budget Process Step one: Gearing up for the budget process, the Congressional Budget Office reports to Congress its annual economic forecast. On January 31, 2012, the non-partisan Congressional Budget Office (CBO) submitted its annual economic outlook, something it does each January. In this document, it establishes what is known as the CBO baseline, an important figure in the federal budget process.17 According to the CBO “baseline projections must estimate the future paths of federal spending and revenues under current law and policies...[the baseline] is meant to serve as a neutral benchmark that lawmakers can use to measure the effects of proposed changes to spending and taxes18.” Step two: The President Submits Budget Request (a.k.a. “the President’s budget) to Congress. The Budget and Accounting Act of 1921 requires the President to submit a budget to Congress on an annual basis. It also created the Bureau of the Budget, now known as the Office of Management and Budget (OMB), to assist the President in creating a budget. The OMB also serves as the principle auditing agency of the federal government. The President is required by law to submit his budget to Congress by the first Monday in February.19 However, the budget is sometimes delivered late, as is the case this year since the President isn’t releasing his budget until February 1320. Although the President is one week late with his request this year, he’s not tardy as Congress has been in the last several years —it hasn’t enacted a budget for

nearly three years21, even though they are required by law to do so22. Step three: Congressional committees submit policy priorities and funding requests to Budget Committees (a.k.a. views and estimates). After the President submits his budget proposal to Congress, within six weeks, House and Senate committees are to submit to their respective Budget Committee “views and estimates” regarding spending and revenue matters in their jurisdiction. In theory, this information is used as the House and Senate Budget Committees draft their budget outlines.23 Step four: The Senate Budget Committee reports a Concurrent Resolution on the budget by April 1 (usually late, if it happens at all). Even though the Senate Budget Committee has a specific deadline to report out a budget, no specific date is established for the House to do the same24. This year, as Senate Majority Leader Reid has indicated25, the Senate is unlikely to report a budget by April 1. Step five: Congress passes concurrent resolution on budget by April 15. Congress rarely passes a budget by April 1526. Generally, the budget sets a topline discretionary spending number—the limit that the Appropriation Committee can spend. Some consider this limit setting to be the most important aspect of a budget process, since it lays out what the Appropriation Committee can spend. So what happens if no budget is passed? Congress will pass a “deeming resolution” that sets the topline spending number27 or do what they did last year—insert the topline spending number in a piece of legislation (such as the Budget Control Act that raised the debt ceiling)28.

A TIMELINE O

GEARING UP FOR THE BUDGET PROCESS; THE CONGRESSIONAL BUDGET OFFICE

PRESIDENT SUB TO CONGRESS

REPORTS TO CONGRESS ITS ANNUAL ECONOMIC FORECAST

(jan 31)

(feb 13)

SENATE BUDGET COMMITTEE

CONGRESS PAS

REPORTS CONCURRENT RESOLUTION

RESOLUTION ON

ON BUDGET

(apr 1)

HOUSE APPROPRIATION COMMITTEE MAY BEGIN REPORTING APPROPRIATION

(apr 15)

FISCAL YEAR B

BILLS OUT OF THE COMMITTEE TO FULL HOUSE; SENATE BEGINS REPORTING AT A LATER DATE

(house – may or june; senate – june or july & continues into the fall)

(oct 1)

OF TARDINESS

BMITS BUDGET REQUEST

CONGRESSIONAL COMMITTEES SUBMIT POLICY PRIORITIES AND FUNDING REQUESTS TO BUDGET COMMITTEES

(no later than 6 weeks after president submits budget)

of hap

penin

SSES CONCURRENT

N BUDGET

WITH A TOPLINE NUMBER SET ON HOW MUCH THEY CAN SPEND, APPROPRIATION COMMITTEES IN HOUSE AND SENATE GEAR UP TO CONSIDER SPENDING BILLS

never happens then

BEINGS

(may 15)

The facts are clear: Congress has not passed a budget resolution in three years. This failure is nothing new - past Congresses have a poor track record of passing budgets, too, including for Fiscal Years 2003, 2005, and 200729. Step six: With a topline discretionary spending number set on how much they can spend, Appropriations Committees in House and Senate Gear up to Consider Spending bills30. Step seven: House Appropriation Committee may begin reporting appropriation bills out of the committee to full House (May or June); the Senate may begin reporting its appropriation bills later (June or July and continues throughout fall).31 Reporting out a bill simply means it is favorably reported by a Committee and moves to the full House or Senate where it may be considered. Step eight: Fiscal Year begins (October 1) Congress routinely misses this deadlineâ&#x20AC;&#x201D;to fund the government in full by the start of the new fiscal year.

