Budget Reconciliation Legislation in 2005-2006 Under the FY2006 Budget Resolution

Congressional research reportAug 17, 2007

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Order Code RL33132

Budget Reconciliation Legislation in 2005-2006

Under the FY2006 Budget Resolution

Updated August 17, 2007

Robert Keith

Specialist in American National Government

Government and Finance Division

Budget Reconciliation Legislation in 2005-2006

Under the FY2006 Budget Resolution

Summary

The FY2006 budget resolution (H.Con.Res. 95), which was agreed to by the

House and Senate on April 28, 2005, included reconciliation instructions for: (1) an

omnibus bill to reduce mandatory outlays by about $35 billion over a five-year

period, covering FY2006-FY2010; (2) a bill to reduce revenues by $70 billion over

the same period; and (3) a bill to increase the limit on the public debt by $781 billion.

Congressional action on the resultant reconciliation legislation, while ultimately

successful, was marked by controversy and delay. Initial floor consideration of the

first reconciliation measure, the omnibus spending bill, occurred in November 2005.

Congressional action on reconciliation legislation carried over into the following

session, concluding with action on the revenue reconciliation bill in May 2006.

The omnibus spending reconciliation bill, the Deficit Reduction Act of 2005 (S.

1932), was signed into law by President George W. Bush on February 8, 2006, as

P.L. 109-171 (120 Stat. 4-184). The Congressional Budget Office (CBO) estimated

net mandatory outlay savings under the measure of $38.810 billion over five years.

Assuming that apparent drafting errors in two sections are corrected, CBO noted, the

five-year savings would increase by $713 million, to $39.523 billion (neither the

House nor the Senate have taken any action in this regard).

The revenue reconciliation bill, the Tax Increase Prevention and Reconciliation

Act of 2005 (H.R. 4297), was signed into law on May 17, 2006, as P.L. 109-222 (120

Stat. 345-373). The Joint Committee on Taxation estimated the five-year revenue

reduction at $69.960 billion. Additional revenue reductions, including some matters

dropped from the initial House and Senate revenue reconciliation bills in conference,

have been considered in pension reform legislation (P.L. 109-280) and other

measures.

Finally, the House and Senate passed a measure (H.J.Res. 47), outside of the

budget reconciliation process, increasing the debt limit by $781 billion. The measure

was signed into law on March 20, 2006, as P.L. 109-182 (120 Stat. 289).

Consequently, no actions were taken under the reconciliation process with respect to

debt-limit legislation.

As of May 2006, congressional action on the reconciliation legislation called for

in the FY2006 budget resolution was completed. No action was taken during the

waning days of the 2006 session on attendant matters, including legislation correcting

the two apparent drafting errors in the Deficit Reduction Act of 2005. In addition,

at least five lawsuits contesting the validity of the Deficit Reduction Act of 2005

(because of an apparent clerical error that occurred during House and Senate

consideration of the measure) have been dismissed at the federal district court level,

but appeals are being pursued in several cases.

This report will be updated as developments warrant.

Contents

Most Recent Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Overview of the Budget Reconciliation Process . . . . . . . . . . . . . . . . . . . . . . . . . . 3

The Budget Policy Context . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Baseline Budget Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

The Deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Mandatory Outlays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Public Debt Limit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

President Bush’s FY2006 Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Initial Budget Submission (February) . . . . . . . . . . . . . . . . . . . . . . . . . 11

Mid-Session Review (July) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

The FY2006 Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Legislative History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Overall Budget Resolution Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Reconciliation Directives in the FY2006 Budget Resolution . . . . . . . . . . . . . . . 16

Initial House Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Initial Senate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Action on the Conference Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Subsequent Changes in Budget Policy Affecting Reconciliation . . . . . . . . . . . . 22

Reconciliation Legislation in 2005: Summary and Legislative History . . . . . . . 24

Spending Reconciliation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Initial Senate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Initial House Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Action on the Conference Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Approval by the President and Subsequent Challenges . . . . . . . . . . . . 30

Brief Summary of the Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Revenue Reconciliation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Initial Senate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Initial House Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Action on the Conference Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Approval by the President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Brief Summary of the Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Debt-Limit Reconciliation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Products on Selected Policy Issues Addressed in Reconciliation . . . . . . . . . . . . 46

Spending Reconciliation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Revenue Reconciliation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Appendix A. Deficit Reduction Act of 2005 (S. 1932): Contents Listing

of the Conference Report (H.Rept. 109-362) . . . . . . . . . . . . . . . . . . . . . . . . 50

Appendix B. Tax Increase Prevention and Reconciliation Act of 2005

(H.R. 4297): Contents Listing of the Conference Report

(H.Rept. 109-455) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

List of Figures

Figure 1. Budgetary Components of Selected Reconciliation Acts . . . . . . . . . . . 7

List of Tables

Table 1. Reconciliation Resolutions and Resultant Reconciliation Acts:

FY1991-FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Table 2. Total Deficit or Surplus: FY2000-FY2004 . . . . . . . . . . . . . . . . . . . . . . 9

Table 3. CBO and OMB Baseline Deficit Projections: FY2005-FY2010 . . . . . . 9

Table 4. Public Debt-Limit Increases: 1997-2004 . . . . . . . . . . . . . . . . . . . . . . . 11

Table 5. President Bush’s FY2006 Budget: February 2005 Submission . . . . . . 12

Table 6. President Bush’s FY2006 Budget: July 2005 Mid-Session Review . . 13

Table 7. Selected Components of the FY2006 Budget Resolution:

House, Senate, and Conference Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Table 8. Initial Reconciliation Instructions: House . . . . . . . . . . . . . . . . . . . . . . 16

Table 9. Initial Reconciliation Instructions: Senate . . . . . . . . . . . . . . . . . . . . . . 18

Table 10. Reconciliation Instructions for FY2006-FY2010:

Summary of House, Senate, and Conference Amounts . . . . . . . . . . . . . . . . 20

Table 11. Reconciliation Instructions in the Conference Agreement on the

FY2006 Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Table 12. CBO Scoring of Spending Reconciliation Legislation:

Senate Reported and Passed (By Title/Committee) . . . . . . . . . . . . . . . . . . . 26

Table 13. CBO Scoring of Spending Reconciliation Legislation:

House Reported and Passed (By Title/Committee) . . . . . . . . . . . . . . . . . . . 27

Table 14. CBO Scoring of Spending Reconciliation Legislation:

Conference Agreement (by Title) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Table 15. Spending Reconciliation Legislation: Savings and Costs in

Selected Program Areas (Conference Agreement) . . . . . . . . . . . . . . . . . . . 36

Table 16. JCT Scoring of Revenue Reconciliation Legislation:

Conference Agreement (by Title) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Table 17. Revenue Reconciliation Legislation: Revenue Increases and

Decreases for Selected Provisions (Conference Agreement) . . . . . . . . . . . . 44

Budget Reconciliation Legislation

in 2005-2006 Under the

FY2006 Budget Resolution

The budget reconciliation process is one of the chief tools used by Congress

during the past quarter-century to implement major changes in budget policy.

Following an indication of the most recent actions, a brief overview of the budget

reconciliation process, and an assessment of the budget policy context, this report

provides information on the consideration of budget reconciliation legislation in

2005, during the first session of the 109th Congress, and the carryover of legislative

action into 2006, during the second session.

Most Recent Actions

The most recent actions of the House and Senate on spending, revenue, and

debt-limit reconciliation legislation are summarized in the box below:

Spending Reconciliation

The Senate passed S. 1932 (the Deficit Reduction Omnibus Reconciliation

Act of 2005) on November 3, by a vote of 52-47. The Congressional Budget

Office (CBO) estimated net mandatory outlay savings of $34.644 billion over

five years (FY2006-FY2010).

The House passed H.R. 4241 (the Deficit Reduction Act of 2005) on

November 18, by a vote of 217-215. CBO estimated net mandatory outlay

savings of $49.889 billion over five years.

The conference report (H.Rept. 109-362) on S. 1932, which was renamed

the Deficit Reduction Act of 2005, was reported on December 19. CBO

estimated net mandatory outlay savings under the measure of $38.810 billion

over five years (assuming that apparent drafting errors in two sections are

corrected, CBO noted, the five-year savings would increase by $713 million, to

$39.523 billion).

On December 19, the House agreed to the conference report by a vote of

212-206. On December 21, the Senate removed extraneous matter from the

legislation pursuant to a point of order raised under the “Byrd rule,” and then,

by a vote of 51-50 (with Vice President Cheney breaking a tie vote), returned the

amended measure to the House for further action. On February 1, the House

concurred in the Senate amendment, by a vote of 216-214, clearing the measure

for the President.

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President Bush signed the measure into law on February 8 as P.L. 109-171

(120 Stat. 4-184). Due to an apparent clerical error during final action on the

measure, the Senate, later that day, agreed to S.Con.Res. 80 by unanimous

consent; the concurrent resolution deemed the version of S. 1932 presented to

the President to be a true enrollment. On February 16, the House tabled a

privileged resolution, H.Res. 687, by a vote of 219-187; the resolution would

have directed the House Committee on Standards of Official Conduct to

investigate the circumstances surrounding the apparent clerical error. Several

lawsuits have been filed contesting the validity of the Deficit Reduction Act of

2005 because of the clerical error; some of the lawsuits have been dismissed.

Revenue Reconciliation

The Senate passed S. 2020 (the Tax Relief Act of 2005) on November 18,

by a vote of 64-33. The Joint Committee on Taxation (JCT) estimated net

revenue reductions of $57.756 billion over five years (FY2006-FY2010). In

order to facilitate a conference with the House, the Senate later passed H.R.

4297 with an amendment. According to the JCT, H.R. 4297, as passed by the

Senate, would reduce revenues by $69.415 billion over FY2006-FY2010,

reflecting about $12 billion in further revenue reduction compared to the levels

in S. 2020, as passed earlier by the Senate.

The House passed H.R. 4297 (the Tax Relief Extension Reconciliation Act

of 2005) on December 8, by a vote of 234-197. JCT estimated net revenue

reductions of $56.082 billion over five years.

The conference report (H.Rept. 109-455) on H.R. 4297, which was

renamed the Tax Increase Prevention and Reconciliation Act of 2005, was filed

on May 9. The JCT estimated that the conference agreement would reduce

revenues by $69.960 billion over the five-year period, FY2006-FY2010.

The House agreed to the conference report on May 10, by a vote of 244185, and the Senate agreed to it the following day, by a vote of 54-44.

President Bush signed the measure into law on May 17 as P.L. 109-222

(120 Stat. 345-373). Additional revenue reductions, including some matters

dropped from the initial House and Senate revenue reconciliation bills in

conference, have been considered in pension reform legislation (P.L. 109-280)

and other measures.

Debt-Limit Reconciliation

On March 20, 2006, President Bush signed H.J.Res. 47, a measure

increasing the statutory debt limit by $781 billion to $8.965 trillion, into law as

P.L. 109-182 (120 Stat. 289). The measure was deemed to have passed the

House on April 28, 2005, pursuant to the “Gephardt rule” (House Rule XXVII),

as part of final action on the FY2006 budget resolution. The Senate passed the

measure without amendment on March 16, 2006, by a vote of 52-48.

The enactment of P.L. 109-182 obviated the need for any action on debtlimit legislation under the reconciliation process.

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Overview of the Budget Reconciliation Process

The Congressional Budget Act of 1974 established the congressional budget

process.1 Under the act, the House and Senate are required to adopt at least one

budget resolution each year (and have done so, except for FY1999, FY2003, and

FY2005).2 The budget resolution, which takes the form of a concurrent resolution

and is not sent to the President for his approval or veto, serves as a congressional

statement in broad terms regarding appropriate revenue, spending, and debt-limit

policies, as well as a guide to the subsequent consideration of legislation

implementing such policies at agency and programmatic levels. Budget resolution

policies are enforced through a variety of mechanisms, including points of order.3

The House and Senate Budget Committees, which were created by the 1974 act,

exercise exclusive jurisdiction over budget resolutions and are responsible for

monitoring their enforcement.

In developing a budget resolution, the House and Senate Budget Committees

use various sources of budgetary information and analysis, including baseline budget

projections of revenue, spending, and the deficit or surplus prepared by the

Congressional Budget Office (CBO). A budget resolution typically reflects many

different assumptions regarding legislative action expected to occur during a session

that would cause revenue and spending levels to be changed from baseline amounts.

Most revenue and mandatory spending,4 however, occurs automatically each year

under permanent law. Therefore, if the committees with jurisdiction over the revenue

and mandatory spending programs do not report legislation to carry out the budget

resolution policies by amending existing law, revenue and mandatory spending for

these programs likely will continue without change. There are some notable

exceptions to the permanency of revenue and mandatory spending laws, such as

many of the tax cuts proposed by President George W. Bush and enacted in 2001 and

2003.

Discretionary spending, on the other hand, is provided annually in regular,

supplemental, and continuing appropriations acts. The House and Senate, therefore,

are assured an opportunity each year to consider discretionary spending within the

See Titles I-IX of the Congressional Budget and Impoundment Control Act of 1974 (P.L.

93-344; July 12, 1974; 88 Stat. 297-339), as amended and codified at 2 U.S.C. 621-692.

For background information on budget resolutions, see CRS Report RL30297,

Congressional Budget Resolutions: Selected Statistics and Information Guide, by Bill

Heniff Jr.

The congressional budget process, and its enforcement procedures, are discussed in more

detail in CRS Report 98-721, Introduction to the Federal Budget Process, by Robert Keith

and Allen Schick. Also, see CRS Report 97-865, Points of Order in the Congressional

Budget Process, by James V. Saturno.

Mandatory spending, also referred to as direct spending, is provided mainly in substantive

law under the jurisdiction of the legislative committees, in contrast to discretionary

spending, which is provided in annual appropriations acts under the jurisdiction of the

House and Senate Appropriations Committees. Most direct spending programs are

entitlements, such as Social Security, Medicare, federal civilian and military retirement, and

unemployment compensation.

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context of budget resolution policies. The enforcement of budget resolution policies

regarding discretionary spending relies, for the most part, on the ability to raise points

of order against individual appropriations acts that violate the suballocations of

discretionary spending made pursuant to Section 302(b) of the 1974 act.

The budget reconciliation process is an optional procedure that operates as an

adjunct to the budget resolution process.5 The chief purpose of the reconciliation

process is to enhance Congress’s ability to change current law in order to bring

revenue, spending, and debt-limit levels into conformity with the policies of the

budget resolution. Under the reconciliation process, the House and Senate may

compel their committees to develop legislation changing existing law. Accordingly,

reconciliation can be a potent budget enforcement tool for a large portion of the

budget.

Reconciliation is a two-stage process. First, reconciliation instructions are

included in the budget resolution, directing the appropriate committees to develop

legislation achieving the desired budgetary outcomes. If the budget resolution

instructs more than one committee in a chamber, then the instructed committees

submit their legislative recommendations to their respective Budget Committees by

the deadline prescribed in the budget resolution; the Budget Committees incorporate

them into an omnibus budget reconciliation bill without making any substantive

revisions.

The second step involves consideration of the resultant reconciliation legislation

by the House and Senate under expedited procedures. Among other things, debate

in the Senate on any reconciliation measure is limited to 20 hours (and 10 hours on

a conference report) and amendments must be germane and not include extraneous

matter. The House Rules Committee typically recommends a special rule for the

consideration of a reconciliation measure in the House that places restrictions on

debate time and the offering of amendments.

In cases where only one committee has been instructed, the process allows that

committee to report its reconciliation legislation directly to its parent chamber, thus

bypassing the Budget Committee. In some years, budget resolutions included

reconciliation instructions that afforded the House and Senate the option of

considering two or more different reconciliation bills. Once the reconciliation

legislation called for in the budget resolution has been approved or vetoed by the

President, the process is concluded; Congress cannot develop another reconciliation

bill in the wake of a veto without first adopting another budget resolution containing

reconciliation instructions.

