The Federal Government is proceeding with finalizing the FY2011 budget and beginning to discuss the FY2012 budget. It is expected that the long term Continuing Resolution will be adopted by both Houses and signed by the President by the end of the day this Friday.
The 2012 Budget discussion has begun. Congressman Ryan introduced his Budget Resolution last week, and the President presented his vision in a speech yesterday the 13th. The Senate is expected to present a proposal in the next week or two.
The updates below will give you an overview of the process to proceed with the 2011 bill and summary of the Republican 2012 Budget Resolution.
WSU government affairs staff will provide further information as additional details become available.
FY2011 Spending Agreement Passes the House
With a vote of 260-167, the FY2011 appropriations measure, HR 1473, passed the House this afternoon. The measure will fund the federal government through September 30th, the end of the fiscal year. The Senate is expected to pass the measure later today.
FY2012 Budget Resolution
This afternoon, the House is expected to begin consideration of H Con Res 34 <http://budget.house.gov/UploadedFiles/fy2012FullReportText.pdf> , the Budget Resolution for FY 2012, which House Budget Committee Chairman Paul D. Ryan (R-WI) introduced last week. The House plans to hold four hours of general debate today with final votes scheduled for Friday.
Overall, the resolution calls for total spending of $3.53 trillion in FY 2012, $179 billion less than requested by the Obama administration. The resolution calls for non-defense discretionary budget authority of $360 billion in FY 2012 which is $105 billion less than the President’s request. It cuts $6 trillion over 10 years of federal spending.
The resolution would also:
· Continue the current earmark ban
· Bring non-security discretionary spending to below 2008 levels
· Assume defense spending increases over the next 10 years
Items of interest to Higher Education include recommendations to student aid and cuts to research.
Proposed changes to Pell Grants include:
· Ending the year-round Pell.
· Setting stricter lifetime limits from the current 18 semesters (9 years) to a recommended limit of 12 semesters (6 years), or their equivalents for part-time students.
· Rolling back certain recent expansions to the need analysis to ensure aid is “targeted to the truly needy.” Potentially by altering the level at which a student qualifies for an automatic zero ‘Expected Family Contribution’ [EFC] and the income protection allowance to pre- College Cost Reduction and Access Act of 2007 levels.
· Eliminating administrative fees, $5 per grant, paid to participating institutions. “Schools already benefit significantly from the Pell program because the aid makes attendance at those schools more affordable.”
· Considering including a maximum income cap.
· Eliminating eligibility for less-than-half-time students. “Funding should be reserved for students with a larger commitment to their education.”
· Terminating eligibility for those who currently receive the minimum award. As the minimum Pell award of $278 “is unlikely to have much, if any, impact.”
· Adopting a sustainable maximum award level, noting that recent program growth can be attributed to the $619 increase in the maximum award that came from the stimulus bill.
For Scientific Research:
For Function 250, the function that funds general science, including the National Science Foundation (NSF), general science programs of the Energy Department, and the non-aviation programs at the NASA, the resolution calls for $27.3 billion in budget authority in FY 2012 “The resolution projects gradually increasing levels of discretionary funding for these programs, reaching $30.3 billion in FY 2021.”
“The resolution preserves basic research, providing stable funding for NSF to conduct its authorized activities. The budget also recognizes the vital strategic importance of the United States to remain the pre-eminent space-faring Nation. In the President’s request, the administration shifted priorities away from the 2010 NASA authorization, allocating about $2 billion to commercial cargo and crew and Earth Science climate change initiatives. The budget realigns funding in accordance with the NASA authorization and its specified spending limits to support robust space capability. [I think there is a missing set of quotes here somewhere.]
The report provides illustrations of the kinds of proposals that can help meet the budget’s fiscal guidelines. For function 250, the report states:
“The stimulus bill provided $1.6 billion, $800 million of which is currently unspent, for the Department of Energy’s Office of Science. Included were some areas, such as biological and environmental research, that could potentially crowd out private investment. The resolution levels support preserving the Office of Science’s original role as a venue for groundbreaking scientific discoveries, while paring back applied and commercial research and development.”
In Function 550, the health-sciences related function, the report does not specifically reference cuts to the National Institutes of Health, but assumes the discretionary spending levels will be the baseline proposed by H.R. 1, which will “reduce aggregate spending for the Department of Health and Human Services.”
For Function 500 (Education), in addition to the Pell grant changes, the report recommends that “the committees of jurisdiction address the duplication between the 82 programs that are designed to improve teacher quality.”
For this function, the report offers the following illustrations of proposals that could save money:
“Encourage Private Funding for Cultural Agencies. Federal subsidies for the National Endowment for the Arts, the National Endowment for the Humanities, and the Corporation for Public Broadcasting can no longer be justified. The activities and content funded by these agencies go beyond the core mission of the Federal Government and they are generally enjoyed by people of higher education and income levels, making them a wealth transfer from poorer to wealthier citizens. These agencies can raise funds from private-sector patrons-which will also free them from any risk of political interference.”
“Promote State, Local, and Private Funding for Museums and Libraries. The Federal Institute of Museum and Library Services is an independent agency that makes grants to museums and libraries. This is not a core Federal responsibility. This function can be funded at the State and local level and augmented significantly by charitable contributions from the private sector.”
“Repeal New Funding From the Student Aid and Fiscal Responsibility Act [SAFRA] of 2010…First, it could repeal the expansion of the Income-Based Repayment [IBR] program…Second, Congress could repeal the new mandatory College Access Challenge Grants…Third, it could make discretionary payments to non-profit servicers, rather than mandatory payments.”
“Accept the Fiscal Commission’s Proposal to Eliminate In-School Interest Subsidies for Undergraduate and Graduate Students.”
Additional information from the budget resolution
· Restructure the Medicare and Medicaid programs. For Medicare, it alters the funding structure from the current “fee-for-service” model to model where future beneficiaries would receive a subsidy to purchase a qualified private health insurance plan rather than being directly covered by the government. The funding structure of Medicaid is changed to a block grant program to states instead of the joint state-federal matching program as currently.
· Extend the 2001 and 2003 tax cuts
· Extend the current estate tax rates, providing a 20% deduction to small business and authorizing trade agreements, among others
· Reduce the top individual and corporate tax rate from 35% to 25%, offset by eliminating some corporate and individual tax deductions
· Establish a binding cap on total spending as a percentage of gross domestic product (GDP) and requires any increase in debt levels to be accompanied by spending reductions