LOOKING BACK AT Fiscal year 2011: A Case of Swol len Spending

Washington’s spending spree is out of control. Last year was marked by last minute battles to cut the deficit and rein in out of control spending. Did it work? Where did the money go? The numbers say it all. Overall Fiscal Year (FY) 2011 Budget Spending: $3.6 trillion Income: $2.3 trillion Deficit: $1.3 trillion33 The deficit is like… $11,510.24 per person in the US34 Buying 904,846,811 super bowl tickets35 Purchasing Adele’s mansion 379,835 times36 Buying Facebook 37 times37 Spending BReakdown Mandatory Spending: $2 trillion (56% of spending) ie. Spending required by law, like Social Security. Discretionary Spending: $1.3 trillion (37% of spending) ie. Spending that goes through the appropriations process, like defense. Interest on the debt: $230 billion (6% of spending)38 Mandatory Spending explained39 Social Security: $725 billion (20% of spending) Medicare: $480 billion (13% of spending) Income Security40: $526 billion (15% of spending) Medicaid & Other Health: $310 billion (9% of spending) Discretionary spending explained41 Non-Defense: $648 billion (18% of spending) This includes international affairs, science, space, technology, energy, natural resources, transportation education housing assistance, etc. Defense: $699 billion (19% of spending)

— A STUDY OF SWOL

37%

discretionary spendin

$3.6 TRILLION

56%

[ fy 2011 ]

interest payments mandatory spending

that’s like... $11,510.24

DISCRETIONARY SPENDING: EX. DEFENSE & NON-DEFENSE

PER PERSON IN THE U.S.

PURCHASING

$1.3 trillion

OP TIONAL SP ENDING CONGR ESS SETS ANNUALLY IN TH E AP P ROP R IATIONS

904,846,811 S U P E R

BOWL TICKETS

P R OCESS. TH EY CAN CUT OR INCREASE THIS FUNDING EACH

PURCHASING ADELE’S MANSION

P U R C H A S I N G FA C E B O O K

379,835

YEAR HOWEVER THEY SEE FIT.

TIMES

M A N D AT O R Y S P E N D I N G : EX. SOCIAL SECURITY & MEDICARE

TIMES

$2 trillion

SPENDING PROGRAMS RUNNING ON “AUTO-P ILOT” THAT HAVE BEEN OBLIGATED BY PREVIOUSLY PASSED LAWS. NOT SUBJECT TO ANNUAL REVIEW. I N T E R E S T PAY M E N T S

$230 billion

THE COST OF BORROWING TRILLIONS OF DOLLARS.

* N U M B E R S M AY N O T A D D D U E T O R O U N D I N G F O R F U L L L I S T O F S O U R C E S , P L E A S E V I S I T: B A N K R U P T I N G A M E R I C A . O R G / B U D G E T _ B R E A K D O W N

D AT E O F P U B L I C AT I O N : M A R C H 1 , 2 0 1 2

LLEN SPENDING —

non-defense discretionary defense discretionary

18%

social security

19%

medicare

20%

income security medicaid & other health

13% 15%

SOCIAL SECURITY

$725 billion

MEDICARE

$480 billion

INCOME SECURITY

$526 billion

MEDICAID & OTHER HEALTH

$310 billion

NON-DEFENSE DISCRETIONARY

$648 billion

T R A N S P O R TAT I O N E D U C AT I O N TRAINING/EMPLOYMENT/SOCIAL SERVICES & OTHERS DEFENSE DISCRETIONARY

N AT I O N A L D E F E N S E

T O TA L B U D G E T $3.6 trillion T O TA L R E V E N U E $2.3 trillion

[ fy 2011 ]

W H I C H L E F T U S S H O R T. . . $1.3 trillion

$699 billion

13 Fiscal Year 2013:

A Budget in the Works Each year, Congress is required to pass a budget by law. Once the budget is enacted, Congress must pass 12 yearly spending bills to fund discretionary programs before the start of the government’s fiscal year (October 1). This sounds great in theory, but unfortunately, Washington has neglected to make it work in practice. Where are we in the budget process, and what proposals are on the table? After cutting out the hype, rhetoric, and commentary, what is left? Here are the facts. President’s Budget, By the Numbers42 On February 13, President Obama submitted his proposed budget for the federal government’s upcoming fiscal year (FY2013). Here are the facts: Spending 2013: $3.803 trillion 5 Years: $20.607 trillion in the next five years Revenue 2013: $2.902 trillion 5 Years: $17.167 trillion Deficit 2013: $901 billion 5 Year: $3.440 trillion House Republicans’ Budget, By the Numbers43 House Budget Committee Chairman Paul Ryan released his proposed budget for FY2013 on March 20, 2012. Here are the facts:

Spending 2013: $3.530 trillion 5 Year: $18.056 trillion in the next five years Revenue 2013: $2.734 trillion 5 Years: $16.037 trillion Deficit 2013: $797 billion 5 Year: $2.020 trillion House Democrats’ Budget, By the Numbers44 On March 26, Representative Van Hollen introduced the Democrat Budget Committee’s response to Paul Ryan’s budget. Here’s how Van Hollen’s budget breaks down: Spending 2013 Outlays: $3.7 trillion 5 Year Outlays: $19.7 trillion Revenue 2013 Revenue: $2.7 trillion 5 Year Revenue: $16.6 trillion Deficit 2013 Deficit: $965 billion 5 Year Deficit: $3.1 trillion The last time Congress completed the budget process was on April 29, 200945. (Explained in depth below.)