As an optional procedure, reconciliation has not been used in every year that the

congressional budget process has been in effect. Beginning with the first use of

reconciliation by both the House and Senate in 1980, however, reconciliation has

been used in most years. Congress has sent the President 19 reconciliation acts over

the years; 16 were signed into law and three were vetoed (and the vetoes not

See CRS Report RL33030, The Budget Reconciliation Process: House and Senate

Procedures, by Robert Keith and Bill Heniff Jr., for more information on the process.

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overriden). Table 1 provides a list of the 10 reconciliation acts presented to the

President from 1990 (for FY1991 and subsequent years) to the present. Seven of the

acts were signed into law and three were vetoed by President Bill Clinton.

The inclusion of reconciliation instructions in a budget resolution has not always

resulted in House or Senate consideration of a reconciliation measure under the

instructions. In 1996, the FY1997 budget resolution (H.Con.Res. 178) provided for

three separate reconciliation measures dealing with: (1) “Welfare and Medicaid

Reform and Tax Relief”; (2) “Medicare Preservation”; and (3) “Tax and

Miscellaneous Direct Spending Reforms.” A reconciliation measure reforming the

welfare system was enacted in 1996 (P.L. 104-193), but the House and Senate did not

act on the other two reconciliation measures provided for under the budget

resolution.

Further, not every reconciliation measure considered by one chamber has been

considered by the other chamber, or been regarded as a reconciliation measure when

considered by the other chamber. In 2000, for example, the House considered and

passed several reconciliation measures, but they were not considered by the Senate.6

Initial actions under reconciliation focused on deficit-reduction efforts.

Consequently, the procedures were employed to achieve spending reductions and

revenue increases on a net basis. In the latter part of the 1990s, particularly when

large surpluses emerged in the federal budget for the first time in decades, the focus

of reconciliation action was shifted to reducing revenues, which continued into the

2000s. In the FY2006 budget resolution, reconciliation directives entail reductions

in both revenues and spending.

See CRS Report RL30714 (archived), Congressional Action on Revenue and Debt

Reconciliation Measures in 2000, available upon request from the author.

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Table 1. Reconciliation Resolutions and Resultant

Reconciliation Acts: FY1991-FY2005

Fiscal

Year

Budget

Resolution

1991

H.Con.Res. 310

Omnibus Budget Reconciliation Act of

1990 (P.L. 101-508)

11-05-90

1994

H.Con.Res. 64

Omnibus Budget Reconciliation Act of

1993 (P.L. 103-66)

08-10-93

1996

H.Con.Res. 67

Balanced Budget Act of 1995 (H.R. 2491)

12-06-95

(vetoed)

1997

H.Con.Res. 178

Personal Responsibility and Work

Opportunity Reconciliation Act of 1996

(P.L. 104-193)

08-22-96

1998

H.Con.Res. 84

Balanced Budget Act of 1997 (P.L. 105-33)

08-05-97

Taxpayer Relief Act of 1997 (P.L. 105-34)

08-05-97

Resultant Reconciliation Act(s)

Date

Enacted

2000

H.Con.Res. 68

Taxpayer Refund and Relief Act of 1999

(H.R. 2488)

09-23-99

(vetoed)

2001

H.Con.Res. 290

Marriage Tax Relief Reconciliation Act of

2000 (H.R. 4810)

08-05-00

(vetoed)

2002

H.Con.Res. 83

Economic Growth and Tax Relief

Reconciliation Act of 2001 (P.L. 107-16)

06-07-01

2004

H.Con.Res. 95

Jobs and Growth Tax Relief Reconciliation

Act of 2003 (P.L. 108-27)

05-28-03

Source: Prepared by the Congressional Research Service.

The three most recent years in which Congress used omnibus reconciliation

legislation to achieve net deficit reduction occurred in the 1990s (one reconciliation

act each in 1990 and 1993, and two in 1997). Over a five-year period, according to

CBO, the Omnibus Budget Reconciliation Act of 1990 reduced the deficit by an

estimated $482 billion; the Omnibus Budget Reconciliation Act of 1993 reduced the

deficit by an estimated $433 billion; and in 1997, the Balanced Budget Act and the

Taxpayer Relief Act together reduced the deficit by an estimated $118 billion.

In all three years, as shown in Figure 1, the reconciliation acts relied on net

mandatory savings, amounting over five years to an estimated $75 billion in the 1990

act, $77 billion in the 1993 act, and $107 billion in the 1997 acts. With regard to

revenues, however, the 1990 and 1993 acts reflected estimated net increases over five

years of $158 billion and $241 billion, respectively, while the 1997 acts reflected an

estimated net reduction of $80 billion over five years.

Five-year net savings in discretionary spending attributable to statutory limits,

established in the 1990 act and extended in the 1993 and 1997 legislation, ranged

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from an estimated $69 billion (in the 1993 act), to $89 billion (in the 1997 acts), to

$190 billion (in the 1990 act). Although estimates of savings in discretionary

spending were included in the CBO assessments of the budgetary impact of the

reconciliation measures, the discretionary savings actually occurred as the annual

appropriations acts were enacted over the five-year period. Debt service savings

accounted for the remaining deficit reduction.

Figure 1. Budgetary Components of Selected Reconciliation

Acts

Sources: Prepared by the Congressional Research Service from data provided by the Congressional

Budget Office in: (1) The Economic and Budget Outlook: Fiscal Years 1992-1996, January 1991,

Table III-3, p. 66; (2) The Economic and Budget Outlook: An Update, September 1993, Table 2-2,

p. 29; and (3) The Economic and Budget Outlook: An Update, September 1997, Table 10, p. 36, and

Table 11, p. 40.

Note: The savings in discretionary spending shown here, which were attributable to statutory limits

established in the 1990 act and extended in the 1993 and 1997 legislation, were included in the CBO

assessments of the budgetary impact of the reconciliation measures, but the discretionary savings

actually occurred as the annual appropriations acts were enacted over the five-year period.

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The Budget Policy Context

The House and Senate, as stated earlier, are required under the Congressional

Budget Act of 1974 to reach agreement each year on a budget resolution that

establishes a budget plan for at least five fiscal years — the upcoming fiscal year and

the ensuing four fiscal years; changes in the current fiscal year may be made as well.

During the 2005 session, for example, the budget resolution developed by the House

and Senate covered FY2006 (which began on October 1, 2005) through FY2010, and

included revisions for FY2005.

Many factors influence the development of a budget resolution, particularly the

President’s annual budget submission toward the start of the session. Development

of the budget resolution, as well as the President’s budget, involves the consideration

of estimates of future spending, revenues, and the resultant deficit (or surplus) based

on current law. These estimates are referred to as baseline budget projections, as

prepared by the Congressional Budget Office (CBO), and current services estimates,

as prepared by the Office of Management and Budget (OMB). The impact of

congressional and presidential budgetary policies often is assessed by comparing

revenue, spending, or deficit or surplus levels under such policies to the CBO and

OMB baseline estimates.

This section provides background on budget policies for FY2006-FY2010, as

formulated in 2005, with respect to budget components targeted by the reconciliation

process — the deficit, mandatory outlays, revenues, and the public debt limit. For

each component, information is provided on baseline budget projections, the

President’s budget submission, and the congressional budget resolution.

Baseline Budget Projections

On January 25, 2005, CBO issued its annual report providing baseline budget

projections, The Budget and Economic Outlook: Fiscal Years 2006 to 2015. The

baseline budget projections were updated on March 8 in conjunction with the

development of the FY2006 budget resolution; the updated March baseline is used

in this report, unless otherwise indicated.7 Current services estimates were prepared

by OMB and submitted in February as part of the President’s FY2006 budget.8

The Deficit. During the period encompassing the five fiscal years most

recently completed before the current session began, FY2000-FY2004, the federal

government incurred both surpluses and deficits, as shown in Table 2.

The March baseline budget projections are presented in: Congressional Budget Office, An

Analysis of the President’s Budgetary Proposals for Fiscal Year 2006, March 2005, Table

1-10, p. 23.

Office of Management and Budget, Budget of the United States Government, Fiscal Year

2006, Analytical Perspectives, February 7, 2005, Chapter 25 (Current Services Estimates),

Table 25-1, pp. 389-404.

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Table 2. Total Deficit or Surplus: FY2000-FY2004

(amounts in $ billions)

2000

2001

2002

2003

2004

Current Dollars

236

128

-158

-378

-412

Constant FY2000 Dollars

236

125

-152

-354

-377

Percentage of GDP

2.4%

1.3%

-1.5%

-3.5%

-3.6%

Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year

2006, Historical Tables, Feb. 7, 2005, Tables 1.1-1.3, pp. 21-26.

Measured in current dollars, the FY2000 surplus of $236 billion, which was the

largest surplus since the end of World War II, steadily eroded, becoming by FY2004

the largest deficit since the end of World War II, at $412 billion. Measured in

constant FY2000 dollars, the FY2004 deficit of $377 billion was still the largest postwar deficit, but it was $35 billion less than the current-dollar deficit for that year. As

a percentage of Gross Domestic Product (GDP), the deficit rose from 1.5% for

FY2002 to 3.6% for FY2004. The largest post-war deficit, in current dollars,

occurred in FY1992, at $290 billion; as a percentage of GDP, the largest post-war

deficit occurred in FY1983, measuring 6.0%.

Both the CBO baseline budget projections and the OMB current services

estimates indicated a sustained but declining deficit path in the coming years. As

shown in Table 3, CBO projected that the FY2005 deficit would decline from the

prior year to $365 billion.

Table 3. CBO and OMB Baseline Deficit Projections:

FY2005-FY2010

(amounts in $ billions)

2005

2006

2007

2008

2009

2010

20062010

Congressional Budget Office (March 2005 Baseline Budget Projections)

Deficit

-365

-298

-268

-246

-219

-201

-1,232

Deficit

(%age of GDP)

-3.0

-2.3

-2.0

-1.7

-1.5

-1.3

—

Office of Management and Budget (February 2005 Current Services Estimates)

Deficit

-390

-361

-303

-251

-229

-207

1,351

Sources: (1) Congressional Budget Office, An Analysis of the President’s Budgetary Proposals for

Fiscal Year 2006, March 2005, Table 1-10, p. 23; (2) Office of Management and Budget, Budget of

the United States Government, Fiscal Year 2006, Analytical Perspectives, Feb. 7, 2005, Chapter 25

(Current Services Estimates), Table 25-1, p. 390.

Note: Details may not add to totals due to rounding.

CRS-10

For the five-year period covering FY2006-FY2010, CBO projected a deficit of

$298 billion for FY2006, declining gradually to $201 billion for FY2010. Over five

years, the cumulative projected deficit amounted to $1.232 trillion. As a percentage

of GDP, the baseline deficit was projected to decline from 2.3% to 1.3% over this

period.

CBO noted that the statutory rules governing the preparation of baseline

projections likely resulted in an understatement of spending for military operations

in Iraq and Afghanistan by tens of billions of dollars, thereby understating the deficit

for FY2006, and possibly later years as well.

The OMB current services estimates included higher deficit levels than CBO for

each year, but followed the same trend of gradual decline reflected in the CBO

projections.9 OMB estimated a decrease in the deficit for FY2005 from the prior

year’s level, to $390 billion. Further, OMB projected the deficit to decline from $361

billion for FY2006 to $207 billion for FY2010. Over five years, the cumulative

projected deficit amounted to $1.351 trillion.

Mandatory Outlays. Under the CBO baseline budget projections, mandatory

outlays were projected to grow by $339 billion over the five-year period, from $1.385

trillion for FY2006 to $1.724 trillion for FY2010. In comparison, outlays for net

interest were projected to grow by $93 billion, from $211 billion for FY2006 to $304

billion for FY2010, and discretionary outlays were projected to grow by $65 billion,

from $915 billion for FY2006 to $980 billion for FY2010. As a percentage of GDP,

mandatory outlays were projected to increase by FY2010 to 10.9% (an increase of

0.2% from FY2006). Outlays for net interest were projected to increase to 1.9% (an

increase of 0.3%) and discretionary outlays were projected to decrease to 6.2% (a

decrease of 0.9%).

The OMB projections for mandatory outlays showed an increase over the fiveyear period of $336 billion, nearly the same as the CBO projection. The OMB

projections, however, showed higher levels of mandatory outlays for each fiscal year,

rising to $1.752 trillion for FY2010.

Revenues. According to CBO, total revenues were projected to rise by $594

billion over the five-year period, from $2.213 trillion for FY2006 to $2.807 trillion

for FY2010. As a percentage of GDP, revenues were projected to increase by

FY2010 to 17.8% (an increase of 0.6% from FY2006).

OMB projected a greater increase in revenues, $663 billion, over the five-year

period (rising to $2.841 trillion for FY2010).

The OMB current services estimates, unlike the CBO baseline budget projections, were

not prepared strictly in accordance with the baseline rules established in the Budget

Enforcement Act (BEA). Accordingly, some of the differences in the amounts presented

by OMB and CBO are attributable to conceptual differences, as discussed in CBO, An

Analysis of the President’s Budgetary Proposals, ibid., p. 17.

CRS-11

Public Debt Limit. Finally, CBO projected the increases that would be

needed in the public debt subject to statutory limit, which currently stands at $8.184

trillion. Although the revised debt-limit levels were not identified in the baseline

projections published in March, the projections published in January indicated that

the debt-limit level would amount to $8.529 trillion for FY2006, rising steadily to

$10.847 trillion for FY2010.

The last four increases in the public debt limit, which occurred between 1997

and 2004, are shown in Table 4. The amount of increase ranged between $450

billion and $800 billion.

Table 4. Public Debt-Limit Increases: 1997-2004

(amounts in $ billions)

Date of

increase

Public law

number

Amount of

increase

Revised

limit

08-05-1997

P.L. 105-33

450

5,950

06-28-2002

P.L. 107-199

450

6,400

05-27-2003

P.L. 108-24

984

7,384

11-19-2004

P.L. 108-415

800

8,184

Source: Office of Management and Budget, Budget of the United States Government,

Fiscal Year 2006, Historical Tables, Feb. 7, 2005, Table 7.3, pp. 121-124.

President Bush’s FY2006 Budget

Initial Budget Submission (February). President George W. Bush

submitted his budget particularly for FY2006 to Congress on February 7, 2005. The

President’s budget focused on deficit reduction, noting his goal of reducing the $521

billion deficit originally projected for FY2004 (amounting to 4.5% of GDP) in half

by FY2009.10 Under the President’s proposals, as shown in Table 5, the deficit

would be reduced over a five-year period, from $390 billion for FY2006 (3.0% of

GDP) to $207 billion for FY2010 (1.3% of GDP), a level below the 40-year historical

average of 1.7% of GDP.

Compared to the OMB current services estimates, the President’s proposals

would increase the deficit in three years (by $29 billion for FY2006, $9 billion for

FY2007, and $4 billion for FY2009) while leaving it unchanged in the other two

years. In the net, the President’s proposals would increase the deficit by $42 billion

over the five-year period, compared to the current services baseline.

Office of Management and Budget, Budget of the United States Government, Fiscal Year

2006, “Overview of the President’s 2006 Budget,” p. 3.

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Table 5. President Bush’s FY2006 Budget:

February 2005 Submission

(amounts in $ billions)

2006

2007

2008

2009

2010

20062010

Deficit

-390

-312

-251

-233

-207

1,393

Deficit (Percentage of GDP)

-3.0

-2.3

-1.7

-1.5

-1.3

—

Mandatory Outlay Savings

-5

-9

-7

-9

-8

-39

Revenue Reduction

—a

-3

-21

-49

-32

-106

Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year

2006, Feb. 7, 2005, Summary Tables S-1 and S-6, pp. 343 and 352-359.

Note: Details may not add to total due to rounding.

a. Less than $500 million.

The President’s budget recommendations encompassed three major policies.

First, discretionary spending would be restrained throughout the five-year period,

reflecting more than 150 reductions and terminations for FY2006 in non-defense

programs.11 For FY2006, discretionary budget authority would increase over the

prior year by 5% for the Defense Department and 3% for homeland security (nonDefense Department) activities, and would decrease by 1% for all other operations

of the federal government. Overall, total discretionary budget authority for FY2006

would increase by 2.1%, a level lower than the expected rate of inflation. For

FY2007-FY2010, total discretionary budget authority would increase by between 1%

and 3% each year, well below recent averages.

