June 24, 2004

By Robert Greenstein and Richard Kogan

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Rep. Jeb Hensarling will offer tonight a comprehensive substitute for budget enforcement legislation now on the House floor.  The Hensarling substitute is drawn from H.R. 3800, legislation that Rep. Hensarling and various other Members introduced earlier this year and that Grover Norquist and other archconservatives have termed the “gold standard” for budget legislation.  Were it to be enacted, the Hensarling substitute would represent perhaps the most extreme piece of budget legislation in recent U.S. history.

Entitlement Cuts Over 10 Years If All Entitlements Are Cut Proportionately Under Hensarling Amendment
(in billions of dollars)





Federal civilian retirement and disability


Unemployment Compensation


Military retirement and disability


Supplemental Security Income


Earned Income Tax and Child Tax Credits


Veterans’ benefits


Food Stamps


Family Support


Child Nutrition


Commodity Credit Corporation


Other federal retirement and disability


TRICARE for Life


Foster Care and Adoption Assistance


Student loans


Universal Service Fund


State Children's Health Insurance


Social services


Other miscellaneous






If all entitlements were cut by the same percentage, Medicare would have to be cut by $624 billion, Medicaid by $332 billion, military retirement and disability programs by $56 billion, veterans’ benefits by $45 billion, Supplemental Security Income for the elderly and disabled poor by $53 billion, the Earned Income Tax Credit and refundable Child Tax Credit for working poor families by $46 billion, and the school lunch and child nutrition programs by $19 billion.  (If Congress took no action and entitlements were cut entirely through automatic cuts, the specific amounts that would be cut in each program would be somewhat different, but the cuts would still total $1.55 trillion.  It is unthinkable that the cuts would be achieved primarily or entirely through automatic cuts, since that would require eliminating many popular programs — as well as the salaries of Members of Congress and Senators — by 2009 and consequently would be politically unacceptable.)

Other Provisions of the Substitute Also Ill-Advised

Under the Hensarling substitute, the budget resolution would be converted into a joint budget resolution that is signed by the President and has the force of law.  In addition, consideration of appropriations bills would be barred until the joint budget resolution is enacted, regardless of how many months it takes for the Senate, the House, and the President to reach agreement on the resolution.  In years in which the President and Congress were in serious disagreement on the budget, those disagreements might not be resolved until the waning days of the Congressional session.  Action on appropriations bills consequently could be held up until the final days of a Congressional session, with the Appropriations Committees losing months of valuable time and finding themselves under enormous pressure to assemble and pass bills in extremely compressed timeframes very late in the year.

Moreover, the President could bring Congress to a near standstill by vetoing the budget resolution until it was altered to suit him.  Until the President signed the resolution, no appropriations bills — and no authorization bills with a budgetary impact — could be considered.

Currently, failing to enact appropriations bills is unthinkable.  With an automatic CR, failing to appropriate could become a common occurrence.

House floor amendments that cut funding in appropriations bills or entitlement legislation would be tallied, and the budget savings from these cuts would be placed in a “lock-box.”  Once the appropriations or entitlement legislation in question had been approved by the House, the spending allocation for the committee of jurisdiction for that legislation would effectively be reduced by the amount placed in the “lock-box.”  The Budget Committee would enforce this requirement by treating the amount that had been cut on the floor and placed in the lockbox as a cost charged against the budget allocation of the committee of jurisdiction.[1]

This approach is unbalanced in the same way as Pay-As-You-Go proposals that apply to entitlement increases but not to tax cuts.  Savings from floor amendments that scale back the size of a tax-cut bill (for example, by closing a tax shelter) would not be placed in a lockbox — and could be used for another tax break.  The Hensarling lockbox procedure would apply to spending measures only.



The Hensarling substitute contains a number of provisions that could have far-reaching effects on policy.  These provisions could result in large cuts that harshly affect low-income children and families, veterans, the elderly and people with disabilities, among others, while allowing continued unfettered tax cuts for the most well-off and the most well-connected.  More balanced and effective approaches to restoring fiscal discipline should be pursued.  As a recent joint statement by the Concord Coalition, the Committee for Economic Development, the Committee for a Responsible Federal Budget, and the Center on Budget and Policy Priorities advises (and as Federal Reserve Chair Alan Greenspan recommends), the first step is to stop “digging the hole deeper” by applying pay-as-you-go rules to entitlement increases and tax cuts alike.

End Notes:

[1] The sponsor of a floor amendment to cut funding in an appropriations bill or to cut expenditures in entitlement legislation could state upon offering the amendment that rather than going in the lock-box, some or all of the savings from the proposed cut would be used to finance a higher level of funding for another program in the bill or reserved for use by the relevant committee of jurisdiction.  Unless such a declaration were made, the savings from the cut would go into the lock-box.