15 Fiscal Year 1995 is the last time all bills were completed individually and signed into law on or before October 146. (Explained in depth below.) Economic Snapshot, By the Numbers National Debt Total: $15.567 trillion47 Debt per household48: $136,267 Debt per person49: $49,699.13 Consecutive Months of Deficits50: 41 Unemployment Rate51: 8.3% Spending Once a budget is passed, Congress is supposed to enact 12 spending bills to fund the government on an individual basis (instead of lumping the bills together). Fiscal Year 1995 is the last time all bills were completed individually and signed into law on or before October 152. In Fiscal Year 1997, all bills were completed on time but five bills were wrapped into one bill53. Appropriations bills are traditionally moved individually—one at a time. According to the CRS: “Regular appropriations were enacted on time in only four instances (FY1977, FY1989, FY1995, and FY1997). No continuing resolutions were enacted for three of these fiscal years, but continuing resolutions were enacted for FY1977 to fund certain unauthorized programs whose funding had been dropped from the regular appropriations acts.”54 Unfortunately, out-of-control spending is not something that is new to Washington. Under President Bush the debt increased $6.1 trillion (between fiscal years 2001-2009). Under President Obama’s budget, debt will increase by an estimated $5.7 trillion (between fiscal years 2009-2013).55

Fiscal Year 2013: PRESIDENTâ&#x20AC;&#x2122;S BUDGET

Breakdown: By the Numbers Spending 2013: $3.803 trillion ($3.796 trillion in 2012) 5 Year: $20.607 trillion in the next five years Revenue 2013: $2.902 trillion ($2.469 trillion in 2012) 5 Year: $17.167 trillion Deficit 2013: $901 billion ($1.327 trillion in 2012) 5 Year: $3.440 trillion Increase in Federal Debt 2013: $1.197 trillion ($1.587 trillion in 2012) 5 Year: $4.975 trillion56 Federal Debt Numbers Today: $15.354 trillion57 2013: $17,547,93658 5 Years from Now: $21,325,493 Increase of Debt Per Household: $43,546.7659 Where does It all go? Mandatory (required by law) Social Security: $820 billion Medicare: $523 billion Medicaid: $282 billion Total: $2.293 trillion

17 Discretionary (funded by Congressional appropriations) Defense: $693 billion International Affairs: $58 billion Natural Resources: $38 billion Agriculture: $6 billion Science, Space, and Technology: $31 billion Energy: $10 billion Transportation: $38 billion Education: $93 billion

Total: $1.261 trillion Be sure to check out our fact sheet, The Budget Process or Why We Have a Budget for more information. Above, we outlined the key numbers behind the President’s Budget, released on February 13. Now, we would like to go into a bit more detail, explaining some of the priorities and policies behind the numbers. Presidential Priorities Taxes The President’s proposals for increasing taxes contained very few surprises. In his budget, he proposes: Ending all of the tax cuts he extended in 2010 for those making more than $250,000 a year. The current rates expire at the end of this year. Increasing death taxes for certain estates. Elimination of “special tax breaks for oil and gas companies; [and] preferred treatment for the purchase of corporate jets…” Taxing carried interest as regular income. Carried interest is a complex tax concept, which means if you manage an investment fund, the money you make from managing the fund is taxed as a capital gain instead of being taxed as ordinary income.

For example, the majority of billionaire Warren Buffett’s earnings are from long-term capital gains (assets he’s held for longer than a year), so he is taxed at the 15 percent capital gain tax rate, instead of the highest ordinary income tax rate of 35 percent. Corporate tax reform “that will close loopholes, lower the overall rate, encourage investment here at home, simplify taxes for America’s small businesses….”62 Deficit The President defended his failure to cut the deficit in half as promised, stating that policies passed before he became president added to the deficit63 and international events64 stunted the economy. Additionally: President Obama blamed “partisan divides” and the “unwillingness by Republicans in Congress to ask the wealthiest among us to pay their fair share through any revenue increases prevent a comprehensive deficit reduction agreement...”65 As we outlined in our By the Numbers fact sheet, Obama’s budget projects $4.97 trillion in added deficits over the next five years. Spending The President’s budget proposes: “... To consolidate six [federal] agencies into one Department…”66 Increasing the employee contribution for federal civilian worker retirement costs by 1.2 percent67. Increasing federal civilian pay by 0.5 percent in 201368. Eliminating direct payments to farmers and reducing crop insurance subsidies69. Allowing the Postal Service to access $10.9 billion from retirees’ pensions70. Reducing mail delivery to five days71. Additionally, his budget claims deficit reduction from the Iraq and Afghanistan

19 drawdown and from a $487 billion cut from last year’s defense spending projections72. Social Security, Medicare, and Medicaid The “big three” make up most of mandatory spending, or spending required by law that is funded on autopilot. The president proposes: Few reforms to Social Security73. Increasing certain premiums for Medicare Parts B and D. Increasing the deductible for Medicare Part B.

Are the President’s proposals enough? Maya MacGuineas, President of the bipartisan Committee for a Responsible Budget, doesn’t think so: “Their plan isn’t actually big enough yet to fix the problem. It has a lot of good components. But they haven’t done enough to make sure that plan becomes the beginning of a national discussion so that we actually get the job done.”75

Fiscal Year 2013:

HOUSE REPUBLICANS’ BUDGET It’s that time of year again. Just over a month after President Obama submitted his Fiscal Year (FY) 2013 budget to Congress, House Budget Committee Chairman Paul Ryan (D-Wis.) has released the House Republicans’ budget. What’s in the 99-page document anyway? What would Ryan’s proposed changes mean? Discretionary Spending Showdown Ryan’s Budget proposes $1.028 trillion in spending for FY13 while the Senate digs in at $1.047 trillion76 One of the most important numbers laid out in the budget is the topline number for discretionary spending. While a budget might make many policy proposals, such as tax and Medicare reforms, these reforms are just a blueprint. As we’ve discussed previously, since the budget is in the form of a concurrent resolution and not a bill, a future bill is required to be signed into law to make these types of policy changes. However, one number the budget does set, if the process is completed by both the House and Senate, is the topline number for discretionary spending. Generally, discretionary spending is spending that occurs through the yearly appropriations process77. Department of Defense and Department of Education spending fall under this category. Most spending on Social Security and Medicare, for example, are not in this category. But here’s the catch: the Budget Control Act, which raised the debt ceiling last August, already set the topline discretionary spending number for Fiscal Year 2013 in the Senate at $1.047 trillion.78 This is why Senate Majority Leader Harry Reid said on February 3: “We do not need to bring a budget to the floor this year”79. In other words, since the number is already set for the Senate appropriators to spend, Senator Reid is very unlikely to move a budget through the Senate.