Second, mandatory outlays would be reduced over the five-year period by $62

billion, reflecting programmatic reforms amounting to $55 billion and user fee

proposals amounting to $7 billion.12 Taking into account outlay increases of $23

billion associated with certain tax proposals (e.g., health tax credits), the net

reduction in mandatory outlays would amount to $39 billion over five years. The net

reduction would eliminate more than 10% of the $330-plus billion growth in

mandatory outlays projected by OMB and CBO in the baseline during FY2006FY2010.

Third, revenues would be reduced in the net by $106 billion during the five-year

period.13 Half of the revenue decreases during this period, $53 billion, would be

attributed to making permanent certain tax cuts enacted in the revenue reconciliation

President’s FY2006 Budget, ibid., Summary Table S-2, p. 344.

President’s FY2006 Budget, ibid., Summary Table S-6, pp. 348-353.

President’s FY2006 Budget, ibid., Summary Table S-7, pp. 354-359.

CRS-13

acts of 2001 and 2003, which dealt with the dividends and capital gains tax rate

structures, expensing for small business, and other matters.

President Bush’s February budget submission did not reflect additional

discretionary spending for operations in Iraq and Afghanistan for FY2006, nor did

it reflect his proposals regarding changes in the Social Security program involving

the establishment of individual accounts.

Mid-Session Review (July). On July 13, 2005, President Bush submitted

to Congress the required Mid-Session Review (MSR) of his FY2006 budget.14 The

MSR revealed some significant changes in the budget since the initial February

submission, as shown in Table 6. The annual deficit levels dropped by between $37

billion and $89 billion, and the cumulative five-year deficit dropped by $326 billion

(from $1.393 trillion to $1.067 trillion).

Table 6. President Bush’s FY2006 Budget:

July 2005 Mid-Session Review

(amounts in $ billions)

2006

2007

2008

2009

2010

20062010

Deficit

-341

-233

-162

-170

1,067

Deficit (Percentage of GDP)

-2.6

-1.7

-1.1

—

Mandatory Outlay Savings

-3

-9

-8

Revenue Reduction

—a

-2

-20

-50

-33

-104

Source: Office of Management and Budget, Budget of the United States Government, Fiscal Year

2006, Mid-Session Review, July 13, 2005, Table 1, p. 6, and Tables S-6 and S-7, pp. 28-35.

Note: Details may not add to total due to rounding.

a. Less than $500 million.

The $326 billion reduction in the cumulative deficit was explained by economic

and technical reestimates amounting to $464 billion in deficit reduction (mainly

higher revenues due to a strengthened economy and the resultant lowering of debt

service costs), offset in part by policy proposals involving $138 billion in higher

outlays (mainly Social Security personal accounts and additional war funding for

FY2006). The levels associated with the President’s recommendations regarding

savings in mandatory outlays in reductions in revenue were barely changed by the

Mid-Session Review. The five-year savings in mandatory outlays were reduced by

$2 billion, from $39 billion to $37 billion, and the five-year reduction in revenues

also was lowered by $2 billion, from $106 billion to $104 billion.

Office of Management and Budget, Budget of the United States Government, Fiscal Year

2006, Mid-Session Review, July 13, 2005.

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The FY2006 Budget Resolution

Consideration of the FY2006 budget resolution began in the House and Senate

in March and came to a conclusion at the end of April. Following a brief legislative

history of the budget resolution, this section provides a summary of overall budget

resolution policies.

Legislative History. The House Budget Committee reported H.Con.Res. 95

on March 11, 2005 (H.Rept. 109-17), and the Senate Budget Committee reported

S.Con.Res. 18 on the same day, but without a written report.15

The House considered H.Con.Res. 95 on March 16 and 17 under the terms of

a special rule, H.Res. 154, which had been reported by the House Rules Committee

(H.Rept. 109-19, March 15, 2005). Four amendments made in order under the

special rule were offered and defeated: (1) an amendment in the nature of a

substitute, offered by Representative Jeb Hensarling on behalf of the Republican

Study Committee, by a vote of 102-320; (2) an amendment offered by Representative

David Obey, ranking minority member of the House Appropriations Committee, by

a vote of 180-242; (3) an amendment in the nature of a substitute, offered by

Representative Melvin Watt on behalf of the Congressional Black Caucus, by a vote

of 134-292; and (4) an amendment in the nature of a substitute, offered by

Representative John Spratt, ranking minority member of the House Budget

Committee, by a vote of 165-264.

After action on the amendments was completed, the House passed H.Con.Res.

95 by a vote of 218-214.

The Senate began consideration of S.Con.Res. 18 by unanimous consent on

March 14. Consideration of the measure continued on March 15 and 16, culminating

with its passage, as amended, on March 17, by a vote of 51-49. The Senate

considered about 70 amendments, agreeing to dozens of them.

The House and Senate convened a conference on their competing versions of

the budget resolution, with H.Con.Res. 95 serving as the conference vehicle. The

conferees met on April 27 and the conference report was filed the next day.16 The

House agreed to the conference report on April 28, by a vote of 214-211, and the

Senate agreed to it the same day, by a vote of 52-47.

Overall Budget Resolution Policies. In terms of overall budget resolution

policies, the House and Senate began the conference from positions of fundamental

agreement. The budget resolutions reported by the House and Senate Budget

House Budget Committee, Concurrent Resolution on the Budget — Fiscal Year 2006 (to

accompany H.Con.Res. 95), H.Rept. 109-17, March 11, 2005. The Senate Budget

Committee issued a committee print, Concurrent Resolution on the Budget, FY 2006

(committee print to accompany S.Con.Res. 18), S.Prt. 109-18, 2005, in lieu of a written

report.

Concurrent Resolution on the Budget for Fiscal Year 2006, conference report to

accompany H.Con.Res. 95, H.Rept. 109-62, April 28, 2005.

CRS-15

Committees hewed fairly closely to the general contours of the President’s budget

proposals. Both resolutions employed a five-year time frame covering FY2006FY2010, with revisions included for the then current fiscal year, FY2005, as well.

The three main pillars of budget policy, as reflected in the reported budget

resolutions, involved significant restraint on the growth of discretionary spending,

a more modest curtailment of the growth of mandatory spending, and further

reductions in revenues, although at a more modest level compared to the actions

taken in 2001 and 2003.

While the House agreed to the budget resolution reported by the House Budget

Committee without change, the Senate revised the version reported by its Budget

Committee. Although dozens of amendments were adopted in the Senate, many of

them involved precatory language (i.e., sense-of-the-Senate statements) or procedural

matters rather than changes in spending or revenue levels. Some significant changes

were made in budget levels, including to reconciliation instructions (as discussed

below), but the basic outline of budget policy recommended by the Senate Budget

Committee remained intact.

The positions of the House, the Senate, and the final conference agreement

regarding several key components of the budget plan are presented in Table 7. With

regard to the cumulative deficit over the five-year period, the differences between the

House ($1.359 trillion) and the Senate ($1.450 trillion) were relatively modest; the

conference agreement essentially split the difference ($1.400 trillion). House-Senate

differences regarding total mandatory outlays and total revenues for the five-year

period were even more narrow. Again, the conference agreement essentially split the

difference ($9.401 trillion) with respect to total mandatory outlays over five years.

In the case of total revenues, the House-Senate difference was negligible ($23

billion), and the conference agreement ($12.440 trillion) was within $1 billion of the

House position.

Table 7. Selected Components of the FY2006 Budget

Resolution: House, Senate, and Conference Levels

(amounts in $ billions)

House

Senate

Conference

-376

-368

-383

Deficit for FY2006-FY2010

-1,359

-1,450

-1,400

Total Mandatory Outlays for FY2006-FY2010

9,374

9,432

9,401

Total Revenues for FY2006-FY2010

12,441

12,418

12,440

Deficit for FY2006

Source: Conference report to accompany H.Con.Res. 95, Concurrent Resolution on the Budget for

Fiscal Year 2006, H.Rept. 109-62, Apr. 28, 2005, pp. 50-67.

CRS-16

Reconciliation Directives in the

FY2006 Budget Resolution

The FY2006 budget resolutions reported by the House and Senate Budget

Committees, and adopted by the House and Senate, included reconciliation directives

for multiple reconciliation measures.

Initial House Action

The House Budget Committee reported the FY2006 budget resolution,

H.Con.Res. 95, on March 11, 2005. As reported, the budget resolution contained two

sets of reconciliation instructions to House committees in Section 201 (see Table 8).

Table 8. Initial Reconciliation Instructions: House

(amounts in $ billions)

Reported and Passed

House Committee

FY2006

Spending (Mandatory outlays)

FY2006FY2010

(submission date: September 16)

Agriculture

-0.797

-5.278

Education and the Workforce

-2.097

-21.410

Energy and Commerce

-0.630

-20.002

Financial Services

-0.030

-0.270

Judiciary

-0.123

-0.603

Resources

-0.096

-1.413

Transportation and Infrastructure

-0.012

-0.103

Veterans’ Affairs

-0.155

-0.798

Ways and Means

-3.907

-18.680

-7.847

-68.557

Total

Revenues

Ways and Means Committee

(reporting date: June 24)

-16.623

-45.000

Source: House Budget Committee, Concurrent Resolution on the Budget — Fiscal Year 2006 (to

accompany H.Con.Res. 95), H.Rept. 109-17, Mar. 11, 2005, pp. 69-71 and 136-137.

Section 201(a) instructed nine House committees to submit reconciliation

recommendations to the Budget Committee that would reduce mandatory outlays by

$7.847 billion in FY2006 and $68.557 billion in FY2006-FY2010. In addition,

Section 201(b) instructed the Ways and Means Committee to report a reconciliation

CRS-17

bill reducing revenues by not more than $16.623 billion in FY2006 and $45.000

billion in FY2006-FY2010. The net effect of the spending and revenue reconciliation

instructions on the deficit estimates was a decrease of $23.557 billion over the fiveyear period.

The House Budget Committee contemplated a schedule in which the revenue

reconciliation bill would be considered first, before the August recess, and the

spending reconciliation bill would be considered second, after the August recess.

The submission deadline for the spending reconciliation recommendations was

September 16, 2005; the reporting deadline for the revenue reconciliation measure

was June 24.

Each of the four amendments made in order during initial House consideration

of the budget resolution would have modified or eliminated the reconciliation

instructions for FY2006-FY2010 recommended by the House Budget Committee.

The Hensarling amendment would have increased the savings in mandatory outlays

to more than $125 billion and the revenue reductions to about $106 billion; the Obey

amendment would have added revenue increases of nearly $26 billion, intended to

be targeted at wealthy taxpayers; and the Watt and Spratt amendments would have

eliminated the reconciliation instructions completely. As indicated earlier, all of the

amendments were defeated; subsequently, the House agreed to the budget resolution

without having made any changes in the reconciliation instructions as reported by the

Budget Committee.

Initial Senate Action

The Senate Budget Committee reported its version of the FY2006 budget

resolution, S.Con.Res. 18, on March 11, 2005.17 The reconciliation instructions

included in the budget resolution as reported by the Senate Budget Committee

differed in several respects from the instructions in the budget resolution agreed to

by the House (see Table 9).

First, Section 201(a) of S.Con.Res. 18 included instructions to seven committees

to achieve savings in mandatory outlays of $4.244 billion in FY2006 and $32.042

billion in FY2006-FY2010, less than half the five-year amount recommended by the

House. Second, Section 201(b) of the measure included instructions to the Senate

Finance Committee to reduce revenues by $14.939 billion in FY2006 and $70.154

billion in FY2006-FY2010, about $25 billion more over five years than the amount

recommended by the House. Third, Section 201(c) of the measure recommended an

increase in the statutory limit on the public debt of $446.464 billion, an issue the

House did not address in reconciliation. The net effect on the deficit estimates of the

spending and revenue reconciliation instructions reported by the Budget Committee

was an increase of $23.557 billion over the five-year period.

The committee issued a print in lieu of a report: Senate Budget Committee, Concurrent

Resolution on the Budget, Fiscal Year 2006 (committee print to accompany S.Con.Res. 18),

S.Prt. 109-18, 2005.

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Table 9. Initial Reconciliation Instructions: Senate

(amounts in $ billions)

Reported

Senate Committee

FY2006

Passed

FY2006FY2010

FY2006

FY2006FY2010

(submission date: June 6)

Spending (mandatory outlays)

Agriculture, Nutrition, and Forestry

-0.171

-2.814

-0.171

-2.814

Banking, Housing, and Urban

Affairs

-0.030

-0.270

-0.030

-0.270

Commerce, Science, and

Transportation

-0.008

-2.576

-0.008

-2.576

Energy and Natural Resources

-0.033

-2.658

-0.033

-2.658

Environment and Public Works

-0.014

-0.112

-0.014

-0.112

Finance

-1.784

-15.036

Health, Education, Labor, and

Pensions

-2.204

-8.576

-2.204

-8.576

-4.244

-32.042

-2.460

-17.006

Total

(reporting date: September 7)

Revenues

Finance Committee

-14.939

-70.154

-19.016

-128.580

Statutory Debt Limit

(reporting date: September 16)

Finance Committee

+446.464

Sources: (1) Senate Budget Committee, Concurrent Resolution on the Budget, Fiscal Year 2006

(committee print to accompany S.Con.Res. 18), S.Prt. 109-18, 2005, p. 43; and (2) S.Con.Res. 18, as

reported, Mar. 11, 2005, pp. 28-30; and (3) S.Con.Res. 18, as passed by the Senate, Mar. 17, 2005,

pp. 28-30.

Finally, the Senate Budget Committee proposed to reverse the timing of

legislative action compared to the House’s recommendation, imposing an earlier

submission date for spending reconciliation recommendations (June 6, instead of

September 16 in the House) and a later reporting date for revenue reconciliation

legislation (September 7, instead of June 24 in the House). The reporting date for the

reconciliation measure pertaining to the public debt limit was September 16.

The Senate, unlike the House, agreed to amendments that changed the

reconciliation instructions recommended by the Budget Committee. On March 17,

the Senate adopted three amendments that revised both the spending and revenue

reconciliation instructions. First, the Senate adopted Bingaman (for Smith)

Amendment #204, by a vote of 52-48. The amendment struck the spending

reconciliation instructions to the Finance Committee in Section 201(a)(6) and added

CRS-19

to the budget resolution a provision establishing a reserve fund of $1.5 million for the

creation of a 23-member Bipartisan Medicaid Commission. It had been widely

assumed that the Finance Committee would consider reductions in Medicaid

spending in order to meets its instruction of $15.036 billion in savings over five

years; consequently, the amendment was seen as a means of protecting the Medicaid

program from spending cuts.

The second amendment that the Senate adopted on March 17 was Bunning

Amendment #241, by a vote of 55-45. The amendment, which increased the revenue

reduction under reconciliation by $4.8 billion for FY2006 and $63.9 billion for

FY2006-FY2010, was characterized by Senator Bunning as accommodating the

repeal of a 1993 increase in the taxation of Social Security benefits.

Finally, the Senate adopted on March 17 Kennedy Amendment #177, as

modified, by a vote of 51-49. The amendment decreased the instruction to reduce

revenues by $723 million for FY2006 and $5.474 billion for FY2006-FY2010,

thereby offsetting spending increases for education programs.

The Senate also considered and rejected several other amendments that would

have modified the reconciliation instructions. In particular, the Senate rejected

Cantwell Amendment #168, by a vote of 49-51. The amendment, which would have

struck the instruction in Section 201(a)(4) to the Energy and Natural Resources

Committee to reduce outlays by $2.658 billion over five years, was characterized by

Senator Cantwell as precluding the opening of the Arctic National Wildlife Refuge

(ANWR) to oil exploration.

In the net, the amendments that the Senate adopted decreased the total outlay

reduction over five years by $15.036 billion, from the reported level of $32.042

billion to $17.006 billion, and increased the total revenue reduction over five years

by $58.426 billion, from the reported level of $70.154 billion to $128.580 billion.

