This is my favorite site to keep up with the federal budget process...thought I'd offer a taste...

THE WASHINGTON BUDGET REPORT
Weekly Report: March 3, 2008
by Charles S. Konigsberg, Editor and Publisher
of Washington Budget Report.

http://www.washingtonbudgetreport.com/

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Budget Committees to Mark-up FY 2009 Budget Resolutions

This week (March 5 - Wednesday), the House and Senate Budget Committees are expected to mark-up their respective Concurrent Resolutions on the Budget for FY 2009.

[Context: In general, a "Budget Resolution" is a concurrent resolution of the Congress that establishes a general framework for subsequent congressional action on spending and revenue bills.

--The Budget Resolution does not require presidential signature and does not become law.

--The Budget Resolution includes spending and revenue totals, which are enforced through parliamentary rules, but the Budget Resolution does not set annual spending levels for specific programs; that authority belongs to the House and Senate Appropriations Committees.

--In order to calculate proposed spending and revenue totals, the Budget Resolution makes non-binding assumptions regarding levels of spending for specific programs, based on "views and estimates submitted by the authorizing committees" (see below) as well as fiscal policy and political judgments on realistic and appropriate levels.]

Democrats face a difficult task, because they will likely feel compelled to produce a budget plan aimed at achieving balance by 2012 or 2013, since the President's Budget claimed to achieve a balanced budget in both years.

[Context: However, as discussed in previous WBRs, the President's Budget is unrealistic in its balanced budget claim for a number of reasons: (1) it uses temporary Social Security surpluses to "mask" the ongoing or "structural deficit" in government operations; (2) it includes only partial war funding for FY 2009 and nothing thereafter ($70 billion, as opposed to $193 billion requested for FY 2008); (3) it assumes that nondefense funding would be frozen, receiving no inflation adjustments for the next five years--in effect causing a significant and unrealistic reduction in government services; (4) it would provide "Alternative Minimum Tax" (AMT) relief for tax year 2008 only; (5) it again includes the President's Social Security privatization proposals, but would not phase them in until 2013--a budgetary gimmick to avoid adding to deficits over 2009-2012; and (6) it gets an artificial boost from using rosy economic projections.]

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Medicare Funding Warning Response Act

Political rhetoric is escalating on the Administration's Medicare reform legislation, which the House may be required to consider later this year under a "trigger" included in the 2003 Medicare prescription drug bill.

Context: The percentage of total Medicare outlays covered by payroll taxes, premiums and other dedicated funding sources is shrinking, and the amount of general revenues required to keep the program afloat is rapidly increasing. As a consequence of this trend, the 2003 Medicare prescription drug legislation (known as the Medicare Modernization Act, or MMA) required the Trustees of the Medicare Trust Funds to report each year on the amount of general revenues required to finance Medicare; and if the percentage of general revenues was to exceed 45% of total Medicare outlays for two consecutive years, the Trustees are directed by the MMA to issue a "Medicare funding warning."

The Trustees made such a finding in 2006 and 2007 and issued the finding in their April 2007 Annual Report. Under the MMA, the President was required to submit to Congress, within 15 days after release of his FY 2009 Budget, proposed legislation to respond to the warning (with reforms that would eliminate the need to expend general revenues in excess of 45% of Medicare outlays). HHS Secretary Leavitt released the President's proposal on February 15, 2008, and House Majority Leader Steny Hoyer introduced the legislation, as required by the MMA. However, his office issued a statement making clear that "the act of introducing this legislation does not imply that Hoyer supports the bill."

The 3-part Administration measure includes: restrictions on medical malpractice lawsuits; increased prescription drug premiums for high-income seniors; and increased utilization of health information technology and electronic medical records.

While agreement can be reached on higher utilization of health information technology, there is considerable disagreement regarding capping medical malpractice awards with many Democrats opposing caps and many Republicans supporting caps.

It is unclear how the votes would break down on increasing Medicare prescription drug premiums on high income beneficiaries, although historically Democrats have tended to oppose income-relating Medicare premiums as contrary to the social insurance basis of the program.

Medicare Advantage is the elephant in the room. The major disagreement on Medicare between the two political parties is over the cost and viability of the Medicare Advantage (private managed care) subsidies. Context: People who are eligible for Medicare Part A and are enrolled in Part B have the option to receive all of their Medicare benefits through managed care plans such as health maintenance organizations (HMOs), preferred provider organizations (PPOs), and special needs plans (SNPs). The managed care alternatives are part of the "Medicare Advantage" (MA) program. Unlike traditional fee-for-service Medicare, in which medical providers are paid for each service, managed care providers in Medicare Advantage are paid a monthly per enrollee amount (known as a "capitation" payment) to provide benefits to enrollees. The total cost of MA in calendar year 2006 was $64 billion-funded about equally by Parts A and B. Although the objective of MA is to lower total Medicare costs through competition, payments to MA plans have been higher than costs per beneficiary in traditional fee-for-service Medicare--12% higher according to one recent study. As of January 2007, nearly 20% of all Medicare beneficiaries were enrolled in a Medicare Advantage plan.

Many congressional Republicans, and the Administration, see Medicare's salvation in expanding Medicare Advantage and generating competition between privately managed plans. Conversely, many Democrats assert that Medicare Advantage is already unfairly subsidized; they argue that Medicare savings could be realized by reducing Medicare Advantage subsidies.

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Views and Estimates on the FY 2009 Budget

-- Senate Homeland Security and Governmental Affairs Chairman Joe Lieberman, in a letter to the Budget Committee, finds that the President's Budget includes some "useful increases for targeted programs," but "shortchanges too many urgent homeland security needs," in particular, homeland security grants and funding to implement the 9-11 Commission Act and the Post-Katrina Act. With regard to grants, the letter expresses concern that the President's Budget would lead to "a 48% drop in overall grant funding -- seriously limiting the ability of state and local officials to prevent, prepare for, and respond to acts of terrorism and natural disasters." The letter also objects to the President's proposed 35% cut in the Emergency Food and Shelter Program funded through FEMA.

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-- The Senate Veterans' Affairs Committee requests $2.6 billion over the President's Budget for VA medical services. The Committee states that "the VA health care system would be devastated should the Administration's budget for future years become a reality." The Committee also rejects the Administration's proposed increases in drug copayments and annual enrollment fees.



Recent Budget Docs (Links on the website - at the top of post)

Estimated Revenue Effects of Tax Provisions Contained in H.R. 5351, the "Renewable Energy and Energy Conservation Tax Act of 2008"; Technical Explanation of HR 5351

Federal Reserve Chairman Ben Bernanke: Semiannual Monetary Policy Report to the Congress, February 27, 2008

GAO: The Federal Government's Financial Health: A Citizen's Guide to the 2007 Financial Report of the U.S. Government

America's Priorities: How the U.S. Government Raises and Spends $3 Trillion Per Year, by Charles S. Konigsberg, Editor and Publisher of Washington Budget Report.