21 In a March 19 letter to Speaker Boehner and Majority Leader Cantor, the Chairman of Senate Budget Committee, Kent Conrad and the Chairman of the Senate Appropriations Committee, Daniel Inouye, said, “Should the House back out of last summer’s agreement and attempt to lower the FY 2013 discretionary spending level [of $1.047 trillion]…[it] would delay consideration of the appropriations bills.”80 What’s in the Budget? We know discretionary spending will be hotly debated between the House and the Senate, but what else is in the House budget? Taxes The Ryan budget: Proposes restricting tax loopholes, deductions, and credits81. Proposes dropping the individual income tax rates to 10 and 25 percent82. Currently, the highest individual income tax rate is 35 percent.83 Deficit As outlined in our By the Numbers document, Ryan’s budget would run a deficit of $797 billion in FY13. It is slightly lower than what would accumulate under President Obama’s proposed budget ($901 billion). Spending84 The budget: Proposes increasing national defense spending by $8 billion (over what was set last August in the Budget Control Act).85 Proposes to privatize Fannie Mae and Freddie Mac; Ryan’s budget notes that the government has spent over $185 billion in government bailouts. Proposes to do more to stop improper government payments, such as fraudulent Social Security payments. Proposes to sell federal assets, such as unneeded federal property. Proposes to restructure farm programs by reducing “the fixed payments

that go to farmers irrespective of price levels.” Social Security Reform In general, Social Security creates a basic level of monthly income once an individual reaches normal retirement age. It also provides benefits to certain disabled workers who are unable to work due to a disability.86 While the House Republican budget document lays out the fiscal challenges facing Social Security, it doesn’t propose specific solutions. Instead, it proposes that “the President and both chambers of Congress to ensure the solvency of this critical program”87. Medicare Reform Medicare is a federal health insurance program for people who are 65 over, people with certain kidney diseases at any age, and for people who have certain disabilities and cannot work88. According to Congressional Quarterly, Ryan’s current plan to overall Medicare is “less extreme” than his proposal last year89. Ryan’s plan is “nearly identical” to the plan Ryan put forth with Ron Wyden (D-Ore.) last year90. For workers currently under the age of 55: In 2023, these Medicare beneficiaries would get to choose between traditional Medicare or would get to select a choice of private plans with premium support. According to Kaiser Health News, “The GOP document projects an estimated $205 billion in Medicare savings over President Barack Obama’s proposed budget over ten years”91. Medicaid Reform Medicaid is a health insurance program for low-income people and is administered by states. The states and the federal government fund the program.92 The budget proposes turning “Medicaid over to the states in the form of a federal block grant.”

23 According to the GOP document, it would constrain “Medicaid’s growing cost trajectory by $810 billion over ten years.”93 Sequester and Defense Spending Last August, the Budget Control Act established a Joint Selection Committee on Deficit Reduction, also known as the “Super Committee,” to find further cuts in federal spending. But Washington failed America because the Super Committee failed to act, which triggered a process called sequestration. What is sequestration? By definition, sequestration makes spending reductions to get budget levels “in line with statutory spending goals”94. Between 2013 and 2021, defense spending would be reduced by $492 billion; nondefense activities would be reduced by $492 billion as well.95 According to the Congressional Budget Office, in calculating these nondefense reductions, “…a significant portion of mandatory spending…” is exempt from sequestration. Such mandatory spending includes Social Security and Medicaid, among others.96 Ryan’s budget proposes to avoid the sequestration process for defense spending. According to The Hill, “The plan from House Budget Committee Chairman Paul Ryan asks six congressional committees — but not Armed Services — to find $261 billion in savings to help roll back the automatic cuts through sequestration that were triggered by the failure of the Super Committee.”97

Fiscal Year 2013:

HOUSE DEMOCRATS’ BUDGET In response to the House Republican’s budget, which focused on mandatory spending reform, Budget Committee Ranking Member Van Hollen submitted the Budget Committee’s Democratic budget proposal. Though much shorter than the Republican majority’s version, the document outlines key policy priorities for Democrats going into fiscal year 2013 funding negotiations. What are those priorities, and what will they mean for our fiscal future? Taxes Instead of Mandatory Spending Reform Van Hollen’s budget proposes $3.704 trillion98 in spending for FY13 funded by deficit spending and tax increases. Modeled after the President’s Budget, Van Hollen’s budget focuses largely on job creation to spur the economy, assuming that a better economy will reduce the deficit in the short run99. The resolution calls for the funding of several proposals featured in the American Jobs Act100, including $50 billion for surface transportation jobs and $10 billion for an infrastructure bank, and increased education and infrastructure investments101. Assuming these proposals spur the economy, Van Hollen states his budget will bring government spending within 2.7 percent of the economy by 2022102. Despite optimism over the economy, the budget does not balance the deficit in the next ten years103, nor does it indicate deficit elimination at any time104. It does, however, send the federal debt up to $20 trillion in five short years105. The budget addresses defense spending, which makes up one of the federal government’s top three expenditures106. However, most of the cuts are from the Afghanistan and Iraq troop withdrawals107.

