Boehner’s Plan -The Budget Control Act of 2011, S. 627 as amended

July 26, 2011 in Debt Crisis

Boehner Plan Update

Here is an update that we received from the RSC on Boehner’s Plan.

The Budget Control Act of 2011, S. 627 as amended

FIRST-YEAR CUTS. The bill would provide
caps on non-emergency discretionary spending for FY 2012-2021. The cap for FY
2012 would be $1.043 trillion, which is a $7 billion reduction
compared to FY 2011.  The House’s appropriations process has been on
course to reduce such spending by $31 billion, a number which many RSC
Members felt was insufficient (The RSC budget would have reduced this
spending by $71 billion).   Per the bill, the discretionary cap for
FY 2012 is $24 billion above the current FY 2012 House appropriations
plan.

TEN-YEAR DISCRETIONARY CAPS.The bill sets
discretionary spending caps that increase gradually over the FY 2012-2021
period. According to the sponsors, the total spending cuts compared to the
baseline are $1.2 trillion. However, the spending cap rises from $1.043
trillion in FY 2012 to $1.234 trillion in FY 2021. This is measured as a cut
because CBO’s baseline assumes growth with inflation, instead of using zero
baseline budgeting. Within the cap, there is a firewall protecting defense in
FY 2012 and FY 2013, but not from FY 2014-2021.

BALANCED BUDGET AMENDMENT. The bill would
require a vote on (not passage of) a Balanced Budget Amendment (BBA) in each
house of Congress during last three months of 2011. If one house did pass a
BBA, the other house would have to take up that BBA as-passed within 15 days.
Nothing in the bill conditions the debt limit increase on a Balanced Budget
Amendment being sent to the states.

EMERGENCY SPENDING OUTSIDE OF CAP. The bill
allows emergency-designated spending or funding for the Global War on
Terrorism to fall outside the caps. In order for spending to fall outside the
cap, the President would have to designate it as an emergency and the
Congress would have to so designate it in statute.

DEBT LIMIT INCREASES. The bill would grant the
President an automatic $400 billion debt-ceiling increase if he certified
before the end of calendar year 2011 that the federal debt is within $100
billion of the debt limit.  Presumably such certification would come
immediately upon enactment of this bill.  The President would get an
additional $500 billion debt-ceiling increase if the Congress failed to pass
a resolution of disapproval, subject to expedited procedures in the House and
Senate (similar procedure to McConnell plan).  If the resolution of
disapproval passed, the President would presumably veto it, and the Congress
could only override it with a two-thirds vote in both houses, pursuant to
Article I, Section 7 of the Constitution.  If, after the debt ceiling is
increased by $900 billion, the President later certifies that the federal
debt is again within $100 billion of the debt limit, the President could
request up to $1.6 trillion in additional debt, subject to the same disapproval
procedures above. This debt limit increase would be contingent on the joint
committee described below leading to enactment of a deficit reduction package
in excess of $1.6 trillion.

JOINT COMMITTEE. The bill would create a
twelve-member Joint Select Committee on Deficit Reduction, which would be
required to provide original recommendations (including legislative language)
to “significantly” improve both the short- and long-term fiscal
imbalance of the federal government, as well as to consider the
recommendations from existing standing committees of Congress.  The goal
of the committee would be to reduce the deficit by $1.8 trillion. A majority
of the committee (seven members) would be able to report its legislative
recommendations for reducing the deficit before Thanksgiving, and such
legislation would be subject to expedited consideration in both houses.
The bill does not prevent the joint committee from reporting
legislation to increase taxes.

MANDATORY SPENDING.The legislation provides funding
to fill a shortfall of $17 billion (over two years) for the federal Pell
Grant program. The bill more than offsets this spending by terminating Direct
Loan Repayment Incentives, as well as subsidized loans for graduate students.
Beyond that, the bill envisions any mandatory spending changes being done via
the Joint Committee described above.

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