By scaling back the outlay reductions and boosting the revenue reductions required

by the reconciliation instructions, the Senate dramatically changed the net effect of

reconciliation on the total deficit estimate over the five-year period. While the

reconciliation instructions in the budget resolution as reported by the Senate Budget

Committee would have increased the deficit in the net by about $38 billion over five

years, the instructions in the resolution as passed by the Senate would have increased

the deficit in the net by about an additional $73 billion over that period, or about

$111 billion in total.

Action on the Conference Report

The conferees reported their agreement on H.Con.Res. 95 on April 28, 2005.

In addition to the separate spending and revenue reconciliation measures that each

chamber had proposed, the conferees agreed to a third reconciliation measure, on the

public debt limit, as had been proposed by the Senate.

In the case of the spending and revenue reconciliation measures, the conferees

found a middle ground between the positions of the two chambers (see Table 10),

which was close to the levels reported by the Senate Budget Committee.

CRS-20

Table 10. Reconciliation Instructions for FY2006-FY2010:

Summary of House, Senate, and Conference Amounts

(amounts in $ billions)

Reconciliation Instructions

for FY2006-FY2010

HousePassed

SenatePassed

Conference

Agreement

Changes in Mandatory Outlays

-68.557

-17.006

-34.658

Changes in Revenues

-45.000

-128.580

-70.000

Change in Statutory Debt Limit

[none]

+446.464

+781.000

Net Effect on Deficit

-23.557

+111.574

+35.342

Source: Concurrent Resolution on the Budget for Fiscal Year 2006 (conference report to accompany

H.Con.Res. 95), H.Rept. 109-62, Apr. 28, 2005, pp. 11-14 and 68-71.

Note: Negative sign (-) denotes a decrease; positive sign (+) denotes an increase.

With respect to savings in mandatory outlays, the conferees recommended

reconciliation instructions to eight House and eight Senate committees, requiring

total savings of $34.658 billion over FY2006-FY2010.18 This was about half the

amount of savings recommended by the House ($68.557 billion) and about twice the

amount of savings recommended by the Senate ($17.006 billion). The House’s

reconciliation instructions had involved nine House committees and the Senate’s

instructions had involved seven Senate committees; in the final instructions, the

House Veterans’ Affairs Committee was dropped and the Senate Judiciary

Committee was added.

Table 11 presents more detailed information on the reconciliation instructions

included in the conference agreement.

For two committees, the House Education and Workforce Committee and the Senate

Health, Education, Labor, and Pensions Committee, the period of savings includes FY2005

as well.

CRS-21

Table 11. Reconciliation Instructions in the Conference

Agreement on the FY2006 Budget Resolution

Amount

($ billions)

Committee

FY2006FY2010

FY2006

Spending (mandatory outlays)

(submission date: September 16)

House Agriculture

-0.173

-3.000

-0.992

-12.651

House Energy and Commerce

-0.002

-14.734

House Financial Services

-0.030

-0.470

House Judiciary

-0.060

-0.300

House Resources

—

-2.400

-0.012

-0.103

-0.250

-1.000

Total for House Committees

-1.519

-34.658

Senate Agriculture, Nutrition, and Forestry

-0.173

-3.000

Senate Banking, Housing, and Urban Affairs

-0.030

-0.470

Senate Commerce, Science, and Transportation

-0.010

-4.810

Senate Energy and Natural Resources

—

-2.400

Senate Environment and Public Works

-0.004

-0.027

—

-10.000

Senate Health, Education, Labor, and Pensions a

-1.242

-13.651

Senate Judiciary

-0.060

-0.300

-1.519

-34.658

House Education and the Workforce

House Transportation and Infrastructure

House Ways and Means

Senate Finance

Total for Senate Committees

Revenues

(reporting date: September 23)

House Ways and Means Committee

-11.000

-70.000

Senate Finance Committee

-11.000

-70.000

Statutory Debt Limit

(reporting date: September 30)

House Ways and Means Committee

+781.000

Senate Finance Committee

+781.000

Source: Concurrent Resolution on the Budget for Fiscal Year 2006 (conference report to accompany

H.Con.Res. 95), H.Rept. 109-62, Apr. 28, 2005, pp. 11-14 and 68-71.

a. The reconciliation instructions to the House Education and the Workforce Committee and the

Senate Health, Education, Labor, and Pensions Committee for FY2006 and FY2006-FY2020

also encompass FY2005.

b. The reconciliation instructions to the Ways and Means Committee are “to reduce the deficit,”

which may include reductions in outlays, increases in revenues, or a combination of the two.

CRS-22

Subsequent Changes in Budget Policy

Affecting Reconciliation

Beginning in September 2005, Congress and the President have enacted various

measures intended to provide relief to the victims of Hurricane Katrina and Hurricane

Rita and to fund reconstruction activities.19 Legislative efforts in this area have

continued into 2006. Republican leaders in the House and Senate and others

expressed concern about the impact of these relief and reconstruction efforts on the

federal deficit and developed plans to enact offsets to some of the relief costs.

On October 6, 2005, Speaker of the House J. Dennis Hastert issued a press

release on a plan developed by House Republican leaders.20 In commenting on the

plan, Speaker Hastert noted:

Hurricanes Katrina and Rita have dealt a severe blow to our nation, both in terms

of human and economic losses. We can and will recover, but it will require some

serious belt-tightening throughout the federal government. House Republican

leadership, Committee Chairmen and key members of the conference have

worked together to come up with a proposal we believe can accomplish this task.

In order to maintain our commitment to deficit reduction, we are proposing to

move a mid-session Budget Amendment for the first time in almost 30 years

(1977). The Amendment will increase the total amount of savings which can

help pay for these unexpected costs.

The “Hastert Plan” has four elements, according to the Speaker’s press release:

an increase of $15 billion or more in the mandatory savings required

to be achieved through the budget reconciliation process, from about

$35 billion for FY2006-FY2010 to at least $50 billion for that

period, as well as the “dollar-for-dollar” offset of any new

mandatory spending for disaster relief included in reconciliation

legislation;

continued restraint on discretionary spending, including an

additional across-the-board cut in discretionary spending for

FY2006;

packages of additional rescissions to further help offset

reconstruction costs; and

Hurricane Katrina made landfall in Louisiana, Mississippi, and Alabama on August 29,

2005 (after impacting Florida on August 25), and Hurricane Rita made landfall in Louisiana

and Texas on September 24. CRS reports on different aspects of this issue are listed on the

CRS Web page [http://www.crs.gov] under the Current Legislative Issues term “Disaster —

Hurricanes.”

Speaker’s Press Office, Speaker Hastert Comments on Republicans’ Initial Spending Cut

Proposal, October 6, 2005, available on the Web at [http://www.speaker.gov].

CRS-23

the permanent elimination, through “deauthorization,” of programs

already “zeroed out” in the current appropriations process.21

As announced by the Speaker, the plan did not indicate what portion or amount

of costs would be offset. The Speaker’s press release stated that a first step in

implementing the plan could be the consideration of a revised budget resolution for

FY2006.22 House action on a revised budget resolution tentatively was scheduled for

Thursday, October 20, but action was postponed and was not rescheduled.23 The

House and Senate Budget Committees may mark up the budget resolution for

FY2007 as early as March 2006. In some past years, the budget resolution has

included revised figures for the fiscal year in progress.

According to an assessment made by the Senate Budget Committee on January

18, 2006, the five-year costs stemming from these measures, covering FY2006FY2010, are estimated at $98.921 billion. Most of the relief costs — $62.3 billion

— are attributable to two emergency supplemental appropriations acts, P.L. 109-61

and P.L. 109-62. The Senate Budget Committee’s assessment does not reflect

several measures still pending in the House or Senate or expected to be considered

at a later time. These measures could increase the costs for hurricane-related relief

by tens of billions of dollars.

In the meantime, seven of the eight House committees were informed by the

Republican leadership that they should work toward achieving, in the aggregate, an

additional $15 billion in five-year savings through their reconciliation

recommendations. Although the increased savings amounts for each committee were

not announced officially, media reports indicated that the House Ways and Means

and Education and Workforce Committees were expected to achieve most of the

increased savings, roughly an additional $7 billion and $5 billion, respectively.24

By informal agreement, the schedule of reconciliation actions in the House was

delayed to accommodate these developments.

In the Senate, the Republican leadership announced its support for enacting

offsets, but did not specify a comprehensive plan to do so or indicate any intent to

consider a revised budget resolution. On September 12, Senate Majority Leader Bill

Frist and Senate Budget Committee Chairman Judd Gregg issued a joint statement

For more information on this topic, see CRS Report RL33127, Speaker Hastert’s Plan to

Offset Spending: A Procedural Perspective, by Robert Keith.

Procedures for revising a budget resolution are discussed in CRS Report RL33122,

Congressional Budget Resolutions: Revisions and Adjustments, by Robert Keith.

See (1) “Leaders Delay Budget Vote in House,” by Susan Davis and Peter Cohn,

CongressDaily AM, October 20, 2005; (2) “Senate Panel Looks to Finish Cuts October 24;

Blunt Plans to Try Again on Amendment,” by Jonathan Nicholson, BNA Daily Report for

Executives, no. 203, October 21, 2005, p. G-9; and (3) “Blunt Won’t Gamble on Budget

Votes,” by Alexander Bolton, The Hill, October 21, 2005.

See, for example, “House Looking to Two Committees to Boost Reconciliation Spending

Cut Totals,” by Jonathan Nicholson, in BNA’s Daily Report for Executives, no. 206,

October 26, 2005, p. G-14.

CRS-24

indicating that, in order to allow “the Congress and the committees to address the

immediate concerns related to the recent hurricane and not be encumbered by budget

reconciliation requirements in the near term,” the Senate Budget Committee would

not meet to markup the spending reconciliation bill until October 26.25

On September 27, Senate Majority Leader Frist, Budget Committee Chairman

Gregg, and other members of the Republican leadership, wrote to the chairmen of the

committees subject to reconciliation instructions, asking them to recommend

spending reductions “above and beyond” those already called for under the

instructions as part of the offset efforts. In addition, the leadership also sent letters

to the chairmen of non-reconciled committees, encouraging them to find savings

within their committee’s jurisdiction as well.26 Specific amounts of additional

savings for the committees were not identified in the correspondence.

As discussed in the next section, the spending reconciliation bills reported by

the House and Senate Budget Committees proposed net savings substantially greater

than were required, but the savings were scaled back somewhat during further

legislative action. According to CBO, the net savings over five years attributed to the

conference agreement on the spending reconciliation bill amount to $39.523 billion

(assuming the correction of two apparent drafting errors), which is nearly $5 billion

more than required under the reconciliation instructions in the FY2006 budget

resolution.

Additional savings were achieved in appropriations legislation enacted late in

2005, including a government-wide, one-percent across-the-board spending cut in the

Defense Appropriations Act for FY2006 (Division B, Section 3801 of P.L. 109-148,

enacted into law on December 30, 2005).

Reconciliation Legislation in 2005:

Summary and Legislative History

Under the revised schedule for reconciliation actions, the House and Senate

passed the spending reconciliation bill in November, reached a conference agreement

in December, and finally cleared the measure for the President on February 1;

President Bush signed the Deficit Reduction Act of 2005 into law (P.L. 109-171) on

February 8. Both chambers passed the revenue reconciliation bill late in 2005,

reached a conference agreement in May 2006, and cleared the measure for the

President on May 11; President Bush signed the Tax Increase Prevention and

Reconciliation Act of 2005 into law (P.L. 109-222) on May 17, 2006. The need to

consider a debt-limit reconciliation bill has been obviated by the enactment of

another measure (P.L. 109-182).

The statement is available on the website of the Senate Budget Committee (Republican)

at [http://www.senate.gov/~budget/republican/] under “News Room.”

Examples of the letters, as well as a September 28, 2005 press release issued by Budget

Committee Chairman Gregg on the subject, are available on Senate Budget Committee

website, cited above.

CRS-25

Spending Reconciliation Legislation

Initial Senate Action. The Senate Budget Committee met on October 26,

2005, and ordered the omnibus spending reconciliation bill, S. 1932 (the Deficit

Reduction Omnibus Reconciliation Act of 2005), reported by a party-line vote of 1210. The bill was reported the following day, without a written report.27

According to the Senate Budget Committee, the submissions from the instructed

committees exceeded the outlay savings required by the instructions in the aggregate

by $4.649 billion for FY2006 and $4.456 billion for FY2006-FY2010. The FY2006

outlay savings totaled $6.168 billion, compared to instructions totaling $1.519

billion; the FY2006-FY2010 outlay savings totaled $39.114 billion, compared to

instructions totaling $34.658 billion. All eight of the instructed committees met or

exceeded their instructions for FY2006 and exceeded their instructions for FY2006FY2010. A summary of CBO’s scoring of the savings in S. 1932, as reported by

committee (and as passed), is presented in Table 12.

The Senate began consideration of S. 1932 on October 31. After four days of

consideration, the Senate passed the bill on November 3, by a vote of 52-47. During

Senate consideration of the bill, 20 amendments were adopted, nine were rejected,

and four were withdrawn; additionally, nine amendments fell under points of order.

Ten of the 20 amendments that were adopted had a significant budgetary impact,

including three with an outlay impact in FY2006-FY2010 of about $1 billion or

more: (1) Enzi Amendment #2352, which increased education spending by $2.555

billion; (2) Bingaman Amendment #2365, which reduced Medicaid spending by

$1.194 billion; and (3) Feinstein Amendment #2411, which increased Medicaid

spending by $950 million.28 In the net, the amendments adopted by the Senate

reduced the savings from the reported level by $746 million in FY2006 (to $5.422

billion) and by $4.470 billion in FY2006-FY2010 (to $34.644 billion).

As shown in Table 12, the outlay savings in the bill as passed by the Senate

exceeded the instructed level for FY2006 by $3.963 billion and virtually matched the

instructed level for FY2006-FY2010 (falling below by $14 million).29

Initial House Action. The House Budget Committee met on November 3 to

consider the spending reconciliation bill and ordered it reported by a party-line vote

of 21-17. The bill, H.R. 4241, the Deficit Reduction Act of 2005, was reported on

November 7 (H.Rept. 109-276). During the committee markup of the measure

In lieu of a written report, the Senate Budget Committee issued a print, Deficit Reduction

Omnibus Reconciliation Act of 2005, S.Prt. 109-37, October 2005.

The impact of the amendments is assessed in: Congressional Budget Office, Letter to the

Honorable Judd Gregg, November 8, 2005, Table 2.

The estimated outlay savings for the bill, as passed by the Senate, reflect in Title I

(Committee on Agriculture, Nutrition, and Forestry) the enactment of H.R. 2744, the

Agriculture, Rural Development, Food and Drug Administration, and Related Agencies

Appropriations Act, 2006 (which became P.L. 109-97 on November 10, 2005).

CRS-26

(which, under the rules of the reconciliation process, does not allow substantive

amendments), the committee rejected six motions offered by Democratic Members

to direct the chairman to request of the House Rules Committee that certain

amendments be made in order during consideration of the Deficit Reduction Act of

2005, and that the special rule for consideration of the bill not allow its consideration

until after the House has considered the revenue reconciliation bill.

Table 12. CBO Scoring of Spending Reconciliation Legislation:

Senate Reported and Passed (By Title/Committee)

(outlays in $ billions)

Instructions

Reported

Passed

FY2006

FY2006FY2010

FY2006

FY2006FY2010

FY2006

FY2006FY2010

Agriculture, Nutrition,

and Forestry

-0.173

-3.000

-0.196

-3.014

-0.108

-2.663

Banking, Housing, and

Urban Affairs

-0.030

-0.470

-0.030

-0.570

-0.030

-0.570

Commerce, Science,

and Transportation

-0.010

-4.810

-0.010

-5.984

-0.010

-5.311

Energy and Natural

Resources

—

-2.400

0.000

-2.501

0.000

-2.501

Environment and

Public Works

-0.004

-0.027

-0.004

-0.030

-0.004

-0.030

—

-10.000

-0.819

-10.006

-1.691

-9.299

Health, Education,

Labor, and Pensions

-1.242

-13.651

-5.015

-16.431

-3.494

-13.874

Judiciary

-0.060

-0.300

-0.094

-0.578

-0.085

-0.394

-1.519

-34.658

-6.168

-39.114

-5.422

-34.644

Finance

Total

Sources: (1) Senate Budget Committee, Deficit Reduction Omnibus Reconciliation Act of 2005, S.Prt.