25 Additionally, the budget does not address programs like Social Security and Medicare108, which, with mandatory spending, make up 56 percent109 of federal spending. In order to reduce the deficit, the budget relies on heavy tax increases to reduce the deficit over time, including: The enactment of the Buffett Rule110, a tax that is expected to bring in only $31 billion over the next decade111. Ending the 2001/2003 tax cuts for those making more than $1 million112. The report, however, does not specify how it will reform taxes to raise the additional revenue.113

by the n FY

President’s

house rep

FY 2013

FY 20

$3.8

$2.9

$901

$3.5

trillion

billion

trillion

trill

SPENDING

REVENUE

DEFICIT

SPENDING

REVE

NEXT 5

NEXT 5 YEARS

$20.6

$17.2

$3.4

$18.1

$16

trillion

trill

SPENDING

REVENUE

DEFICIT

SPENDING

REVE

DATE OF PUBLICATION: MARCH 27, 2012 // FOR MORE INFORMATION & A LIST OF SOURCES SEE OUR F

numbers 2013

publicans’

house DEMOCRATs’

FY 2013

013

2.7

$797

$3.7

$2.7

$965

lion

billion

trillion

billion

ENUE

DEFICIT

SPENDING

REVENUE

DEFICIT

5 YEARS

NEXT 5 YEARS

6.0

$2.0

$19.7

$16.6

$3.1

lion

trillion

ENUE

DEFICIT

SPENDING

REVENUE

DEFICIT

FACT SHEET AT: BANKRUPTINGAMERICA.ORG/FACT-SHEET/FISCAL-YEAR-2013-A-BUDGET-IN-THE-WORKS/

1 Congressional Budget Act. Pp. 937. http://www.gpo.gov/congress/house/hd106-320/pdf/hrm89.pdf 2 Congressional Research Service. Introduction to the Federal Budget Process. December 2, 2010. Pp. 19. http://assets.opencrs.com/rpts/98-721_20101202.pdf 3 Congressional Research Service. Introduction to the Federal Budget Process. December 2, 2010. Pp. 19. http://assets.opencrs.com/rpts/98-721_20101202.pdf 4 Congressional Research Service: Mandatory Spending Since 1962. June 15, 2011. Pp. Summary. http://www.fas.org/sgp/crs/misc/RL33074.pdf 5 Congressional Research Service. Introduction to the Federal Budget Process. December 2, 2010. Pp. Summary. http://assets.opencrs.com/rpts/98-721_20101202.pdf 6 Congressional Research Service. Introduction to the Federal Budget Process. December 2, 2010. Pp. 1415. http://assets.opencrs.com/rpts/98-721_20101202.pdf 7 Congressional Research Service. Introduction to the Federal Budget Process. December 2, 2010. Pp. 24. http://assets.opencrs.com/rpts/98-721_20101202.pdf 8 Congressional Research Service. Introduction to the Federal Budget Process. December 2, 2010. Pp. 7. http://assets.opencrs.com/rpts/98-721_20101202.pdf 9 Congressional Research Service. Introduction to the Federal Budget Process. December 2, 2010. Pp. 7. http://assets.opencrs.com/rpts/98-721_20101202.pdf 10 Library of Congress. 111th Congress. S.Con. Res. 13. Accessed February 9, 2012. http://thomas.loc. gov/cgi-bin/bdquery/z?d111:SC00013:@@@X 11 Washington Post. House approve Ryan budget plan. April 15, 2011. thttp://www.washingtonpost. com/blogs/2chambers/post/house-to-vote-friday-on-paul-ryan-budget-alternative-budgets/2011/04/15/ AFN7RkiD_blog.html 12 Politico. Senate Votes Down Paul Ryan Budget Plan. May 25, 2011. http://www.politico.com/news/ stories/0511/55721.html 13 Politico. Senate Votes Down Paul Ryan Budget Plan. May 25, 2011. http://www.politico.com/news/ stories/0511/55721.html 14 Congressional Research Service. The Congressional Budget Process. January 28, 2004. P. 4. http://fpc. state.gov/documents/organization/34649.pdf 15 Subscription Only. Congressional Quarterly. Reid: No Vote on Fiscal 2013 Budget Resolution. February 3, 2012. http://www.cq.com/doc/news-4022481 16 Subscription Only. Congressional Quarterly. Reid: No Vote on Fiscal 2013 Budget Resolution. February 3, 2012. http://www.cq.com/doc/news-4022481 17 Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years 2012-2022. January, 2012. http://www.cbo.gov/doc.cfm?index=12699 18 Congressional Budget Office. FAQâ&#x20AC;&#x2122;s. http://www.cbo.gov/aboutcbo/faqs.cfm 19 Congressional Research Service. The Congressional Budget Process. P. 1. January 28, 2004. http://fpc. state.gov/documents/organization/34649.pdf 20 Reuters. Obama to deliver budget on February 13. January 23, 2012. http://www.reuters.com/ article/2012/01/23/us-usa-obama-budget-idUSTRE80M1YH20120123

