Currently, key Congressional lawmakers from the House and Senate are negotiating a deal on the federal budget resolution (S. Con. Res. 95), a crucial piece of legislation that sets spending limits and projects revenue for fiscal year 2006 and beyond. The budget resolution is part of the annual federal budget process, beginning with the release of the President's budget proposal and ending in the passage of appropriations bills that provide federal funding for a fiscal year. This year, the budget resolution proposes a number of dangerous cuts to vital programs that serve women in transition, including education, job training, health care, welfare and child care. At this critical time in the federal budget process, it is important that Congress hear from you on the needs and priorities in your communities.

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The federal budget process is governed by the provisions in the Congressional Budget and Impoundment Control Act of 1974. The budget process officially begins each February when the President releases his budget proposal. (For details on President Bush's FY 2006 budget proposal, see the February Insider.) The President's budget contains spending targets for all agencies and programs in the federal government, changes to the tax code, and his public policy priorities. This budget is in some ways an outline from which Congress can work. While Congress is under no obligation to adhere to the President's proposal, it is often taken under consideration as the President must approve or veto all appropriations bills.

Once Congress receives the President's budget proposal, the budget committees in the House and Senate meet to author their respective budget resolutions. Each chamber must pass a resolution, and then meet in a House-Senate conference to resolve any differences between their resolutions. The conference report resulting from this must also be passed by both chambers. The final budget resolution is a "concurrent" congressional resolution, not an ordinary bill. It does not go to the President for approval or veto; it requires a simple majority vote to pass; and it cannot be filibustered in the Senate.

The budget resolution contains spending limits and language that instructs Congressional committees as to how much money they are allowed to spend in total. The budget resolution does not contain cuts or increases in funding to specific programs; those decisions are left up to the committees. From these directions, the legislators serving on the appropriations committees draft the 13 appropriations bills that are to be passed by the start of the fiscal year, October 1st. Delays in the passage of the budget resolution, which are common, can result in delays through the remainder of the federal budget process; for example, appropriations bills passed after the start of the fiscal year. In 2002 and 2004, House and Senate negotiators were unable to reach a conference agreement on the budget resolution at all.

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For the first time since 1997, both the House and Senate versions of the FY 2006 budget resolution contain a mechanism known as "reconciliation instructions." These are a set of instructions that require specific Congressional committees to make cuts to entitlement programs over a five or ten-year period. The House proposes $68 billion in cuts, and the Senate proposes $17 billion. Programs on the chopping block include child care, the EITC and the Child Tax Credit, Medicaid, TANF, food stamps, and student loans. The bulk of the difference between the Senate and House cuts can be attributed to the passage of an amendment to the Senate budget resolution, sponsored by Senator Gordon Smith (R-OR), which eliminated $15 billion in cuts to Medicaid.

Currently, House and Senate negotiators are meeting to reconcile the differences in their proposals. This group of powerful lawmakers is led by Senator Judd Gregg (R-NH) and Congressman Jim Nussle (R-NE). Insiders report that they are aiming to reach an agreement to cut $40-45 billion over five years through the reconciliation process. Once a final figure is agreed upon and passed by both chambers, a reconciliation bill detailing specific cuts will be introduced. The opportunity for amending a reconciliation bill is limited, and only 51 votes in the Senate are required for passage. The instructions in a reconciliation bill are binding and must be followed. Essentially, after a reconciliation bill is passed, the question for legislators is not whether or how much to cut, but instead which benefits and services to cut.

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The motivation for engaging in the reconciliation process to cut entitlement spending is the growing U.S. deficit, projected to reach $400 billion this year. However, the primary cause of this enormous shortfall is not increased spending, but decreased revenue. According to the Congressional Budget Office (CBO), federal revenues in 2005 will make up a smaller share of the economy than in any year from the 1960s through the 1990s. In addition, federal spending is not at particularly high levels as a share of the economy, even with the large increases in spending in defense and homeland security. CBO projects that total federal spending in 2005 will be lower as a share of the economy than in any year from 1975 through 1996.

