Last week, both the House and Senate adopted budget resolutions for fiscal 2014, marking the first time that both chambers passed a budget blueprint in four years (the last time the Senate adopted a budget occurred in 2009). Both budget resolutions were approved narrowly along party lines. The House budget resolution (H Con Res 25) was passed by a vote of 221 to 207, with no Democratic votes in support of the measure, while the Senate budget resolution (S Con Res 8) was passed by a vote of 50 to 49, with no Republican votes of support. The two plans differ significantly in terms of spending priorities, deficit reduction and overall fiscal policies. Due to the substantial differences in the plans, it is unlikely that the two will be reconciled in conference.

The House Republican budget resolution calls for balancing the budget in 10 years by cutting spending by $5.7 trillion compared to the Congressional Budget Office’s baseline. It would replace the defense sequester starting in fiscal 2014 with additional cuts to domestic discretionary spending. It calls for repealing the Affordable Care Act health care exchange subsidies and Medicaid expansion and providing those under 55 years of age a choice between traditional Medicare and a premium-support-based program. It would also convert Medicaid and the Children’s Health Insurance Program (CHIP), as well as the Supplemental Nutrition Assistance Program (SNAP), into block grants to states. Under the House budget resolution, Medicaid and CHIP spending would total $347 billion in federal fiscal 2023, compared to $578 billion under CBO’s baseline. Roughly 40 percent of that reduction is the result of repealing the expansion under ACA, while the rest of the reduction is due to changing the program’s structure to block grants. The proposal also calls on the President and Congress to develop plans to make the Social Security trust fund solvent, without specifying details, and would cut $31 billion from agricultural programs. Regarding tax reform, the resolution calls for a revenue-neutral overhaul of the tax code that would lower marginal income tax rates and scale back tax expenditures.

The Senate Democratic budget would reduce the federal budget deficit by $1.8 trillion over the next 10 years compared to CBO’s baseline by a combination of revenue increases and spending cuts. It would also replace the sequester starting in fiscal 2014 with a combination of new revenue and spending cuts. The plan would not make any major structural reforms to entitlement programs, but would call for $275 billion in savings from mandatory health programs. Unlike the House plan, the Senate budget resolution would not significantly alter Medicaid and CHIP spending over the next decade compared to CBO’s baseline. It would also cut $23 billion from agriculture programs. In addition, it calls for economic stimulus in the form of $90 billion for various infrastructure investments and $10 billion for worker training programs. On tax policy, it instructs the Senate Finance Committee to generate $975 billion in additional revenue over 10 years.

Link(s): H Con Res 25; S Con Res 8