May 21, 2007

On May 17 the House voted 214-209 and Senate voted 52-40 to adopt the FY 2008 budget resolution conference agreement (S. Con. Res. 21). The $2.9 trillion plan strives to balance the budget in five years without large spending cuts by assuming that President Bush's signature tax cuts will be allowed to expire. The conference agreement includes $452.3 billion in non-defense, discretionary spending totals (excluding emergencies, but including program integrity money and the $2 billion in advance appropriations); roughly $1.3 billion below the House level, but $5.3 billion more than the Senate level and $23.3 billion more than the President's request.

Specifically, the conference agreement includes $54.965 billion for Function 550 discretionary health spending, $2.9 billion (5.5 percent) above last year and $3 billion (5.8 percent) above the President's request. The budget agreement does not include the President's proposed cuts in Medicare or Medicaid provider payments.

The budget agreement also includes a number of budget-neutral reserve funds that require offsets, including cuts in other federal programs or revenue increases. Specifically, the budget agreement establishes a "deficit-neutral reserve fund to jumpstart an initiative on comparative effectiveness research" to evaluate the relative effectiveness and value of drugs, devices, medical procedures, and other treatments. Adoption of the budget agreement does not require Congress to act on the priorities recommended through these reserve funds; it would provide only a blueprint should Congress pursue these priorities in FY 2008.

On May 11, Rob Portman, Director of the Office of Management and Budget (OMB), sent a letter to Congress on behalf of the Bush Administration threatening to veto any 2008 appropriations bills that exceed the levels requested by President Bush. The OMB letter charged that the congressional budget plans approved by the Senate and the House of Representatives would "increase federal spending by hundreds of billions of dollars." Based on the close budget vote, it is unlikely that Democrats could secure enough votes to override a presidential veto of appropriations bills.

The first appropriations bill to be marked up in the House will be Homeland Security, followed by the Interior and Military Construction appropriations bills. The Coalition expects the House Labor-HHS-Education appropriations bill will be marked up after the Memorial Day recess. 

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