Still, both the House and Senate have included massive tax cuts in their budget resolution bills; $106 and $129 billion over five years, respectively. But recent CBO data indicates that most households paid a smaller percentage of their income in federal taxes in 2002 than in any year on record, with data going back to 1979. Estimates by the Center on Budget and Policy Priorities show that a median family of four will pay just 5.5% of its income in federal income taxes in 2005, the lowest rate since 1955. Households earning more than $1 million annually will receive an average tax cut of $100,000, 140 times the size of the average tax cut received by families in the middle of the income scale ($742).

The Center on Budget and Policy Priorities projects that these tax cuts could increase the deficit by $127-218 billion over five years.

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In addition to the cuts to entitlement programs through the reconciliation process that could total $45 billion over five years, both House and Senate budget resolutions contain cuts to discretionary programs like Perkins Vocational Education, Workforce Investment Act, and Adult Basic Education & Literacy. In total, the House budget resolution includes $216 billion in cuts by 2010, and $24 billion in FY 2006. The Senate's includes $203 billion by 2010, with $20 billion in FY 2006. The budget resolution does not include details about cuts to specific programs, but assigns spending limits in 20 different budget areas; for example, "education and training." Then, Congressional committees with jurisdiction over these policy areas are charged with implementing instructions.

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The House and Senate budget resolutions differ significantly in the area of education and training. The House budget matches the President's budget proposal in cutting 2006 discretionary funding for "education, training, and social services" by $1.5 billion below the 2005 enacted level, and by $2.5 billion below the amount needed to maintain current services. While there is no expectation that Congress would adopt the President's budget recommendations "en bloc," the President's budget can provide a rough idea of how the House's budget resolution would affect education funding. The President's FY 2006 budget proposal cuts job training (WIA) by 20%, and 48 education programs that currently (FY 2005) receive $4.3 billion. The President's budget eliminates Perkins Vocational Education programs, and reduces funding for Adult Basic Education and Literacy programs by over 60%. If Congress decided to retain funding for both these programs, but fund them at levels consistent with the House budget resolution, we could expect to see a combined funding reduction of $5.8 billion over five years:

Unless Congress adopts the Kennedy amendment in its budget resolution, funding for these vital discretionary programs will be cut.

Both House and Senate budget resolutions also contain reconciliation cuts to student financial aid programs. It is estimated that the House budget resolution includes approximately $7 million in cuts over five years, and the Senate's includes $6.5 billion over five years. Though these figures are estimates, it is likely that funding for student aid programs will be reduced through the reconciliation process.

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While the Senate's budget resolution does not contain provisions that would affect TANF or federal child care subsidies, the House's budget resolution would cut these programs deeply. Projections by the Center on Budget and Policy Priorities indicate that under the House bill, TANF and the Child Care and Development Block Grant would be subject to a combined cut of $2.4 billion over the next five years, and $600 million in FY 2006 alone. The loss of funds to the states to implement these critical safety net programs would be disastrous. Under this scenario, 132,000 children would lose child care. It is difficult to calculate the costs to women in transition who are dependent on welfare while struggling to become economically self-sufficient. These cuts to TANF and child care programs would be implemented through the reconciliation process.

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The House budget resolution would slash Medicaid by $15-20 billion dollars over five years through the reconciliation process. Originally the Senate's budget contained $14 billion dollars in cuts. On March 17th, the Senate voted 52-48 to pass a bipartisan amendment sponsored by Senators Gordon Smith (R-OR) and Jeff Bingaman (D-NM) that stripped the cuts to Medicaid from the Senate's bill. House and Senate negotiators are currently working towards an agreement on cuts to Medicaid that could reach $10 billion over five years.

Currently, Medicaid provides health care services for an estimated 53 million low-income Americans including one in ten adult women. Seventy percent of adults on Medicaid are women, and it is the largest health insurer of single mothers, providing nearly 40% with health care. If enacted, a funding cut like the one proposed by the House are equivalent to the savings that would be achieved by eliminating federal funding for Medicaid coverage for between 1.8 million and 2.5 million low-income parents, primarily working mothers, for each of the next five years. There would be less resources to aid these individuals and the quality of coverage they receive would also decrease. States depend on federal funds for around half of their Medicaid costs, and would be forced to reduce eligibility, and eliminate or cap services in order to recover from the loss of funding.

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