Senate Budget Committee Approves FY 2008 Budget Blueprint
The Senate Budget Committee voted 12-11 along party lines March 15 to adopt a fiscal year 2008 budget resolution that Chairman Kent Conrad, D-N.D., said would bring the budget into surplus by 2012 without raising taxes. The panel’s action sends the resolution to the full Senate, which is expected to take up the bill the week of March 19.
Revenue
The resolution provides for a two-year patch of the alternative minimum tax (AMT), and creates a deficit-neutral “reserve fund” requiring any extension of the 2001 and 2003 tax cuts beyond their scheduled expiration in 2010 to be offset.
Additional revenue would be raised by reducing the tax gap and curbing offshore tax havens and other tax shelters. The resolution also provides nearly $400 million for IRS enforcement to close the tax gap.
No Reconciliation Instructions
Significantly, the resolution does not include reconciliation instructions that would allow lawmakers to sidestep certain procedural hurdles involved in getting legislation to the Senate floor. The reconciliation process has been used in the past to move tax legislation, including President Bush’s 2001 and 2003 tax cut bills. Conrad said reconciliation instructions were unnecessary at this time, and that the reserve funds set up in the resolution will provide allowances for future tax cuts.
Spending
The $15.5 trillion resolution would reduce discretionary spending from 7.2 percent of gross domestic product (GDP) to 6.3 percent of GDP by 2012.
Budget Committee ranking Republican Judd Gregg of New Hampshire and Finance Committee ranking Republican Charles Grassley of Iowa were both critical of the planned spending in the resolution, saying taxes would need to be increased by $900 billion to pay for fixing the AMT and extending the 2001 and 2003 tax cuts.
Rules
The resolution also includes provisions that extend “pay-as-you-go” rules through 2017, adopt discretionary spending caps through 2008, and allow a point of order to be raised against revenue or spending provisions that increase the long-term deficit by more than $5 billion over 10 years.
Upcoming House Action
For its part, the House Budget Committee is tentatively scheduled to mark up its budget resolution the week of March 19.
— Amy Ackerman
Tax Policy Group
Deloitte Tax LLP