109-37, October 2005, pp. 8-12; and (2) Congressional Budget Office, Letter to the Honorable Judd

Gregg, Nov. 8, 2005, Table 1.

Notes: Details may not add to totals due to rounding. The reconciliation instructions to the Health,

Education, Labor, and Pensions Committee for FY2006 and FY2006-FY2020 also encompassed

FY2005. The estimated savings for Title I (Committee on Agriculture, Nutrition, and Forestry), as

passed by the Senate, reflect enactment of H.R. 2744, the Agriculture, Rural Development, Food and

Drug Administration, and Related Agencies Appropriations Act, 2006 (which became P.L. 109-97 on

Nov. 10, 2005).

CRS-27

According to scoring by CBO, the reconciliation submissions of each of the

eight instructed committees, as shown in Table 13, met or exceeded (substantially

exceeded, in some instances) its instructions for FY2006-FY2010. The submissions

of two committees in particular, Education and Workforce and Ways and Means,

exceeded the required five-year savings by $7.771 billion and $7.048 billion,

respectively. The combined savings from all eight committees, amounting to

$53.918 billion over five years, exceeded the total instructed levels by $19.260

billion, more than achieving the leadership’s request for an additional $15 billion in

outlay savings.

Table 13. CBO Scoring of Spending Reconciliation Legislation:

House Reported and Passed (By Title/Committee)

(outlays in $ billions)

Instructions

House

Committee

Reported

Passed

FY2006

FY2006FY2010

FY2006

FY2006FY2010

FY2006

FY2006FY2010

Agriculture a

-0.173

-3.000

-0.567

-3.650

-0.555

-3.503

Education and the

Workforce b

-0.992

-12.651

-7.678

-20.422

-7.678

-20.422

Energy and

Commerce

-0.002

-14.734

+2.832

-17.066

+2.852

-16.576

Financial Services

-0.030

-0.470

-0.030

-0.470

-0.030

-0.470

Judiciary

-0.060

-0.300

-0.076

-0.428

-0.076

-0.428

Resources

—

-2.400

-0.006

-3.678

-0.006

-0.286

Transportation

and Infrastructure

-0.012

-0.103

-0.030

-0.156

-0.030

-0.156

Ways and Means

-0.250

-1.000

-0.100

-8.048

-0.100

-8.048

Total

-1.519

-34.658

-5.655

-53.918

-5.623

-49.889

Sources: (1) Congressional Budget Office, “Cost Estimates for Reconciliation Legislation,” providing

estimates for committee-reported legislation, and (2) Letter from CBO Director Holtz-Eakin to Budget

Committee Chairman Nussle, Nov. 18, 2005, Table 1, both available on the CBO website at

[http://www.cbo.gov/]

The estimates for the House Agriculture Committee reflect scorekeeping adjustments for

commodity programs made by the House Budget Committee affecting FY2010 and beyond.

b. The reconciliation instructions to the House Education and the Workforce Committee for FY2006

and FY2006-FY2020 also encompassed FY2005.

CRS-28

The House tentatively was scheduled to consider the spending reconciliation bill

on November 10 pursuant to a special rule reported by the House Rules Committee.

The special rule, H.Res. 542 (H.Rept. 109-281), which was approved by the Rules

Committee on November 9 by voice vote, provided (under a self-executing feature)

for the adoption of amendments modifying the language regarding food stamp

eligibility and striking provisions dealing with the Arctic National Wildlife Reserve

(ANWR) and oil and gas leasing in the Outer Continental Shelf (OCS), and barred

the consideration of any further amendments. Neither the rule nor the bill were

considered at that time, however. On November 17, the House tabled H.Res. 542

pursuant to the terms of a special rule (H.Res. 558) on a further continuing resolution

for FY2006 (H.J.Res. 72).

On November 17, the House Rules Committee met and reported a second

special rule for the consideration of the spending reconciliation bill. The special rule,

H.Res. 560 (H.Rept. 109-303), provided (under a self-executing feature) for the

adoption of amendments modifying the language regarding food stamp eligibility and

striking provisions dealing with ANWR and OCS leasing, as in the first rule, and

modifying the Medicaid language, and barred the consideration of any further

amendments. Later that day, the House considered and passed H.Res. 560 by voice

vote, after agreeing to an amendment offered by Representative Adam Putnam. The

Putnam amendment provided for the incorporation of further amendments into the

bill under a self-executing feature of the special rule.

Later on November 17, the House considered H.R. 4241 under the closed rule,

passing the bill early on November 18, by a vote of 217-215. Beyond the

amendments incorporated automatically pursuant to H.Res. 560, no amendments

were considered. According to CBO, the modifications made pursuant to H.Res. 560

reduced the overall outlay savings in the bill to $49.889 billion over five years (see

Table 13).30

In order to prepare for conference action, the House then immediately passed

the Senate companion bill, S. 1932, without objection, after amending it to substitute

the House-passed language in H.R. 4241.

Action on the Conference Report. On December 14, the Senate disagreed

to the House amendment to S. 1932 and requested a conference. Seven different

motions to instruct conferees were offered and agreed to that day: DeWine (71-20),

Kohl (75-16), Harkin (66-26), Baucus (75-16), Carper (64-27), Kennedy (83-8), and

Reed (63-28). Senate conferees were appointed the next day.

On December 16, the House agreed to the request for a conference and

appointed conferees. A motion to instruct conferees, offered by Representative John

Letter from CBO Director Holtz-Eakin to Budget Committee Chairman Nussle,

November 18, 2005, Table 1, available on the CBO website at [http://www.cbo.gov/] The

estimate reflects scorekeeping adjustments for agricultural commodity programs made by

the House Budget Committee that affect FY2010 and beyond. See also the document on the

House Budget Committee’s website [http://www.house.gov/budget/], The Deficit Reduction

Act of 2005 As Amended by the Manager’s Amendment, November 17, 2005.

CRS-29

Spratt, ranking minority member of the House Budget Committee, was agreed to by

a vote of 246-175.

The conference report (H.Rept. 109-362) on S. 1932, which was renamed the

Deficit Reduction Act of 2005, was reported on December 19 (during the legislative

day of December 18).31 Appendix A provides a contents listing of S. 1932 as set

forth in the conference report. The Congressional Budget Office estimated net

mandatory outlay savings under the measure of $38.810 billion over FY2006FY2010 (assuming that apparent drafting errors in two sections are corrected, CBO

noted, the five-year savings would increase by $713 million, to $39.523 billion).32

On December 19, the House agreed to the conference report by a vote of 212206. The Senate considered a motion to proceed to the consideration of the

conference report on December 19. Senate consideration of the conference report

occurred on December 19-21. On December 21, the Senate removed extraneous

matter from the legislation pursuant to a point of order raised under the “Byrd rule,”

and then, by a vote of 51-50 (with Vice President Cheney breaking a tie vote),

returned the amended measure to the House for further action.

The extraneous matter was removed from S. 1932 pursuant to a point of order

raised by Senator Kent Conrad, the ranking minority member of the Senate Budget

Committee.33 The point of order sought to strike four provisions from the measure:

Section 5001(b)(3), requiring the Secretary of Health and Human

Services to submit to Congress by August 1, 2007, a report on the

plan for the hospital value based purchasing program under

Medicare;

Section 5001(b)(4), requiring the Medicare Payment Advisory

Commission to submit to Congress by June 1, 2007, a report that

includes detailed recommendations on a structure of value based

payment adjustments for hospital services under Medicare;

a portion of Section 6043 (proposing a new subsection (e)(4) to the

proposed new Section 1916A of the Social Security Act), relating to

the negligent standard for hospitals and physicians who treat

Medicaid patients; and

The conference report also is set forth in the Congressional Record (daily ed.) of

December 18, 2005, vol. 151, no. 164, book II, at pages H12641-H12737.

See the CBO Cost Estimate on S. 1932, January 27, 2006, 80 p., available on the CBO

website at [http://www.cbo.gov] CBO identifies the apparent drafting errors as occurring

in Section 8006, regarding direct loans to parents of postsecondary students, and Section

10002(a)(2), dealing with bankruptcy fees.

The raising and disposition of the point of order, and other procedural actions related

thereto, appear in the Congressional Record (daily ed.) of December 21, 2005, at pages

S14204-S14205.

CRS-30

Section 7404, regarding eligibility for foster care maintenance

payments and adoption assistance.

Following an unsuccessful attempt to waive the “Byrd rule,” in which a waiver

motion offered by Senator Judd Gregg failed by a vote of 52-48 (by not achieving the

necessary 60 votes), the chair sustained the point of order against all of the sections

except for Section 7404.

In order to complete final action on S. 1932, the House and Senate had to

resolve the remaining differences with respect to Section 5001(b)(3) and (b)(4) and

the applicable portion of Section 6043. On December 21, Speaker J. Dennis Hastert

sought unsuccessfully to have the House concur in the Senate changes by unanimous

consent.34 At that time, the decision was made to carry over House action into early

2006, toward the beginning of the second session.

On February 1, the House considered H.Res. 653, a resolution reported by the

House Rules Committee (H.Rept. 109-366; January 31, 2006), which provided for

the concurrence by the House in the Senate amendment to the House amendment to

S. 1932.35 By agreeing to the resolution, by a vote of 216-214, the House cleared the

measure for the President.

Prior to agreeing to H.Res. 653, the House overcame a point of order raised by

Representative Jim McDermott, by a vote of 226-201. The point of order, raised

pursuant to Section 426(a) of the Congressional Budget Act of 1974, pertained to the

inclusion in S. 1932 of an unfunded mandate involving the child support enforcement

program.

Approval by the President and Subsequent Challenges. President

Bush signed the measure into law on February 8, as P.L. 109-171 (120 Stat. 4-184),

and issued a signing statement indicating how specified provisions in the law would

be regarded by the executive branch:

The executive branch shall construe section 1936(d)(2) of the Social Security Act

as enacted by section 6034 of the Act, which purports to make consultation with

a legislative agent a precondition to execution of the law, to call for but not

mandate such consultation, as is consistent with the Constitution’s provisions

concerning the separate powers of the Congress to legislate and the President to

execute the laws.

BNA Daily Report for Executives, “Senate OKs Budget Bill by Thin Margin, But Changes

Send Package Back to House,” by Kurt Ritterpusch, December 22, 2005, p. G-2.

House consideration of H.Res. 653 appears in the Congressional Record (daily ed.) of

February 1, 2006, at pages H37-H60 and H68-H114.

CRS-31

Sections 5006(b) and 5008(c) of the Act, and section 401A(a)(2)(C) of the

Higher Education Act of 1965 as enacted by section 8003 of the Act, call for

executive branch officials to submit legislative recommendations to the

Congress. The executive branch shall construe such provisions in a manner

consistent with the constitutional authority of the President to supervise the

unitary executive branch and to recommend for congressional consideration such

measures as the President shall judge necessary and expedient.36

At the same time, a dispute arose regarding an apparent clerical error in the

measure and its impact on the status of the Deficit Reduction Act of 2005 as public

law. The issue pertains to Section 5101 of the act, which deals with rental

reimbursement periods for durable medical equipment under Medicare. Section

5101(a) provides for a 13-month period for certain durable medical equipment, such

as wheelchairs, and Section 5101(b) provides for a 36-month period for oxygen

equipment.37 Apparently, due to a clerical error, the engrossed Senate amendment

mistakenly referred to a 36-month period in Section 5101(a), which the House agreed

to without correction; in the course of enrolling the measure for the President, the

erroneous reference to a 36-month period in the subsection was corrected to reflect

a 13-month period. According to the Congressional Budget Office, net Medicare

savings would be reduced by about $2 billion over a five-year period (FY2006FY2010) if the rental reimbursement period under Section 5101(a) were extended to

36 months.38

Due to concerns regarding the apparent clerical error, the Senate on February 8

passed by unanimous consent S.Con.Res. 80, a measure stating:

That the enrollment of the bill S. 1932 as presented to the President for his

signature on February 8, 2006, is deemed the true enrollment of the bill reflecting

the intent of the Congress in enacting the bill into law.39

The House has not considered S.Con.Res. 80.

White House spokesman Scott McClellan, in the daily press briefing on

February 13, indicated that the Administration regards S. 1932 as public law.40

The next day, February 14, House Democratic Leader Nancy Pelosi and other

members of the House Democratic leadership sent a letter to Speaker Hastert

requesting that the legislation be reconsidered. On February 16, House Democratic

The signing statement by President Bush, and a fact sheet on the law, are available at the

White House website under “Current News” for February 8, 2006

[http://www.whitehouse.gov].

See Deficit Reduction Act of 2005, conference report to accompany S. 1932, H.Rept. 109362, December 19, 2005, pp. 215-216.

Congressional Budget Office, letter of February 13, 2006, to the Honorable John Spratt

Jr. from Acting Director Donald B. Marron.

Congressional Record (daily ed.), February 8, 2006, p. S870.

BNA Daily Report for Executives, “Despite Clerical Error, White House Says New Deficit

Reduction Act Still Valid Law,” by Jonathan Nicholson, February 14, 2006, p. A-21.

CRS-32

Leader Pelosi offered a privileged resolution, H.Res. 687, directing the House

Committee on Standards of Official Conduct to conduct an investigation into the

matter; the House tabled the resolution by a vote of 219-187.41

At least five challenges to the Deficit Reduction Act of 2005 were raised in

federal district court, mainly on the ground that it violated the Bicameral Clause of

the Constitution (i.e., was not passed in identical form in both chambers).42 All five

lawsuits were dismissed at the district court level, including:

Zeigler v. Gonzalez, No. 1:06-CV-00080 (S.D. Ala.), filed on

February 13, 2006, in the U.S. District Court for the Southern

District of Alabama; decided by Chief Judge Callie V.S. Granade on

June 28, 2007;43

One Simple Loan. v. U.S. Secretary of Education, No. 06-CV-2979

(S.D.N.Y.), filed on April 18, 2006, in the U.S. District Court for the

Southern District of New York; decided by Judge Richard M.

Berman on June 9, 2006;44

California Department of Social Services v. Leavitt, CIV S-99-0355

(E.D. Calif.), filed in the U.S. District Court for the Eastern District

of California; decided by Judge Frank C. Dambrell, Jr. on July 18,

2006; and

Public Citizen v. Clerk of the District Court of the District of

Columbia, No. 1:06-00523-JDB (D.D.C.), filed on March 21, 2006,

in the U.S. District Court for the District of Columbia; decided by

Judge John D. Bates on August 11, 2006.45

Conyers v. Bush, No. 2:06-cv-11972 (E.D. Mich.) filed on April 28,

2006, by Representative John Conyers, the then-ranking member of

the House Judiciary Committee, and other ranking members of

Congressional Record (daily ed.), February 16, 2006, pp. H351-H352.

For a detailed discussion on this topic, see CRS Report RS22507, Constitutionality of the

Deficit Reduction Act of 2005: Litigation, by Thomas J. Nicola. Also, see (1) Roll Call,

“Judges Toss Pair of Legal Challenges to DRA,” by Jennifer Yachnin, August 14, 2006; and

(2) National Health Law Program, Health Advocate, “The Deficit Reduction Act of 2005:

Congress Targets Beneficiaries for Cuts,” no. 224, Spring 2006, p. 2.

CQ Today, “Lawsuit by Conservative Alabama Lawyer Seeks to Invalidate Savings Law,”

by Steven T. Dennis, February 15, 2005.

The actions in this case are explained in CRS Congressional Distribution Memorandum

by Thomas J. Nicola, Constitutionality of the Deficit Reduction Act of 2005: Dismissal of

One Simple Loan, et al. v. U.S. Secretary of Education, et al., July 17, 2006, 3 pages.

BNA Daily Report for Executives, “Federal Judge Tosses Suit Challenging Deficit

Reduction Law,” by Jonathan Nicholson, August 14, 2006, p. A-22. Information on the

lawsuit also is available at Public Citizen’s website at

[http://www.citizen.org/hot_issues/issue.cfm?ID=1335].

