NMHA Capitol Hill Update
May 10, 2005

 

Round One of Budget Fight Comes to a Close
Budget Resolution Calls for Significant Cuts, But Fight is Not Yet Over

 

Thank you to all the MHAs who have contacted their Members of Congress in recent weeks, urging them to oppose federal Fiscal Year (FY) 2006 budget cuts in Medicaid and other crucial programs. This NMHA Capitol Hill Update provides the current status of the federal budget process; describes future steps in that process; and lists some upcoming opportunities for grassroots advocacy.

Summary:

The very disappointing budget resolution recently adopted by Congress represents a general blueprint. Decisions on where cuts are made, how those cuts are to be carried out, and which programs are protected or even expanded are still to be made. Advocates have a critical role to play in the weeks and months ahead.

Background:

Last month Congress adopted a Budget Resolution which would cut Medicaid by $10 billion over the next five years, add $106 billion in tax cuts, and set aside only $843 billion for discretionary spending. The Budget Resolution narrowly passed 214 to 211 in the House and 52 to 47 in the Senate.

Although the budget resolution passed Congress, that broad plan leaves major decisions - on where to allocate funds and how to achieve cuts - to congressional committees. The coming weeks remain a critical time for advocates to influence those decisions, and to re-engage with Members of Congress. The next step or "round" of this budget bout is for the appropriations committees to begin developing their funding bills. The appropriators recently outlined a plan on how to divide the $843 billion set aside for total discretionary spending under the FY 2006 budget resolution.

BUDGET HIGHLIGHTS

Medicaid
The budget resolution assumes $10 billion in Medicaid cuts over the next five years, beginning in October 2007. While this is a much lesser cut than the House budget resolution would have required, NMHA is gravely concerned over this step Under the now-approved budget plan, the Senate Finance Committee and the House Energy and Commerce Committee must produce legislation by mid-September to achieve those spending cuts. However, they have the discretion to determine how those cuts are achieved. Advocates must insist that such legislation not eliminate coverage for beneficiaries, the position Administration officials have taken in calling for such cuts.

The budget agreement also provides for the establishment of a Medicaid commission, which is to recommend changes to the program by September 1st. Many questions remain to be answered about the composition and independence of this panel.

Domestic Discretionary Programs
The budget resolution sets aside $843 billion for overall discretionary funding for FY 2006 - roughly the same level proposed by the Administration. That represents almost a 6% cut below current funding, adjusted for inflation. Since it is only a blueprint, the budget resolution provides no details about which specific programs might absorb these cuts. But given the likelihood that defense and homeland security accounts will be protected, appropriators will face tough decisions about winners and losers among federal programs and projects in achieving this $23 billion cut. Advocates clearly have a critical role to play in helping shape these decisions, among which are to urge restoration of funds that the Administration proposed cutting from key programs.

Taxes
The budget resolution calls for more than $100 billion in tax cuts over the next five years, including $70 billion in tax cuts that can be enacted through fast-track reconciliation legislation (such legislation has limited debate, cannot be filibustered, is difficult to amend, and requires a simple majority to be enacted). It is widely assumed that the tax reconciliation bill will include a two-year extension of the capital gains/dividend tax cut. The Urban Institute-Brookings Institution Tax Policy Center estimates that more than half of the benefits of this tax cut go to households with income in excess of $1 million per year and nearly 80% of the benefits to the 3% of households with annual income in excess of $200,000 per year.

There is an inescapable link between these proposed tax cuts and the cuts in funding for entitlement and discretionary programs.

Next Steps for Advocates

Upcoming congressional recesses offer opportunities to weigh in on these issues with your Members of Congress; these include Memorial Day Recess (5/30-6/3); Fourth of July Recess (7/4-8); and the August Recess (8/1-9/5). Prior to these recesses, NMHA will distribute advocacy talking points on the federal budget and other key issues.

In addition, stay tuned for legislative alerts that will arm you with advocacy tools for the next stages of the battle.

Once again, THANK YOU for your advocacy efforts and your continued commitment to protecting critical federal programs and the people they serve. This is not an easy battle, but one that NMHA must and will continue to fight. Your contribution to this fight is invaluable.

If you have any questions or need further information, please contact Julio C Abreu, NMHA's Government Affairs, at jabreu@nmha.org.