Senate FY 2014 Budget Resolution

The Senate passed its fiscal year 2014 budget resolution (S. Con. Res. 8) March 23, 2013. Titled "A Foundation for Growth: Restoring the Process of American Opportunity," the nonbinding resolution outlines spending and tax priorities for the appropriations process and tax-writing committees and would replace the sequester with an even split between new revenue and spending cuts.

The Senate proposal's focus on revenue is in stark contrast to the House resolution, which derives its deficit reduction from deep spending cuts and entitlement reforms.

Independent Sector, along with 20 national nonprofit organizations, sent a letter to members of the Senate Finance and Budget Committees, urging lawmakers to exclude the charitable deduction from a provision that instructs the Finance Committee to identify $975 billion in revenue from limiting itemized deductions, exclusions, and credits.

Highlights of the FY 2014 Senate Budget Resolution
FY 2014 Senate Budget Resolution - Top Line Snapshot

Total Spending
Discretionary Spending (Base Outlays)
Projected Deficit
FY 2014 Senate Budget Resolution
$3.7 trillion
$1.241 trillion
$692 billion
Current Policy Baseline (FY 2014) $3.6 trillion $1.116 trillion $608 billion

Additional Details

  • Proposes to reduce the deficit by a total of $1.85 trillion over 10 years
    • $975 billion in new revenue for deficit reduction
    • $975 billion in spending reductions for deficit reduction
    • $100 billion in infrastructure investments
  • Increases net revenue by $923 billion over 10 years in part by eliminating tax breaks for wealthy Americans and large corporations
  • The budget projects over $4.25 trillion in deficit reduction since 2010 when combining the budget's $1.85 trillion in savings with $1.8 billion in spending cuts already authorized by Congress and the $600 billion in revenue increases from the fiscal cliff agreement.
  • The budget maintains the discretionary spending caps created by the Budget Control Act of 2011.

The resolution proposes to fully replace the remaining $960 billion in the sequester's automatic spending cuts with an equal mix of spending reductions and revenue increases. The alternative measures include:

  • $480 billion in new revenue (from the $975 billion total new deficit reduction revenue from eliminating tax deductions, credits, and exclusions for wealthy Americans and large corporations).
  • $240 billion in domestic spending reductions
  • $240 billion in reductions to defense spending

Taxes / Revenue
The resolution calls provides the Senate Finance Committee with budget reconciliation instructions to identify $975 billion in revenue for deficit reduction from eliminating tax deductions, credits, and exclusions for wealthy Americans and large corporations. The budget proposal does not offer suggestions for which expenditures on the individual income side of the tax code should be considered for elimination or reduction, but it does offer several illustrative approaches that the Finance Committee may consider, including:

  • Across the board limitations on deductions for the top 2 percent of income earners
    • Percentage cap on itemized deductions
    • Hard-dollar cap on itemized deductions
    • Limitation on the rate at which deductions can reduce an individual's tax liability
  • Reforming the current structure of certain expenditures

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 reducing the deficit. 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.

Spending Reductions
The resolution calls for $975 billion in targeted spending cuts for deficit reduction, including:

  • $493 billion in total domestic spending reductions (including $275 billion in health savings)
  • $240 billion in defense spending reductions
  • $242 billion in savings from interest spending

Infrastructure Investments
The resolution calls for $100 billion in targeted investments in our nation's infrastructure and workforce, including:

  • $50 billion for high priority infrastructure projects (roads, bridges, airports, and mass transit)
  • $20 billion to begin repairs and increase technological infrastructure in public schools
  • $10 billion for waterway infrastructure projects, including dams and ports
  • $10 billion for an infrastructure bank to leverage private sector investment for loans and loan guarantees for significant infrastructure projects
  • $10 billion for worker training

Health Care / Entitlement Programs
The resolution calls for maintaining and strengthening many of the health care reforms established by the Patient Protection and Affordable Care Act (PL 112-148)

  • Preserves Medicare and incorporates savings from the Affordable Care Act
  • Preserves the expansion of Medicaid under the Affordable Care Act
  • Protects federal safety net programs like the Supplemental Nutrition Assistance Program (SNAP)

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