CRS-33

House committees with jurisdiction over agencies affected by the

Deficit Reduction Act of 2005, in United States District Court for

the Eastern District of Michigan (Judge Nancy Edmunds).46

Appeals have been pursued in several of the cases. On May 29, 2007, the

dismissal of the Public Citizen case was affirmed by the Court of Appeals for the

District of Columbia Circuit.47 In that case, the plaintiff reportedly has asked for a

review of the matter by the Supreme Court.48

Dismissal of the lawsuits by the district courts principally was based on the

Enrolled Bill Rule, arising from a case decided by the Supreme Court more than a

century ago, Marshall Field & Co. v. Clark, 143 U.S. 649, 672 (1892). Under the

rule, the signatures of the presiding officers of the House and Senate on the enrolled

bill authenticates its passage by the two chambers. One media report speculated that

the Enrolled Bill Rule may be given less consideration in subsequent court action.49

While previous media reports indicated that the House and Senate might

consider legislation making the two “technical corrections” identified by the

Congressional Budget Office (discussed below),50 the House and Senate adjourned

sine die on December 8 without taking such action.51

Brief Summary of the Act. The Deficit Reduction Act of 2005 consists of

ten titles, as shown in Table 14.

The changes made by the act affect a wide array of federal programs, including

federal assistance to agriculture (Title I); housing programs and the deposit insurance

system for banks and credit unions (Title II); the Federal Communication

Commission’s authority to auction licenses to use the electromagnetic spectrum,

federal assistance to consumers for the transition to digital television, and grants to

For more information on this action, see the press release of April 27, 2006, on the

minority website of the House Judiciary Committee at

[http://www.house.gov/judiciary_democrats/releases/budgetlawsuitpr42706.pdf]

CRS Report RS22507, ibid., p. 5.

BNA Daily Report for Executives, “Deficit Reduction Law Legal Despite Drafting Glitch,

Courts Say,” by Jonathan Nicholson, no. 159, August 17, 2007, p. A-14; see also,

“Correction Notice,” no. 161, August 21, 2007, p. A-24.

BNA Daily Report for Executives, “Initial Court Deference to 1892 Precedent In Suit on

Deficit Law May End, Experts Say,” by Jonathan Nicholson, no. 164, August 24, 2006, p.

A-26.

See, for example, the following: (1) BNA Daily Report for Executives, “Corrections Bill

Expected for Budget; Consequence of Clerical Error Uncertain,” by Jonathan Nicholson,

February 16, 2006, p. A-1; (2) CQ Today, “Partisan Bickering Escalates in House Over

Glitch in Budget Savings Bill,” by Steven T. Dennis, February 16, 2006; and (3) The Hill,

“House GOP: No New Vote on Budget,” by Jeffrey Young and Patrick O’Connor, February

16, 2006.

BNA Daily Report for Executives, “Congress Seems Unlikely to Correct Gaffes in Budget

Bill Costing $2 Billion,” by Jonathan Nicholson, no. 185, September 25, 2006, p. A-21.

CRS-34

public safety agencies of interoperable communications systems (Title III); vessel

tonnage charges levied by the U.S. Customs Service on ships entering the United

States (Title IV); Medicare (Title V); Medicaid and the State Children’s Health

Insurance Program (SCHIP) (Title VI); welfare, including the Temporary Assistance

for Needy Families (TANF) program (Title VII); federal higher education programs

and the operations of the Pension Benefit Guaranty Corporation (PBGC) (Title VIII);

the Low-Income Home Energy Assistance Program (LIHEAP) (Title IX); and civil

filing fees for federal courts and filing fees for bankruptcy relief (Title X).

According to CBO, the act is expected to lead to net costs for FY2007 ($3.635

billion in outlays), but net savings in outlays in each of the other four years

encompassed by the reconciliation instructions (see Table 14). Net savings are

estimated to amount to $4.847 billion in FY2006 and $4.474 billion in FY2008,

peaking in FY2009 at $20.780 billion, and declining to $12.342 billion in FY2010.

Net savings in the ensuring five fiscal years, FY2011-FY2015, are estimated to range

between $11.0 billion and $13.6 billion each year.

In total, net savings in outlays are expected to amount to $38.810 billion over

five years (FY2006-FY2010) and $99.263 billion over ten years (FY2006-FY2015).

In its cost estimate on the conference agreement, CBO identified apparent

drafting errors in two sections — Section 8006, regarding direct loans to parents of

postsecondary students, and Section 10002(a)(2), dealing with bankruptcy fees. If

it is assumed that the apparent drafting errors will be corrected, then the projected

five-year net outlay savings increase by $713 million, to $39.523 billion, and the 10year savings increase by $2.013 billion, to $101.276 billion.

CRS-35

Table 14. CBO Scoring of Spending Reconciliation Legislation: Conference Agreement (by Title)

(outlays in $ billions)

Title

FY2006

FY2007

FY2008

FY2009

FY2010

FY2006-FY2010

FY2006-FY2015

Title I — Agriculture Provisions

0.419

-1.365

-0.503

-0.651

-0.609

-2.709

-3.541

Title II — Housing and Deposit Insurance Provisions

-0.030

-0.155

-0.355

0.050

-0.030

-0.520

-2.110

Title III — Digital Television Transition and Public Safety

-0.010

1.420

2.460

-11.449

0.196

-7.383

-7.575

Title IV — Transportation Provisions

-0.030

-0.031

-0.032

-0.156

Title V — Medicare

-3.431

6.222

-1.194

-2.969

-5.040

-6.412

-22.392

Title VI — Medicaid and SCHIP

2.247

-0.581

-1.676

-2.004

-2.729

-4.743

-26.384

Title VII — Human Resources and Other Provisions

-0.020

0.192

-0.285

-0.536

-0.898

-1.547

-7.190

Title VIII — Education and Pension Benefit Provisions

-3.942

-2.430

-2.928

-3.096

-3.094

-15.491

-29.536

Title IX — LIHEAP Provisions

0.000

0.469

0.144

0.013

0.000

0.625

Title X — Judiciary Related Provisions

-0.050

-0.106

-0.474

-1.004

-4.847

3.635

-4.474

-20.780

-12.342

-38.810

-99.263

-0.063

-0.130

-0.150

-0.175

-0.195

-0.713

-2.013

-4.910

3.505

-4.624

-20.955

-12.537

-39.523

-101.276

Subtotal

Additional Savings With Possible Corrections

Total Changes

Source: Congressional Budget Office, Cost Estimate for S. 1932, Deficit Reduction Act of 2005, Jan. 27, 2006.

a. According to CBO, the conference agreement on S. 1932 contains apparent drafting errors in two sections, Section 8006 (regarding direct loans to parents of postsecondary students)

and Section 10002(a)(2) (dealing with bankruptcy fees). These figures show the additional savings that would accrue if the apparent drafting errors were corrected.

CRS-36

The net figures cited above obscure a much higher level of outlay savings, offset

in part by significant program costs. Table 15 provides major examples of savings

and costs in selected program areas. Generally, the table lists examples of savings

or costs that exceed $1 billion over the five-year (FY2006-FY2010) or 10-year

(FY2006-FY2015) period. The examples are ranked in descending order on the basis

of their 10-year impact (except in the case of costs under Medicare for physicians’

payments, which amount to $7.3 billion over five years, but yield modest savings

over 10 years).

Table 15. Spending Reconciliation Legislation:

Savings and Costs in Selected Program Areas

(Conference Agreement)

(outlays in $ billions)

FY2006FY2010

FY2006FY2015

Borrowers’ Interest Rates & Lenders’ Yields (Title VIII)

-14.3

-34.4

Medicaid: Pharmacy Reimbursement Limits (Title VI)

-3.6

-11.8

Spectrum Auction Proceeds (Title III)

-10.0

-10.3

Medicare: Imaging Services (Title IV)

-2.8

-8.1

Medicaid: Alternative Benefit Packages (Title VI)

-1.3

-6.1

Eliminate Mandatory Funding of Admin. Costs (Title VIII)

-2.2

-6.0

PBGC Premiums: Single Employer Plans (Title VIII)

-2.3

-5.8

Medicare: Home Health Services (Title V)

-2.0

-5.7

Medicaid: Additional Cost Sharing for Drugs (Title VI)

-1.0

-5.4

Medicaid: Increased Cost Sharing & Premiums (Title VI)

-1.0

-4.4

Child Support (Title VII)

-1.5

-4.1

Medicare: Risk Adjustment to MA Plans (Title V)

-6.5

-4.1

Medicaid: Asset Transfer Penalty Period (Title VI)

-1.5

-4.0

Borrowers’ Insurance Premiums/Agency Fees (Title VIII)

-1.5

-3.6

Loans Financed With Tax-Exempt Bonds (Title VIII)

-1.8

-3.0

Medicare: Disproportionate Share Adjustments (Title V)

-1.2

-3.0

Medicaid: Restrictions on Provider Taxes

-0.4

-2.9

FDIC and NCUA Premium Collections (Title II)

-0.3

-2.2

Medicaid: Targeted Case Management Services (Title VI)

-0.8

-2.1

Program Area

Savings

CRS-37

FY2006FY2010

FY2006FY2015

Supplemental Security Income (Title VII)

-0.7

-2.0

Medicare: Durable Medical Equipment (Title V)

-0.7

-1.9

Continuing Dumping & Subsidy Offset Repeal (Title VII)

-0.3

-1.8

Medicaid: Third-Party Recovery (Title VI)

-0.6

-1.7

Medicare: Income-Related Part B Premium (Title V)

-1.6

Agriculture: Conservation Programs (Title I)

-1.0

-1.4

Medicare: Physicians’ Services

7.3

-0.4

Borrower Origination Fees (Title VIII)

4.0

13.1

PBGC: Slowed Drawdown of Reserves (Title VIII)

0.0

7.4

Medicaid: Certain Disabled Children (Title VI)

1.4

6.4

Academic Competitiveness & SMART Grants (Title VIII)

3.7

4.5

Increased Loan Limits (Title VIII)

1.5

4.2

Medicaid: Home & Community-Based Services (Title VI)

0.8

2.6

Katrina Health Care Relief (Title VI)

2.1

Medicaid: Money-Follows-the-Person Demo. (Title VI)

0.3

2.0

Child Care (Title VII)

0.9

1.9

Converter Box Subsidies (Title III)

1.4

Medicare: Dialysis Services (Title V)

0.5

1.3

Medicare: Abdominal Aneurysm Screening (Title V)

0.2

1.3

Medicaid: Integrity Program (Title VI)

0.5

1.2

Interoperability Grants (Title III)

1.0

Program Area

Costs

Source: Prepared by the Congressional Research Service from data provided in: Congressional

Budget Office, Cost Estimate for S. 1932, Deficit Reduction Act of 2005, Jan. 27, 2006.

CRS-38

Revenue Reconciliation Legislation

Initial Senate Action. The Senate Finance Committee considered, amended,

and approved S. 2020, the Tax Relief Act of 2005, on November 15, by a vote of 146. The committee reported the bill without a written report.52

According to estimates prepared by the Joint Committee on Taxation (JCT), the

bill as reported would have reduced revenues in the net by $59.594 billion over

FY2006-FY2010.53 Although the reconciliation instructions in the FY2006 budget

resolution allow revenue reductions of as much as $70 billion over FY2006-FY2010,

the amount of revenue reduction in the bill was reduced because of concerns

regarding the Senate’s “pay-as-you-go” (PAYGO) rule.54 The PAYGO rule, which

remains in effect through September 30, 2008, bars the consideration of revenue or

direct spending legislation that violates certain budgetary constraints for three

different time periods; during this session, the time periods are FY2006, FY2006FY2010, and FY2011-FY2015. A motion to waive a point of order under the

PAYGO rule requires the affirmative vote of three-fifths of the Senate membership

(60 Senators, if no seats are vacant).

Under current practices, a balance for each of the three time periods is

established each session on a PAYGO scorecard set forth in the joint explanatory

statement accompanying the conference report on the annual budget resolution. The

PAYGO scorecard is maintained by the Senate Budget Committee and is adjusted

each time a revenue or direct spending measure passes the House and Senate in

identical form.

A revenue or direct spending measure may not be considered if the balances on

the PAYGO ledger are not adequate to cover its costs. Although the PAYGO

balance for FY2006-FY2010 was expected to be adequate later in the session to

accommodate a measure reducing revenues by $70 billion over that period, at that

time it stood at about $60 billion.

The Senate began consideration of S. 2020 on November 16, continued

consideration on November 17, and passed it early on November 18, by a vote of 6433.

During Senate consideration of the bill, seven amendments were adopted, four

were rejected, one was withdrawn, and 18 fell on points of order. According to the

See Summary of the Tax Relief Act of 2005, November 8, 2005, and related items under

“Legislation” at the Senate Finance Committee website [http://www.senate.gov/~finance/]

Joint Committee on Taxation, Estimated Revenue Effects Of S. 2020, The “Tax Relief Act

Of 2005,” Scheduled For Consideration On The Senate Floor On November 16, 2005, JCX80-05, November 16, 2005, available on the Web at [http://www.house.gov/jct/].

The Senate’s PAYGO rule is set forth in Section 505 of the FY2004 budget resolution.

For detailed information on the origin, development, and operation of the Senate’s PAYGO

rule, see (1) CRS Report RL31943, Budget Enforcement Procedures: Senate’s “Pay-AsYou-Go” (PAYGO) Rule, by Bill Heniff Jr.; and (2) CRS Report RL32835, PAYGO Rules

for Budget Enforcement in the House and Senate, by Robert Keith and Bill Heniff Jr.

CRS-39

JCT, the bill as passed would reduce revenues in the net by $57.756 billion over

FY2006-FY2010, $1.838 billion less than the reported bill.55

Initial House Action. The House Ways and Means Committee considered,

amended, and approved H.R. 4297, the Tax Relief Extension Reconciliation Act of

2005, on November 15. The bill was reported on November 17 (H.Rept. 109-304).

The committee approved the measure by a vote of 24-15. During the markup,

Chairman Bill Thomas offered an amendment in the nature of a substitute that

removed many of the provisions, reducing the total revenue reductions to $31.947

billion over FY2006-FY2010.56 Before approving the chairman’s substitute, the

committee adopted several amendments to it that restored particular provisions,

thereby further reducing revenues. According the JCT, the bill as reported would

reduce revenues in the net by $5.773 billion in FY2006 and $56.082 billion in

FY2006-FY2010.57

On December 7, the House Rules Committee reported a special rule, H.Res. 588

(H.Rept. 109-330), providing for the consideration of H.R. 4297. The special rule

provided (under a self-executing feature) for the adoption of the amendment in the

nature of a substitute recommended by the Ways and Means Committee. In addition,

the special rule allowed one amendment in the nature of a substitute, to be offered by

Representative Charles Rangel, the ranking member of the Ways and Means

Committee, and one motion to recommit with instructions.

The House considered H.R. 4297 on December 8. After defeating the Rangel

substitute, by a vote of 192-239, and a Rangel motion to recommit with instructions,

by a vote of 193-235, the House passed the bill, by a vote of 234-197.

Action on the Conference Report. In order to facilitate a conference with

the House, the Senate took up H.R. 4297 on February 1 and passed it the next day,

by a vote of 66-31. During action on February 2, the Senate adopted a substitute

amendment (Grassley/Baucus Amendment 2707) to the House-passed bill, as well

as six amendments to the substitute amendment. In addition, one amendment was

rejected, one amendment and a motion to commit were withdrawn, and several

amendments fell, generally upon the successful raising of points of order.

Joint Committee on Taxation, Estimated Revenue Effects Of The Tax Provisions

Contained in S. 2020, “The Tax Relief Act of 2005,” As Passed By The Senate On November

18, 2005, JCX-82-05 R, November 29, 2005, available on the Web at

[http://www.house.gov/jct/]. The initial estimate made by the JCT, issued as JCX-82-05 on

November 28, 2005, placed the five-year revenue loss an $57.761 billion.

