The Issue
On March 29, 2012, the House of Representatives adopted the FY 2013 Budget Resolution Blueprint (H. Con. Res. 112). Titled "The Path to Prosperity," the nonbinding $3.5 trillion resolution outlines spending and tax priorities for the appropriations process and tax-writing committees and includes a process for replacing some of the automatic spending cuts prescribed by the Budget Control Act. Read the Independent Sector statement.

The proposal includes plans for individual and corporate tax reform, reductions in discretionary spending, and significant changes to entitlements, including programs serving low-income individuals and seniors.

• House FY 2013 Budget Blueprint
  

Highlights of the FY 2013 House Budget Resolution (H. Con. Res. 112)
FY 2013 Budget Resolution - Top Line Snapshot

* Congressional Budget Office Estimates

Additional Details

• Proposes to cut spending by $5.3 trillion over 10 years (compared to President’s FY 2013 budget request)
• Reduces revenue to the government by nearly $4 trillion over 10 years
• Reduces the current $1.047 trillion discretionary spending cap for FY 2013 to $1.028 trillion
  
• $554 billion of the $1.028 trillion discretionary cap would be reserved for defense spending ($9 billion above current spending levels)

Sequestration
The resolution calls for replacing some of the automatic spending cuts established by the Budget Control Act, particularly those affecting defense spending, with the alternative reductions to be identified through budget reconciliation.

Budget Reconciliation
The reconciliation process provides Congress an expedited procedure for enacting spending, revenue, and debt policies contained in the budget resolution. Under reconciliation, the budget resolution directs specific committees to draft legislation to implement the desired budgetary outcome – in this case reduced federal expenditures.  The reconciliation process importantly allows for Senate adoption of the final spending package by a simple majority, rather than the normal 60 vote threshold. Additionally, no changes to the Social Security program are permitted under the reconciliation process.

Reconciliation in the FY 2013 Budget
The budget includes reconciliation instructions for the following six House committees, directing them to find additional program savings that would total $261 billion in deficit reduction over 10 years: Agriculture; Energy and Commerce; Financial Services; Judiciary; Oversight and Government Reform; and Ways and Means.

Taxes
The resolution calls for a simplified tax code for individuals and businesses that broadens the tax base and lowers rates by:

• Replacing the current six rate individual income tax structure with two rates:
• 10 percent and 25 percent
• Reducing the corporate tax rate to 25 percent
• Eliminating many tax deductions and credits for individuals and businesses (the resolution does not specify which tax deductions and credits would be altered)

Entitlement / Mandatory Spending Reform
The resolution calls for a number of changes to entitlement programs that predominantly serve low income populations and seniors. The budget resolution also calls for beginning to devolve other low-income programs to states to provide states with greater autonomy, but does not specify the number or types of programs.

Medicaid

• Proposes converting Medicaid into a block grant program that would give states more flexibility to tailor their Medicaid programs to the specific needs of their residents, indexed for inflation and population growth

Supplemental Nutrition Assistance Program – SNAP (food stamps)

• Beginning in 2016, proposes converting SNAP to a block grant program tailored to each state’s low-income population, indexed for inflation and eligibility. This would result in an estimated $122.5 billion cut to the program over 10 years.
  

Medicare

• Establishes a Medicare Exchange program to replace the current system beginning in 2023.
• Workers currently under the age of 55 would, beginning in 2023, be given a choice of private plans competing alongside the traditional fee-for-service option within the Medicare Exchange
• Medicare would provide a premium support payment to either pay for or offset the premium cost of the plan chosen by the senior

Social Security

• Calls for the Administration and Congress to begin working together to provide long-term solutions for the solvency of Social Security

Corporation for National and Community Service

• Proposes eliminating the Corporation for National and Community Service

National Endowment for the Arts & National Endowment for Humanities

• Proposes eliminating federal funding for these agencies and suggests raising necessary operating funds from private sector patrons

Health Care

• Assumes the repeal of the Patient Protection and Affordable Care Act (PL 111-148) as part of long-term spending reductions and savings.