Effects of Budget Resolution Remain Uncertain The bill that sets federal spending levels through Sept. 30 cuts $38 billion from the federal budget, the largest cut in U.S. history. The bill—a hard-fought bargain reached close to midnight on April 8 between President Obama, Senate Majority Leader Harry Reid (D-Nev.), and House Speaker John Boehner (R-Ohio)—narrowly averted ... Policy Analysis
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Policy Analysis  |   June 01, 2011
Effects of Budget Resolution Remain Uncertain
Author Notes
  • George Lyons, Jr., JD, MBA, director of government relations and public policy, can be reached at glyons@asha.org.
    George Lyons, Jr., JD, MBA, director of government relations and public policy, can be reached at glyons@asha.org.×
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Regulatory, Legislative & Advocacy / Policy Analysis
Policy Analysis   |   June 01, 2011
Effects of Budget Resolution Remain Uncertain
The ASHA Leader, June 2011, Vol. 16, 4. doi:10.1044/leader.PA1.16062011.4
The ASHA Leader, June 2011, Vol. 16, 4. doi:10.1044/leader.PA1.16062011.4
The bill that sets federal spending levels through Sept. 30 cuts $38 billion from the federal budget, the largest cut in U.S. history.
The bill—a hard-fought bargain reached close to midnight on April 8 between President Obama, Senate Majority Leader Harry Reid (D-Nev.), and House Speaker John Boehner (R-Ohio)—narrowly averted a shutdown of the federal government, as the continuing resolution (CR) that authorized federal spending was set to expire at midnight.
To keep the government running, the parties agreed to another short-term CR to give lawmakers and congressional staff an opportunity to hammer out details and craft the agreement into a bill passed a week later. Although the agreement funds the government for the remainder of fiscal year (FY) 2011, which ends Sept. 30, 2011, and cuts $38 billion from current spending levels, it reduces the 2010 deficit by only $352 million.
The total U.S. budget is $3.5 trillion, with mandatory entitlement spending comprising $2.1 trillion (Medicare, Medicaid, Social Security, interest) and discretionary spending (optional spending where levels are set by annual congressional appropriations, such as for defense, health, and education) making up the $1.4 trillion remainder.
The agreement trims mandatory ($17 billion) and discretionary ($21 billion) spending, but Democrats and Republicans are still working out details of which programs will actually be cut. The two parties fought for months about the size of cuts from discretionary spending and riders that would strip funding for Planned Parenthood and for Environmental Protection Agency enforcement of greenhouse gas emissions curtailment under the Clean Air Act amendments. The House and Senate will vote on these at a later date.
Even without a budget deal, Medicare and Medicaid would have continued to operate because they are not funded through annual appropriations. However, the Medicare Call Center—which fields about 500,000 calls a week—would have operated on a limited basis that could have led to longer hold and wait times. In addition, Medicare Part A services that are reimbursed by a trust fund would not have been affected by a shutdown.
According to the U.S. Department of Health and Human Services, a long-term shutdown would have compromised the ability of the Centers for Medicare and Medicaid Services to pay contractors and beneficiaries because government workers’ salaries and Medicare contractor payments are subject to the appropriations process.
Challenges Ahead
Despite the agreement, Congress still faces budget hurdles. Democrats and Republicans must decide on specific cuts to trim $13 billion from programs at the Departments of Labor, Education, and Health and Human Services and another $1 billion from domestic agencies. There will be reductions in housing assistance programs, some health care programs, and $8 billion in cuts to the State Department and foreign aid.
Congress also must vote this summer to raise the federal government debt ceiling from its current $14.25 trillion level. The government's debt is projected to pass that mark by mid-May. Although Secretary of the Treasury Timothy Geithner believes he can stretch that timeline to July with emergency measures, Congress must act by July 8 or the government will begin defaulting on its debt, a process that could send interest rates soaring and create a financial crisis worldwide. Leaders in both parties want the debt ceiling raised; the administration wants it raised without amendments, but many Republicans want substantial spending cuts attached.
Third, Congress must agree on a budget for FY 2012 to avoid a government shutdown on September 30. This battle promises to be much tougher than the one just concluded. The House passed a budget by Rep. Paul Ryan (R-Wis.), House Budget Committee chair, that would trim health care costs, preserve the Bush tax cuts, lower corporate tax rates from 35% to 25%, preserve oil subsidies, and spare Defense Department budget cuts.
The proposal would dramatically slow the Medicare growth rate, raise Medicare eligibility age from 65 to 67, raise seniors’ share of Medicare Part B premiums from 25% to 35%, offer voucher plan or premium support to allow Medicare seniors to shop for coverage and services, and transform Medicaid into a block grant program giving states more discretion in administering the program. Overall, the plan cuts spending by $5.8 trillion and reduces the deficit by $4.4 trillion over 10 years.
Although President Obama's original proposed FY 2012 budget did not contain major spending cuts, he recently announced a broad-based plan to counter the Ryan proposal and reduce debt by $4 trillion over 12 years. The administration will urge bipartisan support for a multi-year debt reduction plan that includes tax increases for the wealthy, cuts in military spending, savings in Medicare and Medicaid spending, and unspecified changes to Social Security, and that aims to preserve funding for education and health care programs.
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June 2011
Volume 16, Issue 6