Joint Committee on Taxation, Estimated Revenue Effects Of The Chairman’s Amendment

In The Nature Of A Substitute To H.R. 4297, The “Tax Relief Extension Reconciliation Act

Of 2005,” Scheduled For Markup By The Committee On Ways And Means On November

15, 2005, JCX-79-05, November 15, 2005, available on the Web at

[http://www.house.gov/jct/].

Joint Committee on Taxation, Estimated Revenue Effects Of H.R. 4297, The “Tax Relief

Extension Reconciliation Act Of 2005,” As Reported By The Committee On Ways And

Means, JCX-81-05, November 18, 2005, available on the Web at

[http://www.house.gov/jct/].

CRS-40

According to the JCT, H.R. 4297, as passed by the Senate, would reduce

revenues by $69.415 billion over FY2006-FY2010, reflecting about $12 billion in

further revenue reduction compared to the levels in S. 2020, as passed earlier by the

Senate.58 House action to clear S. 1932, the spending reconciliation measure, for

action by the President provided sufficient room on the Senate’s PAYGO scorecard

to accommodate the additional revenue reductions without incurring a violation of

the PAYGO rule.59 The JCT estimated the five-year revenue reduction in the Housepassed version of H.R. 4297 at $55.627 billion.

On February 8, the House by unanimous consent disagreed to the Senate

amendment and requested a conference, and the Speaker appointed conferees.60 The

House also rejected, by a vote of 185-297, a motion to instruct conferees on

alternative minimum tax relief, dividends and capital gains relief, and other matters,

offered by Representative Richard Neal.

On February 13, the Senate agreed to a conference and agreed to one motion to

instruct conferees (Grassley, 92-0) and rejected another (Dodd, 40-53). On the next

day, February 14, the Senate appointed conferees and agreed to five more motions

to instruct conferees: Grassley (53-47), DeWine (voice vote), Wyden (voice vote),

Talent/Snow/Lincoln (voice vote), and Hutchison (75-25). Additionally, the Senate

rejected three motions to instruct conferees: Kennedy (47-53), Reed (45-55), and

Lautenberg (46-54); another eight motions to instruct conferees were withdrawn.

The conferees met on March 15 and informal negotiations continued thereafter.

In the House, a motion to instruct conferees was agreed to on March 15 (Tanner,

222-187). Three motions to instruct conferees were rejected — on March 29

(Rangel, 192-229), on April 6 (Cardin, 196-232), and, following debate the previous

day, on April 27 (McDermott, 190-232).

The conference report (H.Rept. 109-455) on H.R. 4297, which was renamed the

Tax Increase Prevention and Reconciliation Act of 2005, was reported on May 9,

2006.61 Appendix B provides a contents listing of H.R. 4297 as set forth in the

conference report.

Joint Committee on Taxation, Comparison of the Estimated Revenue Effects of the Tax

Provisions Contained in H.R. 4297, the “Tax Relief Extension Reconciliation Act of 2005,”

as Passed by the House, and H.R. 4297, the “Tax Relief Act of 2005,” as Amended by the

Senate, JCX-10-06, February 9, 2006.

See the February 3, 2006, edition of the Senate Budget Committee’s newsletter, Informed

Budgeteer, for a discussion of the PAYGO rule and the status of reconciliation legislation.

See the Congressional Record (daily ed.) of February 8, 2006, at pp. H185-H191.

The House Ways and Means Committee issued a 6-page summary, Detailed Summary of

Conference Report, May 9, 2006, available on the Committee’s website at

[http://waysandmeans.house.gov/media/pdf/taxdocs/050906longsummary4297.pdf]. In

addition, the Senate Finance Committee issued a 10-page summary, Summary of the Tax

Prevention Increase and Reconciliation Act of 2005, available on the Committee’s website

at [http://www.senate.gov/~finance/sitepages/leg/leg050906sum.pdf]

CRS-41

According to the JCT, the conference agreement is estimated to reduce revenues

by $69.960 billion over the five-year period, FY2006-FY2010.62 CBO also issued

a cost estimate, indicating that the conference agreement is not estimated to have an

effect on federal spending.63 Further, CBO noted that the conference agreement

contains, as determined by the JCT, two unfunded private-sector mandates (involving

repeal of the FSC-ETI grandfather rule and an amendment to the Section 911 housing

exclusion), as well as an intergovernmental mandate (pertaining to withholding on

certain government payments, in Section 511), which exceed annual cost thresholds

established in the Unfunded Mandates Reform Act.

The conference agreement recommends significant revenue reduction beyond

the five-year budget “window” (FY2006-FY2020) encompassed by the reconciliation

instructions, principally with respect to extensions of current capital gains and

dividends provisions through December 31, 2010.64 The Senate’s “Byrd rule”

(Section 313 of the Congressional Budget Act of 1974) prohibits the consideration

of reconciliation legislation that increases the deficit beyond the budget window; the

prohibition is enforced by a point of order in the Senate which requires the

affirmative vote of three-fifths of the Members (60 Senators, if no seats are vacant)

to waive. Past tax-cut reconciliation acts have included sunset provisions in order

to comply with the Byrd rule, but the conference agreement on H.R. 4297 includes

offsets of the revenue losses instead. The JCT estimates the total revenue loss over

ten years (FY2006-FY2015) at $69.084 billion, an amount nearly $900 million

smaller than the five-year revenue loss.

On May 9, the House Rules Committee reported a special rule, H.Res. 805

(H.Rept. 109-458) providing for the consideration of the conference report on H.R.

4297. The next day, on May 10, the House agreed to the special rule, by a vote of

228-194, and then agreed to the conference report, by a vote of 244-185. During

action on the conference report, the House rejected a motion to recommit with

instructions offered by Representative Charles Rangel, the ranking member of the

Ways and Means Committee, by a vote of 190-239.

The Senate considered the conference report on May 11, agreeing to it by a vote

of 54-44.

Additional revenue reductions, including some matters dropped from the initial

House and Senate revenue reconciliation bills in conference, have been considered

Joint Committee on Taxation, Estimated Revenue Effects of the Conference Agreement

for the “Tax Increase Prevention and Reconciliation Act of 2005,” JCX-18-06, May 9,

2006.

Congressional Budget Office, Letter to the Honorable William “Bill” M. Thomas,

Chairman, Committee on Ways and Means, from Acting Director Donald B. Marron, May

9, 2006.

Although the capital gains and dividends provisions would sunset on December 31, 2010,

they would incur revenue losses in succeeding years (e.g., in FY2012, a $12.698 billion

revenue loss for the capital gains provision and a $6.326 billion revenue loss for the

dividends provision).

CRS-42

in pension reform legislation — the Pension Protection Act of 2006 (P.L. 109-280;

August 17, 2006; 120 Stat. 780 et. seq.) and other measures.65

Approval by the President. President Bush signed the measure into law on

May 17, as P.L. 109-222 (120 Stat. 345-373).66 During remarks made at the signing

of the bill, the President highlighted the provisions extending the tax cuts on

dividends and capital gains for two years (until the end of 2010).67

Brief Summary of the Act. The Tax Increase Prevention and Reconciliation

Act of 2005 consists of five titles, as shown in Table 16. The changes made by the

act involve the extension and modification of certain provisions, including reduced

rates on capital gains and dividends, increased expensing for small business, and

exceptions under Subpart F regarding taxation of controlled foreign corporations

(Title I); various other provisions affecting such matters as the taxation of certain

settlement funds, modification of the active business definition under Section 355,

amortization of song rights, and industrial development bonds (Title II); an increase

in the individual Alternative Minimum Tax (AMT) exemption amount and AMT

relief for personal tax credits (Title III); modifications in the amounts and timing of

corporate estimated tax payments (Title IV); and revenue offset provisions, including

elimination of the income limitations on Roth IRA conversions, withholding on

government payments for property and services, an increase in the age of minor

children whose unearned income is taxed as if parent’s income, and a requirement

for partial payments with submissions of offers-in-compromise (Title V).

According to the JCT, the act is expected to lead to net revenue reductions

ranging from $6.765 billion to $23.231 billion per year during the FY2006-FY2010

period (see Table 16). In total, net reductions in revenues are estimated to amount

to $69.960 billion over five years and $69.084 billion over ten years (FY2006FY2015).

The net revenue reduction expected over ten years is less than the net revenue

reduction expected over five years (by $876 million) because the act increases

revenues modestly (by between $85 million and $423 million) in each of the last five

years, covering FY2011-FY2015. Consequently, prohibitions against incurring a

deficit in the last five years (e.g., under the Byrd rule) did not apply during Senate

consideration of the conference report.

The revenue impact of the Pension Protection Act of 2006 is discussed in: Joint

Committee on Taxation, Estimated Budget Effects of H.R. 4, the “Pension Protection Act

of 2006,” as Introduced in the House of Representatives on July 28, 2006, JCX-36-06, July

28, 2006.

The remarks of President Bush during a signing ceremony, and a fact sheet on the law, are

available at the White House website under “Current News” for May 17, 2006

[http://www.whitehouse.gov].

See “Remarks on Signing the Tax Increase Prevention and Reconciliation Act of 2005”

on May 17, 2006 in the Weekly Compilation of Presidential Documents, May 22, 2006, vol.

42, no. 20, pp. 943-945.

CRS-43

Table 16. JCT Scoring of Revenue Reconciliation Legislation: Conference Agreement (by Title)

(revenues in $ billions)

Title

FY2006

FY2007

FY2008

FY2009

FY2010

FY2006-FY2010

FY2006-FY2015

Title I — Extension and Modification of Certain Provisions

-0.082

-1.012

-7.613

-19.114

-5.545

-33.367

-56.596

Title II — Other Provisions

-0.004

-0.022

-0.038

-0.048

-0.054

-0.167

-0.403

Title III — Individual AMT Provisions

-12.984

-20.888

—

-33.872

Title IV — Corporate Estimated Tax Provisions

2.209

-2.209

—

-5.640

—

Title V — Revenue Offset Provisions

0.104

0.900

0.886

0.704

0.494

3.086

21.787

-10.757

-23.231

-6.765

-18.458

-10.745

-69.960

-69.084

Total Changes

Source: Joint Committee on Taxation, Estimated Revenue Effects of the Conference Agreement for the “Tax Increase Prevention and Reconciliation Act of 2005,” JCX-18-06, May

9, 2006.

CRS-44

The net figures cited above obscure a higher level of revenue reductions, offset

in part by revenue increases. Table 17 provides information on revenue reductions

and increases associated with selected provisions, involving changes of $0.5 billion

or more over the five-year (FY2006-FY2010) or 10-year (FY2006-FY2015) period.

The provisions are ranked in descending order on the basis of their 10-year impact.

The largest revenue increases over the 10-year period involve withholding on

government payments for property and services ($6.977 billion) and elimination of

the income limitations on Roth IRA conversions ($6.432 billion); the largest revenue

decreases pertain to an increase in the individual AMT exemption amount for 2006

($31.047 billion) and the extension of reduced tax rates for dividends ($30.779

billion) and capital gains ($20.004 billion).

Table 17. Revenue Reconciliation Legislation: Revenue

Increases and Decreases for Selected Provisions

(Conference Agreement)

(revenues in $ billions)

FY2006FY2010

FY2006FY2015

Withholding on government payments for property and

services

—

6.977

Eliminate the income limitations on Roth IRA conversions

-0.447

6.432

Increase in age of minor children whose unearned income

is taxed as if parent’s income

0.776

2.128

Amend section 911 housing exclusion and impose a

stacking rule and provide regulatory authority to allow for

geographic differences

0.903

2.126

Require partial payments with submissions of offers-incompromise (permanent 24-month rule)

0.715

1.955

Repeal of FSC/ETI binding contract relief

0.467

0.502

Increase individual AMT exemption amount for 2006

-31.047

Tax dividends with a 15%/0% rate structure

-13.299

-30.779

Tax capital gains with a 15%/0% rate structure

-7.252

-20.004

Delay due date (from September 15 to October 1) for a

percentage of corporate estimated taxes

-5.640

—

Controlled foreign corporations: exception under subpart

F for active financing income

-4.796

Provision(s)

Revenue Increases

Revenue Decreases

CRS-45

FY2006FY2010

FY2006FY2015

Treatment of nonrefundable personal credits under the

individual AMT

-2.825

Controlled foreign corporations: look-through treatment

of payments between related CFCs under foreign personal

holding company income rules

-0.746

Provision(s)

Source: Prepared by the Congressional Research Service from data provided in: Joint Committee

on Taxation, Estimated Revenue Effects of the Conference Agreement for the “Tax Increase

Prevention and Reconciliation Act of 2005,” JCX-18-06, May 9, 2006.

Debt-Limit Reconciliation Legislation

Neither the House Ways and Means Committee nor the Senate Finance

Committee scheduled any meetings to consider debt-limit reconciliation legislation.

On November 15, 2005, the Treasury Department indicated that the level of

public debt subject to the statutory limit had exceeded $8 trillion for the first time

($8,002,607,000,000).68 In view of the pattern of monthly deficits and surpluses in

the last several years, the current limit of $1.184 trillion was expected to suffice into

about the middle of the first quarter of calendar year 2006.

In a letter to Senate Majority Whip Mitch McConnell, dated December 29,

2005, Treasury Secretary John W. Snow indicated that the debt limit would become

insufficient in mid-February 2006, and that “all available prudent and legal actions”

to finance government operations within that limit would be exhausted by midMarch.69 Thus, by using various financing techniques that have been employed in the

past, the Treasury Department was expected to be able to cope with an insufficient

debt limit for about a month before defaulting on government obligations.70

In addition to the reconciliation process, the House and Senate may use other

procedures to develop and consider debt-limit legislation.71 Pursuant to House Rule

XXVII (the “Gephardt rule”), H.J.Res. 47 was deemed to have passed the House

automatically on April 28, 2005, in conjunction with House approval of the

conference report on the FY2006 budget resolution. The measure proposed an

increase of $781 billion in the statutory debt limit, to $8.965 trillion, the same

increase recommended in the budget resolution and contained in the reconciliation

See the Daily Treasury Statement for November 15, 2005, Table III-C, p. 2, available on

the web at [http://www.fms.treas.gov/dts/].

Quoted in “Treasury Secretary Urges Speedy Action on Debt Limit Increase,” by CQ

Staff, CQ Today, December 30, 2005.

For further information on this topic, see CRS Report RL31967, The Debt Limit: The

Ongoing Need for Increases, by Philip D. Winters.

These procedures are reviewed in CRS Report RS21519, Legislative Procedures for

Adjusting the Public Debt Limit, by Robert Keith and Bill Heniff Jr.

CRS-46

instructions. On March 16, 2006, the Senate passed H.Res. 47 without amendment,

by a vote of 52-48.

President Bush signed the measure into law on March 20, as P.L. 109-182. The

enactment of the measure obviated the need for any action on debt-limit legislation

under the reconciliation process.

Products on Selected Policy Issues

Addressed in Reconciliation

The reconciliation legislation being developed and considered in the House and

Senate addresses a wide range of policy issues. For information on the specific

policy proposals recommended in the legislation, the reader is directed to the reports

(and committee prints) of the instructed committees, as well as to the floor debate.72

In addition, the reader is directed to the cost estimates and related reports prepared

by CBO and the JCT for each of the committee submissions; these estimates briefly

summarize the policy proposals.73

The Congressional Research Service also has prepared reports and issue briefs

on major issues addressed in reconciliation legislation; they are identified on the CRS

website under the Current Legislative Issues term “Reconciliation, Budget” and are

available at [http://www.crs.gov]. The CRS reports and issue briefs posted on the

website so far are listed below by major category; additional products will be listed

as they become available.

Spending Reconciliation Legislation

Agriculture and Nutrition

CRS Report RS22086, Agriculture and FY2006 Budget Reconciliation, by Ralph M.

Chite.

CRS Report RL33475, Dairy Policy Issues, by Ralph M. Chite.

For the spending reconciliation bill, see (1) Senate Budget Committee, Deficit Reduction

Omnibus Reconciliation Act of 2005 (print to accompany S. 1932), S.Prt. 109-37, October

2005 (the print is not yet available online), and (2) House Budget Committee, Deficit

Reduction Act of 2005 (report to accompany H.R. 4241), H.Rept. 109-276, November 7,

2005.