21 Library of Congress. Thomas. 111th Congress, S.Con. Res 13. Accessed February 9, 2012. http:// thomas.loc.gov/cgi-bin/bdquery/z?d111:SC00013:@@@X 22 Congressional Research Service. The Congressional Budget Process. P. 6. January 28, 2004. http://fpc. state.gov/documents/organization/34649.pdf 23 Congressional Research Service. The Congressional Budget Process. P. 2. January 28, 2004. http://fpc. state.gov/documents/organization/34649.pdf 24 Congressional Research Service. The Congressional Budget Process. P. 6. January 28, 2004. http://fpc. state.gov/documents/organization/34649.pdf 25 Subscription Service. Congressional Quarterly. Reid: No Vote on Fiscal 2013 Budget Resolution. February 3, 2012. http://www.cq.com/doc/news-4022481 26 Congressional Research Service. The Congressional Budget Process. P. 6. January 28, 2004. http://fpc. state.gov/documents/organization/34649.pdf 27 http://fpc.state.gov/documents/organization/34649.pdf. P. 4. 28 Subscription Only. Congressional Quarterly. Reid: No Vote on Fiscal 2013 Budget Resolution. February 3, 2012. http://www.cq.com/doc/news-4022481 29 http://www.senate.gov/CRSReports/crs-publish.cfm?pid=’0E%2C*PLS2%23%20%20%20%0A. P. 4. 30 Congressional Research Service. The Congressional Appropriations Process: An Introduction. PP. 4 – 5. http://assets.opencrs.com/rpts/97-684_20101202.pdf 31 Congressional Research Service. The Congressional Appropriations Process: An Introduction. PP. 4 – 5. http://assets.opencrs.com/rpts/97-684_20101202.pdf 32 Numbers may not add due to rounding. 33 OMB Historical Table 1.1. http://www.whitehouse.gov/omb/budget/Historicals 34 3,603,100,000,000/313,034,410. Sources: OMB Historical Table 1.1 http://www.whitehouse. gov/omb/budget/Historicals and U.S. Population Clock. Accessed February 17, 2012. http://www.census. gov/main/www/popclock.html 35 3,603,100,000,000/$3,982. Source: Bloomberg. Super Bowl Ticket Drops to Average $3,982 as Giants-Patriots Matchup Nears. January 30, 2012. http://www.bloomberg.com/news/2012-01-30/superbowl-ticket-drops-to-average-3-982-as-giants-patriots-matchup-nears.html 36 $3,603,100,000,000/$9,485,961.01. Sources: Daily Mail. Hasn’t the Girl Done Well? http://www. dailymail.co.uk/tvshowbiz/article-2101830/Adele-new-house-As-scoops-6-Grammys-singer-moves-world.html and XE. Pound Conversion. http://www.xe.com/ucc/convert/?Amount=6000000+&From=GBP&To=USD accessed on February 17, 2012. 37 3,603,100,000,000/98,000,000,000. Business Week. http://www.bloomberg.com/news/201202-16/facebook-s-implied-value-slips-to-98-billion-in-private-market-trading.html 38 OMB Historical Table 8.1. http://www.whitehouse.gov/omb/budget/Historicals 39 Numbers calculated by dividing expenditure by total outlays. OMB Historical Table 8.5. http://www. whitehouse.gov/omb/budget/Historicals 40 Includes retirement, disability insurance, unemployment, housing assistance, etc.

41 Numbers calculated by dividing expenditure by total outlays. OMB Historical Table 8.7. http://www. whitehouse.gov/omb/budget/Historicals 42 White House President’s FY13 Budget. Historical Table 1.1. Date Accessed: March 16, 2012. http:// www.whitehouse.gov/omb/budget/Historicals 43 House Budget Committee. Path to Prosperity Budget Numbers. March 20, 2012. http://budget.house. gov/UploadedFiles/summary_tables.pdf 44 House Democrat Budget Committee. Summary Table. http://democrats.budget.house.gov/sites/ democrats.budget.house.gov/files/documents/dem_alt_tables.pdf 45 Washington Post. Congress is addicted to stop-gap budgets. September 30, 2011. http://www. washingtonpost.com/blogs/ezra-klein/post/congress-is-addicted-to-stop-gap-budgets/2011/09/30/ gIQAXa1dAL_blog.html 46 Congressional Research Service. The Congressional Appropriations Process: An Introduction. December 2, 2010. P. 13. http://assets.opencrs.com/rpts/97-684_20101202.pdf 47 Numbers may change upon Treasury revisions. Treasury Direct Debt to the Penny. Accessed March 20, 2012. http://www.treasurydirect.gov/NP/BPDLogin?application=np 48 Calculated by dividing U.S. debt to the penny by total U.S. Households. U.S. Census Bureau USA Quick Facts. http://quickfacts.census.gov/qfd/states/00000.html 49 Calculated by dividing U.S. Debt to the penny by total U.S. Population. U.S. Census Population Clock. http://www.census.gov/main/www/popclock.html 50 U.S. Treasury Monthly Treasury Statement. February 2012. http://www.fms.treas.gov/mts/mts.xls 51 Bureau of Labor Statistics. Unemployment Rate. February 2012. http://www.bls.gov/ 52 Congressional Research Service. The Congressional Appropriations Process: An Introduction. December 2, 2010. P. 13. http://assets.opencrs.com/rpts/97-684_20101202.pdf 53 Congressional Research Service. The Congressional Appropriations Process: An Introduction. December 2, 2010. Pp. 13-14. http://assets.opencrs.com/rpts/97-684_20101202.pdf 54 Congressional Research Service. Duration of Continuing Resolutions in Recent Years. April 28, 2011. Summary. http://www.fas.org/sgp/crs/misc/RL32614.pdf 55 White House President’s FY13 Budget. Historical Table 7.1. Date Accessed: March 16, 2012. http:// www.whitehouse.gov/omb/budget/Historicals 56 Future debt totals taken from: White House President’s FY13 Budget. Historical Table 7.1. http://www. whitehouse.gov/omb/budget/Historicals 57 Treasury Direct: Debt to the Penny. February 13, 2012. http://www.savingsbonds.gov/NP/ BPDLogin?application=np 58 Calculated by subtracting totals from former fiscal years. White House President’s FY13 Budget. Historical Tables 1.1 and 7.1. http://www.whitehouse.gov/omb/budget/Historicals 59 Calculated by dividing total increased debt fiscal years 2013-2017 ($4,974,608 million) by total U.S. households (114.235996 million) and subtracting that total from today’s debt per household. U.S. Census Bureau. Accessed February 13, 2012. http://quickfacts.census.gov/qfd/states/00000.html 60 White House President’s FY13 Budget. Historical Table 8.5. http://www.whitehouse.gov/omb/budget/Historicals 61 White House President’s FY13 Budget. Historical Table 8.7. http://www.whitehouse.gov/omb/budget/Historicals 62 White House. President’s FY 2013 Budget. February 13, 2012. Pp. 4-6. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 63 White House. President’s FY 2013 Budget. February 13, 2012. P. 23. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf

64 White House. President’s FY 2013 Budget. February 13, 2012. P. 9. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 65 White House. President’s FY 2013 Budget. February 13, 2012. P. 10. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 66 White House. President’s FY 2013 Budget. February 13, 2012. P. 6. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 67 White House. President’s FY 2013 Budget. February 13, 2012. P. 27. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 68 White House: President’s FY 2013 Budget. February 13, 2012. P. 27. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 69 White House. President’s FY 2013 Budget. February 13, 2012. P. 28. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 70 White House. President’s FY 2013 Budget. February 13, 2012. P. 31. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 71 White House. President’s FY 2013 Budget. February 13, 2012. P. 31. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 72 White House. President’s FY 2013 Budget. February 13, 2012. P. 25-26. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 73 For more information on the “big three” and why they matter to the budget, see our Budget Briefing Book Volume Two. 74 White House. President’s FY 2013 Budget. February 13, 2012. P. 34-35. http://www.whitehouse.gov/ sites/default/files/omb/budget/fy2013/assets/budget.pdf 75 Washington Post. National Debt Will be Obama Budget: National Debt Will Be $1 Trillion Higher In A Decade Than Forecast. February 13, 2012. http://www.washingtonpost.com/blogs/ezra-klein/post/ congress-is-cutting-the-wrong-spending/2011/07/11/gIQAyXIJfI_blog.html 76 Subscription Only. Congressional Quarterly. House GOP Budget Would Cut Spending, Protect Defense From Sequester. http://cq.com/doc/news-4048756 77 Congressional Research Service. Introduction to the Federal Budget Process. December 2, 2010. P. 19. http://assets.opencrs.com/rpts/98-721_20101202.pdf 78 Congressional Research Service. The Budget Control Act of 2011. August 19, 2011. P. 12. http:// www.fas.org/sgp/crs/misc/R41965.pdf 79 The Hill. Reid: This Year’s Budget is Done. February 3, 2012. http://thehill.com/blogs/on-the-money/ budget/208593-reid-this-years-budget-is-done 80 Letter to Speaker Boehner and Majority Leader Cantor. March 19, 2012. http://budget.senate.gov/ democratic/index.cfm/files/serve?File_id=95846b25-c536-4918-99f5-2264c35d6df7 81 House Republican Budget for FY 13. P. 60 http://budget.house.gov/UploadedFiles/ Pathtoprosperity2013.pdf 82 House Republican Budget for FY 13. P. 15 http://budget.house.gov/UploadedFiles/ Pathtoprosperity2013.pdf 83 House Republican Budget to Propose Lower Income Tax Rates. Business Week. March 19, 2012. http://www.businessweek.com/news/2012-03-19/house-republican-budget-to-propose-lower-income-tax-rates 84 Unless noted, information comes from House Republican Budget for FY 13. Pp. 26, 30, 33, and 34. http://budget.house.gov/UploadedFiles/Pathtoprosperity2013.pdf 85 The Hill. GOP Budget Boosts Defense Spending. March 20, 2012. http://thehill.com/blogs/defconhill/budget-approriations/216925-gop-budget-boosts-defense-spending 86 Government Accountability Office. Social Security Reform. http://www.gao.gov/new.items/

