Can Congress Fix the Budget?
A brief explanation of the
Joint Select Committee on Deficit Reduction
Robert J. Tennessen
Five hundred thirty-five members of Congress delegated unprecedented budgetary power to twelve members by adopting The Budget Control Act of 20111. The Joint Select Committee on Deficit Reduction2 is mandated to reduce the federal budget deficit by $1.5 trillion over ten years, and has unlimited authority to include any spending and revenue changes the members approve. The authority and special rules of the Select Committee expire on January 31, 20123.
The Select Committee operates under special procedures. If the Select Committee approves a report by November 23 as required by the Act and transmits it to Congress by the December 2 deadline, the House and Senate Majority Leaders are required to introduce it as a bill without change.4 By December 9, each House and Senate committee with subject matter jurisdiction must report the legislation out of the committee without amendment. Once it is reported, Senate debate is limited to 30 hours and passage requires only a simple majority. Debate in the House is limited to two hours and all points of order are waived. Each house must vote by December 23.
Unless your concerns are addressed in the Select Committee Report they cannot be addressed by Congress through this special process. Access to the Select Committee is very limited by time and other circumstances. However, congressional committees have until October 14, to submit deficit reduction recommendations to the Select Committee.
Should the Select Committee fail to issue a report by November 23 any resulting legislation will not be eligible for the special procedural rules. Sequestration will then take effect in January 2013, unless Congress enacts other legislation that reduces the deficit by $1.2 trillion, or Congress repeals or modifies the Budget Control Act. If the Select Committee report does not reduce the deficit by $1.2 trillion, sequestration will apply with respect to the shortfall unless Congress repeals or amends the Act.
Three things may happen. If the Select Committee and Congress meet all the deadlines and targets and the President signs the bill, sequestration will not occur. If the Select Committee and Congress fail to meet the deadlines and no bill is passed, the President and the Office of Management and Budget (OMB) will sequester $1.2 trillion. Lastly, if a bill is passed and signed by the President that does not result in a reduction of at least $1.2 trillion the difference between the amount reduced by the bill and $1.2 trillion will be sequestered by the President and OMB.
In the event sequestration is necessary, OMB will make the calculations using its own assumptions. Any assumptions and calculations by the Congressional Budget Office will be irrelevant. Sequestration will be automatic and indiscriminate. Across-the-board budget cuts will be made to force reductions in spending to statutorily established levels.
The pending threat of sequestration is designed to force program advocates to participate in the process and agree to changes in their programs. They cannot stand by and demand that other programs be reduced or eliminated and theirs untouched.
Any automatic cuts resulting from sequestration will be divided somewhat equally between eligible defense programs and eligible non-defense programs. However, some domestic entitlement programs are exempt from cuts — Social Security, federal retirement programs, and Medicaid. Medicare may be cut up to 2%. OMB will cut eligible defense programs by 10%, eligible non-defense or "discretionary" programs by 7.8%, Medicare by 2%. These cuts will fall as follows: appropriated programs will account for 71% of the cuts, mandatory spending (entitlement) programs account for 13%, and reduced interest payments on the debt will account for 16% of the savings.5
If Congress adopts the Select Committee's deficit reduction report by the December 23 deadline, OMB will score the spending reductions the bill purports to make. If the bill does not cut at least $1.2 trillion from the projected deficit, OMB will calculate the amount that must be sequestered from both defense and non-defense spending to eliminate the gap using the method as previously described.
The Select Committee began work on September 8 and had its first hearing on September 13 hearing testimony on the drivers of the nations’ debt and its threats from Douglas Elmendorf, Director of the Congressional Budget Office.6 Subsequently on September 22, Thomas Barthold, Chief of Staff of the Joint Committee on Taxation, addressed revenue options and reforming the tax code.7 Notices of future hearings are posted on the Select Committee’s web site.
Whether this Select Committee and the process established by the Budget Control Act will achieve its mandate is an open question. Can a 12-member committee, of which six members have signed a pledge to not raise taxes, be able to agree on a report that includes revenue increases? Will program advocates be able to hammer out reductions in their programs to achieve sufficient savings? If the Select Committee agrees upon a report, Congress is likely to approve the bill with bipartisan support and the 62 House Republican hold-outs become irrelevant. However, there are many points along the road where the Select Committee and the process might slide into the ditch.
1 http://www.gpo.gov/fdsys/pkg/BILLS-112s365eah/pdf/BILLS-112s365eah.pdf
2Rep. Jeb Hensarling (R-Texas) Co-Chair
Sen. Patty Murray (D-Washington) Co-Chair
Sen. Max Baucus (D- Montana)
Rep. Xavier Becerra (D-California)
Rep. Dave Camp (R-Michigan)
Rep. James Clyburn (D-South Carolina)
Sen. John Kerry (D-Massachusetts)
Sen. Jon Kyl (R-Arizona)
Sen. Rob Portman (R-Ohio)
Sen. Pat Toomey (R-Pennsylvania)
Rep. Fred Upton (R-Michigan)
Rep. Chris Van Hollen (D-Maryland)
3 Committee web site and special rules; http://deficitreduction.senate.gov/public/
5 Venable LLP presentation September 20, 2011