For the revenue reconciliation bill, see (1) Senate Finance Committee, Summary of the Tax

Relief Act of 2005, November 8, 2005, and other materials (in lieu of a committee report)

under “Legislation” at the Committee’s website [http://www.senate.gov/~finance/], and (2)

House Ways and Means Committee, Tax Relief Extension Reconciliation Act of 2005 (report

to accompany H.R. 4297), H.Rept. 109-304, November 17, 2005.

Congressional Budget Office, “Cost Estimates for Reconciliation Legislation,” available

at [http://www.cbo.gov/] and Joint Committee on Taxation, various reports, available at

[http://www.house.gov/jct/].

CRS-47

Arctic National Wildlife Refuge (ANWR)

CRS Report RS22304, ANWR and FY2006 Budget Reconciliation Legislation, by

Bill Heniff Jr. and M. Lynne Corn.

CRS Report RL33523, Arctic National Wildlife Refuge (ANWR): Controversies for

the 109th Congress, by M. Lynne Corn, Bernard A. Gelb, and Pamela Baldwin.

“Byrd Amendment” on Anti-Dumping

CRS Report RL33045, The Continuing Dumping and Subsidy Offset Act (“Byrd

Amendment”), by Jeanne J. Grimmett and Vivian C. Jones.

Deposit Insurance

CRS Report RS20724, Federal Deposit and Share Insurance: Proposals for

Change, by William D. Jackson.

CRS Report RL33143, Federal Deposit Insurance Reform Legislation (Including

Budgetary Implications), by Barbara Miles and William Jackson.

Energy and Minerals

CRS Report RS22313, Energy and Minerals Issues in the FY2006 Budget

Reconciliation Bill, by Marc Humphries.

Federal Judicial System

CRS Report RL33189, Proposals in the 109th Congress to Split the Ninth Circuit

Court of Appeals, by R. Sam Garrett.

Medicare, Medicaid, and SCHIP (State Children’s Health Insurance Program)

CRS Report RL33131, Budget Reconciliation FY2006: Medicaid, Medicare, and

State Children’s Health Insurance Program (SCHIP) Provisions, by Evelyne

C. Baumrucker, Hinda Chaikind, April Grady, Jim Hahn, Jean Hearne, Elicia

Herz, Bob Lyke, Paulette Morgan, Jennifer O’Sullivan, Rich Rimkunas, Julie

Stone, Sibyl Tilson, and Karen Tritz.

CRS Report RS22333, Budget Reconciliation FY2006: Provisions Affecting the

Medicaid Federal Medical Assistance Percentage, by April Grady.

CRS Report RL33130, Budget Reconciliation: Projections of Funding in the State

Children’s Health Insurance Program, by Chris L. Peterson.

CRS Report RL33121, Medicaid Issues for the 109th Congress, by Jean Hearne.

CRS Report RL33251, Side-by-Side Comparison of Medicare, Medicaid, and SCHIP

Provisions in the Deficit Reduction Act of 2005, by Karen Tritz, Sibyl Tilson,

Julie Stone, Chris Peterson, Jennifer O’Sullivan, Paulette C. Morgan, Elicia J.

CRS-48

Herz, Jeanne Hearne, Jim Hahn, April Grady, Hinda Chaikind, and Evelyne P.

Baumrucker.

Outer Continental Shelf Leasing

CRS Report RL33493, Outer Continental Shelf: Debate Over Oil and Gas Leasing

and Revenue Sharing, by Marc Humphries.

Pension Benefit Guaranty Corporation (PBGC)

CRS Report RS22315, Budget Reconciliation and the PBGC, by Neela K. Ranade.

Spectrum Auction and Fees and Transition to Digital Television

CRS Report RL31260, Digital Television: An Overview, by Lennard G. Kruger.

CRS Report RS22218, Spectrum Auctions and Deficit Reduction: FY2006 Budget

Reconciliation, by Linda K. Moore.

CRS Report RS22306, Spectrum Use and the Transition to Digital TV, by Linda K.

Moore.

Student Loans

CRS Report RS22308, Student Loans and FY2006 Budget Reconciliation, by Adam

Stoll.

Welfare

CRS Report RL33155, Child Welfare: Foster Care and Adoption Assistance

Provisions in the Budget Reconciliation Bills, by Emilie Stoltzfus.

CRS Report RS22377, Child Support Provisions in the Deficit Reduction Act of 2005

(P.L. 109-171), by Carmen Solomon-Fears.

CRS Report RS22369, TANF, Child Care, Marriage Promotion, and Responsible

Fatherhood Provisions in the Deficit Reduction Act of 2005 (S. 1932), by Gene

Falk.

CRS Report RL33157, Welfare Reauthorization: A Side-by-Side Comparison of

Current Law, Senate Committee Approved and House Budget Reconciliation

Bill Provisions, by Gene Falk, Melinda Gish, Carmen Solomon-Fears, and

Emilie Stoltzfus.

CRS-49

Revenue Reconciliation Legislation

CRS Report RS21992, Extending the 2001, 2003, and 2004 Tax Cuts, by Gregg

Esenwein.

CRS Report RL32781, Federal Deductibility of State and Local Taxes, by Steven

Maguire.

CRS Report RL32719, Major Tax Issues in the 109th Congress, by David L.

Brumbaugh.

CRS Report RL31181, Research Tax Credit: Current Status, Legislative Proposals,

and Policy Issues, by Gary Guenther.

CRS Report RL31852, Small Business Expensing Allowance: Current Status,

Legislative Proposals, and Economic Effects, by Gary Guenther.

CRS Report RS22322, Taxes and Fiscal Year 2006 Budget Reconciliation: A Brief

Summary, by David L. Brumbaugh.

CRS Report RS22100, The Alternative Minimum Tax for Individuals: Legislative

Initiatives and Their Revenue Effects, by Gregg Esenwein.

CRS Report RS21682, The Tax Deduction for Classroom Expenses of Elementary

and Secondary School Teachers, by Linda Levine.

CRS Report RL30089, The Work Opportunity Tax Credit (WOTC) and the Welfareto-Work (WtW) Tax Credit, by Linda Levine.

CRS-50

Appendix A. Deficit Reduction Act of 2005 (S. 1932):

Contents Listing of the Conference Report (H.Rept. 109-362)

Congressional Record

Page Number

(December 18, 2005)

Title/Subtitle

Chapter/Subchapter

Printed Conference Report

Content

Legislative Text

Joint

Explanatory

Statement

Legislative Text

Joint

Explanatory

Statement

Sec. 1

Short Title

H12641

—

Sec. 2

Table of Titles

H12641

—

Agriculture Provisions

H12641

H12687

187

Subtitle A

Commodity Programs

H12641

H12687

187

Subtitle B

Conservation

H12641

H12688

189

Subtitle C

Energy

H12641

H12688

191

Subtitle D

Rural Development

H12641

H12688

191

Subtitle E

Research

H12641

H12688

191

Housing and Deposit Insurance Provisions

H12642

H12689

194

FHA Asset Disposition

H12642

H12689

194

Title I

Title II

Subtitle A

CRS-51

Congressional Record

Page Number

(December 18, 2005)

Title/Subtitle

Chapter/Subchapter

Printed Conference Report

Content

Legislative Text

Joint

Explanatory

Statement

Legislative Text

Joint

Explanatory

Statement

Deposit Insurance

H12642

H12689

195

Title III

Digital Television Transition and Public Safety

H12645

H12691

200

Title IV

Transportation Provisions

H12647

H12735

360

Title V

Medicare

H12647

H12692

205

Subtitle A

Provisions Relating to Part A

H12647

H12692

205

Subtitle B

Provisions Relating to Part B

H12649

H12695

215

Chapter 1

Payment Provisions

H12649

H12695

215

Chapter 2

Miscellaneous

H12651

H12697

222

Subtitle C

Provisions Relating to Parts A and B

H12652

H12699

229

Subtitle D

Provisions Relating to Part D

H12652

H12699

232

Medicaid and SCHIP

H12654

H12705

252

Medicaid

H12654

H12705

252

Subtitle B

Title VI

Subtitle A

CRS-52

Congressional Record

Page Number

(December 18, 2005)

Title/Subtitle

Chapter/Subchapter

Printed Conference Report

Content

Legislative Text

Joint

Explanatory

Statement

Legislative Text

Joint

Explanatory

Statement

Chapter 1

Payment for Prescription Drugs

H12654

H12705

252

Chapter 2

Long-Term Care Under Medicaid

H12655

H12709

269

Subchapter A

Reform of Asset Transfer Rules

H12655

H12709

269

Subchapter B

Expanded Access to Certain Benefits

H12657

H12714

285

Chapter 3

Eliminating Fraud, Waste, and Abuse in Medicaid

H12658

H12719

302

Chapter 4

Flexibility in Cost Sharing and Benefits

H12661

H12721

310

Chapter 5

State Financing Under Medicaid

H12663

H12724

319

Chapter 6

Other Provisions

H12664

H12726

329

Subchapter A

Family Opportunity Act

H12664

H12726

329

Subchapter B

Money Follows the Person Rebalancing

Demonstration

H12666

H12728

102

335

Subchapter C

Miscellaneous

H12668

H12729

111

339

CRS-53

Congressional Record

Page Number

(December 18, 2005)

Title/Subtitle

Chapter/Subchapter

Printed Conference Report

Content

Legislative Text

Joint

Explanatory

Statement

Legislative Text

Joint

Explanatory

Statement

Subtitle B

SCHIP

H12673

H12732

130

348

Subtitle C

Katrina Relief

H12673

H12734

132

357

Human Resources and Other Provisions

H12674

H12735

135

361

Subtitle A

TANF

H12674

H12735

135

361

Subtitle B

Child Care

H12676

H12736

141

363

Subtitle C

Child Support

H12676

H12736

141

363

Subtitle D

Child Welfare

H12677

H12736

149

364

Subtitle E

Supplemental Security Income

H12679

H12736

154

364

Subtitle F

Repeal of Continued Dumping and Subsidy Offset

H12679

—

155

—

Subtitle G

Effective Date

H12679

—

155

—

Education and Pension Benefit Provisions

H12679

H12736

155

365

Higher Education Provisions

H12679

—

155

—

Title VII

Title VIII

Subtitle A

CRS-54

Congressional Record

Page Number

(December 18, 2005)

Title/Subtitle

Chapter/Subchapter

Printed Conference Report

Content

Legislative Text

Joint

Explanatory

Statement

Legislative Text

Joint

Explanatory

Statement

Pensions

H12686

H12736

181

365

Title IX

LIHEAP Provisions

H12686

H12736

184

365

Title X

Judiciary Related Provisions

H12686

—

184

—

Subtitle A

Civil Filing Adjustments

H12686

—

184

—

Subtitle B

Bankruptcy Fees

H12686

—

185

—

Subtitle B

Note: The conference report was printed in the Congressional Record (daily ed.) of Dec. 18, 2005, vol. 151, no. 164, book II. A statement regarding the clarification of a clerical error

(pertaining to a reference in Section 10002(a)(2), dealing with bankruptcy fees, in Title X — Judiciary Related Provisions) was inserted by Senate Budget Committee Chairman Judd

Gregg into the Congressional Record (daily ed.) of Dec. 21, 2005, at pages S14298-S14299.

CRS-55

Appendix B. Tax Increase Prevention and Reconciliation Act of 2005 (H.R. 4297):

Contents Listing of the Conference Report (H.Rept. 109-455)

Congressional Record

Page Number

(May 5, 2006)

Title/Section

Conference Report

Content

Legislative Text

Joint

Explanatory

Statement

Legislative Text

Joint

Explanatory

Statement

Short Title, Etc.

H2209

—

Extension and Modification of Certain Provisions

H2210

H2216

Sec. 101

Increased Expensing for Small Business

H2210

H2228

Sec. 102

Capital Gains and Dividends Rates

H2210

H2227

Sec. 103

Controlled Foreign Corporations

H2210

H2227

Other Provisions

H2210

—

Sec. 201

Clarification of Taxation of Certain Settlement Funds

H2210

H2230

Sec. 202

Modification of Active Business Definition Under Section

355

H2210

H2230

Sec. 203

Veterans’ Mortgage Bonds

H2210

H2232

Sec. 1

Title I

Title II

CRS-56

Congressional Record

Page Number

(May 5, 2006)

Title/Section

Conference Report

Content

Legislative Text

Joint

Explanatory

Statement

Legislative Text

Joint

Explanatory

Statement

Sec. 204

Capital Gains Treatment for Certain Self-Created Musical

Works

H2210

H2232

Sec. 205

Vessel Tonnage Limit

H2211

H2232

Sec. 206

Modification of Special Arbitrage Rule for Certain Funds

H2211

H2233

Sec. 207

Amortization of Expenses Incurred in Creating or Acquiring

Music or Music Copyrights

H2211

H2233

Sec. 208

Modification of Effective Date of Disregard of Certain

Capital Expenditures for Purposes of Qualified Small Issue

Bonds

H2211

H2264

203

Sec. 209

Modification of Treatment of Loans to Qualified Continuing

Care Facilities

H2211

H2265

208

Alternative Minimum Tax Relief

H2211

H2229

Increase in Alternative Minimum Tax Exemption Amount for

2006

H2211

H2229

Title III

Sec. 301

CRS-57

Congressional Record

Page Number

(May 5, 2006)

Title/Section

Conference Report

Content

Legislative Text

Joint

Explanatory

Statement

Legislative Text

Joint

Explanatory

Statement

Allowance of Nonrefundable Personal Credits Against

Regular and Alternative Minimum Tax Liability

H2211

H2216

Corporate Estimated Tax Provisions

H2211

H2294

310

Time for Payment of Corporate Estimated Taxes

H2211

H2294

310

Revenue Offset Provisions

H2211

H2267

216

Sec. 501

Application of Earnings Stripping Rules to Partners Which

Are Corporations

H2211

H2281

265

Sec. 502

Reporting of Interest on Tax-Exempt Bonds

H2212

H2284

275

Sec. 503

5-Year Amortization of Geological and Geophysical

Expenditures for Certain Major Integrated Oil Companies

H2212

H2285

280

Sec. 504

Application of FIRPTA to Regulated Investment Companies

H2212

H2286

282

Sec. 505

Treatment of Distributions Attributable to FIRPTA Gains

H2212

H2287

285

Sec. 302

Title IV

Sec. 401

Title V

CRS-58

Congressional Record

Page Number

(May 5, 2006)

Title/Section

Conference Report

Content

Legislative Text

Joint

Explanatory

Statement

Legislative Text

Joint

Explanatory

Statement

Sec. 506

Prevention of Avoidance of Tax on Investments of Foreign

Persons in United States Real Property Through Wash Sale

Transactions

H2212

H2287

290

Sec. 507

Section 355 Not to Apply to Distributions Involving

Disqualified Investment Companies

H2213

H2230

Sec. 508

Loan and Redemption Requirements on Pooled Financing

Requirements

H2213

H2283

272

Sec. 509

Partial Payments Required When Submission of Offers-inCompromise

H2214

H2272

234

Sec. 510

Increase in Age of Minor Children Whose Unearned Income

Is Taxed As If Parent’s Income

H2214

H2282

268

Sec. 511

Imposition of Withholding on Certain Payments Made by

Government Entities

H2214

H2291

299

Sec. 512

Conversions to Roth IRAs

H2214

H2292

301

Sec. 513

Repeal of FSC/ETI Binding Contract Relief

H2215

H2292

304

CRS-59

Congressional Record

Page Number

(May 5, 2006)

Title/Section

Conference Report

Content

Legislative Text

Joint

Explanatory

Statement

Legislative Text

Joint

Explanatory

Statement

Sec. 514

Only Wages Attributable to Domestic Production Taken Into

Account in Determining Deduction for Domestic Production

H2215

H2293

306

Sec. 515

Modification of Exclusion for Citizens Living Abroad

H2215

H2293

307

Sec. 516

Tax Involvement of Accommodation Parties in Tax Shelter

Transactions

H2215

H2241

125

Note: The conference report was printed in the Congressional Record (daily ed.) of May 9, 2006, vol. 152, no. 55.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.