d05193sp.pdf 87 House Republican Budget for FY 13. P. 14 http://budget.house.gov/UploadedFiles/ Pathtoprosperity2013.pdf 88 Medicare.gov. What is Medicare and Medicaid? http://www.medicare.gov/Publications/Pubs/ pdf/11306.pdf 89 Subscription Only. Congressional Quarterly. Ryan’s Latest Medicare Plan Another Likely Non-Starter for Democrats. March 20, 2012. http://www.cq.com/doc/news-4048757 90 Kaiser Health News. New Ryan Budget Would Transform Medicare and Medicaid. March 20, 2012. http://www.kaiserhealthnews.org/Stories/2012/March/20/ryan-budget-medicare-medicaid-republicans.aspx 91 Kaiser Health News. New Ryan Budget Would Transform Medicare and Medicaid. March 20, 2012. http://www.kaiserhealthnews.org/Stories/2012/March/20/ryan-budget-medicare-medicaid-republicans.aspx 92 Medicare.gov. What is Medicare and Medicaid? http://www.medicare.gov/Publications/Pubs/ pdf/11306.pdf 93 Kaiser Health News. New Ryan Budget Would Transform Medicare and Medicaid. March 20, 2012. http://www.kaiserhealthnews.org/Stories/2012/March/20/ryan-budget-medicare-medicaid-republicans.aspx 94 Congressional Research Service. Budget Sequesters: A Brief Review. March 8, 2004. P. 2. 95 CBO: Testimony of Douglas W. Elmendorf on Discretionary Spending. October 26, 2011. P. 15. http://www.cbo. gov/ftpdocs/124xx/doc12490/10-26-DiscretionarySpending_Testimony.pdf. 96 CBO: Testimony of Douglas W. Elmendorf on Discretionary Spending. October 26, 2011. Pp. 4, 15. http://www. cbo.gov/ftpdocs/124xx/doc12490/10-26-DiscretionarySpending_Testimony.pdf. 97 The Hill. GOP Budget Boosts Defense Spending. March 20, 2012. http://thehill.com/blogs/defcon-hill/budgetapproriations/216925-gop-budget-boosts-defense-spending 98 Democratic Budget Committee. FY13 Budget. Aggregates Chart. http://democrats.budget.house.gov/ sites/democrats.budget.house.gov/files/documents/dem_alt_tables.pdf AND Democratic Budget Committee. FY13 Budget. Pp. 3-4. http://democrats.budget.house.gov/sites/democrats.budget.house.gov/files/ documents/dem_alt_summary_3.pdf 99 Democratic Budget Committee. FY13 Budget. Pg. 1. http://democrats.budget.house.gov/sites/ democrats.budget.house.gov/files/documents/dem_alt_summary_3.pdf 100 Washington Post. Democrats release budget to compete with Ryan plan. March 26, 2012. http:// www.washingtonpost.com/blogs/2chambers/post/democrats-release-budget-to-compete-with-ryanplan/2012/03/26/gIQACQQ3cS_blog.html 101 Democratic Budget Committee. FY13 Budget. Pp. 1-2. http://democrats.budget.house.gov/sites/ democrats.budget.house.gov/files/documents/dem_alt_summary_3.pdf 102 Democratic Budget Committee. FY13 Budget. Aggregates Chart. http://democrats.budget.house.gov/ sites/democrats.budget.house.gov/files/documents/dem_alt_tables.pdf 103 Democratic Budget Committee. FY13 Budget. Aggregates Chart. http://democrats.budget.house.gov/ sites/democrats.budget.house.gov/files/documents/dem_alt_tables.pdf 104 Washington Post. Democrats release budget to compete with Ryan plan. March 26, 2012. http:// www.washingtonpost.com/blogs/2chambers/post/democrats-release-budget-to-compete-with-ryanplan/2012/03/26/gIQACQQ3cS_blog.html 105 Democratic Budget Committee. FY13 Budget. Budget by Function Chart. http://democrats.budget. house.gov/sites/democrats.budget.house.gov/files/documents/dem_alt_tables.pdf

106 OMB Historical Tables 8.7 and 8.5. http://www.whitehouse.gov/omb/budget/Historicals 107 The Hill. House Dems introduce $3.6T budget plan. March 27, 2012. http://thehill.com/blogs/on-themoney/budget/218333-house-dems-introduce-36t-budget-plan 108 Washington Post. Democrats release budget to compete with Ryan plan. March 26, 2012. http:// www.washingtonpost.com/blogs/2chambers/post/democrats-release-budget-to-compete-with-ryanplan/2012/03/26/gIQACQQ3cS_blog.html 109 Calculated by dividing expenditure by total outlays. OMB Historical Table 8.5. http://www.whitehouse. gov/omb/budget/Historicals 110 Democratic Budget Committee. FY13 Budget. Pg. 4. http://democrats.budget.house.gov/sites/ democrats.budget.house.gov/files/documents/dem_alt_summary_3.pdf 111 Reuters. Buffett millionariesâ&#x20AC;&#x2122; tax would raise $31 billion. March 20, 2012. http://www.reuters.com/ article/2012/03/20/us-usa-tax-buffett-idUSBRE82J17E20120320 112 The Hill. House Dems introduce $3.6T budget plan. March 27, 2012. http://thehill.com/blogs/on-themoney/budget/218333-house-dems-introduce-36t-budget-plan 113 Washington Post. Democrats release budget to compete with Ryan plan. March 26, 2012. http:// www.washingtonpost.com/blogs/2chambers/post/democrats-release-budget-to-compete-with-ryanplan/2012/03/26/gIQACQQ3cS_blog.html

For more information on the facts that affect your pocketbook, visit us at: thepublicnotice.org [published March, 29 2012]