Order Code RL33291
CRS Report for Congress
Received through the CRS Web
Congressional Budget Actions in 2006
March 3, 2006
Bill Heniff Jr.
Analyst in American National Government
Government and Finance Division
Congressional Research Service ˜ The Library of Congress

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Congressional Budget Actions in 2006
Summary
During the second session of the 109th Congress, the House and Senate will
consider many different budgetary measures. Most of them will pertain to fiscal year
(FY) 2007 and beyond, but some will make adjustments to the budget for FY2006.
As the session progresses, this report will describe House and Senate actions on
major budgetary legislation within the framework of the congressional budget
process and other procedural requirements.
Congress typically begins its annual budget process once the President submits
his budget for the upcoming fiscal year. On February 6, 2006, President George W.
Bush submitted his FY2007 budget to Congress.
The congressional budget process provides for an annual concurrent resolution
on the budget to serve as a framework for the consideration of budgetary legislation.
The budget resolution sets forth aggregate spending and revenue levels, and spending
levels by major functional area, for at least five fiscal years. Budget resolution
policies are implemented through the enactment of reconciliation bills, revenue and
debt-limit legislation, and appropriations and other spending measures. They are
enforced by points of order that may be raised when legislation is pending on the
House and Senate floor.
In preparation for action on the FY2007 budget resolution, on January 26, the
Congressional Budget Office released its annual report on budget baseline
projections, The Budget and Economic Outlook: Fiscal Years 2007-2016. The
House and Senate are expected to begin consideration of the budget resolution for
FY2007 in March, with the intention to complete action on it by the statutory
deadline of April 15.
This report will be updated as actions occur during the session.

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Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Overview of the Congressional Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The President’s Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Budget Resolution: Implementation and Enforcement . . . . . . . . . . . . . 3
Expired Budget Enforcement Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Budget Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reconciliation Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reconciliation Provided by the FY2006 Budget Resolution . . . . . . . . . . . . 10
Revenue and Debt-Limit Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Revenue Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Debt-Limit Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Appropriations and Other Spending Legislation . . . . . . . . . . . . . . . . . . . . . . . . . 15
Discretionary Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Mandatory Spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Chronology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
For Additional Reading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Congressional Hearings, Reports, and Documents . . . . . . . . . . . . . . . . . . . 20
CRS Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
List of Figures
Figure 1. Actual FY2005 Revenues by Source . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Figure 2. Actual FY2005 Outlays by Major Spending Category . . . . . . . . . . . . 16
List of Tables
Table 1. The Congressional Budget Process Timetable . . . . . . . . . . . . . . . . . . . . 4
Table 2. Mapping Spending and Revenue Legislation through the
Congressional Budget Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Table 3. Budget Baselines, FY2006-FY2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

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Congressional Budget Actions in 2006
Most Recent Developments
Congress began 2006 with unfinished budgetary matters left over from the
previous year. Specifically, Congress had not completed action on the reconciliation
measures provided for in the FY2006 budget resolution (H.Con.Res. 95). The
FY2006 budget resolution provided for three reconciliation measures: (1) to cut
direct (or mandatory) spending; (2) to cut taxes; and (3) to increase the statutory debt
limit.
Accordingly, on February 1, the House completed action on the spending
reconciliation measure, S. 1932, the Deficit Reduction Act of 2005, by concurring
in the Senate amendment to the House amendment to S. 1932, thereby clearing the
measure for the President. On February 8, President Bush signed S. 1932 into law
(P.L. 109-171).
On February 8 and 14, respectively, the House and Senate also agreed to a
conference to resolve the legislative differences between their respective versions of
the tax reconciliation bill, H.R. 4297. (Neither the House nor the Senate has taken
action on a third reconciliation measure changing the statutory limit on the public
debt.)
Finally, in preparation for congressional action on the budget for FY2007
(which begins on October 1, 2006), the Congressional Budget Office (CBO) released
its annual report on budget baseline projections, The Budget and Economic Outlook:
Fiscal Years 2007-2016, on January 26. About two weeks later, on February 6,
President Bush submitted his FY2007 budget to Congress, thereby initiating
congressional action on the budget for the upcoming fiscal year.
Introduction
During the second session of the 109th Congress, the House and Senate will
consider many different budgetary measures. Most of them will pertain to fiscal year
(FY) 2007 (referred to as the “budget year”) and beyond. In addition, some will
make adjustments to the budget for FY2006 (referred to as the “current year”). As
the congressional session progresses, this report will describe House and Senate
action on major budgetary legislation within the framework of the congressional
budget process and other procedural requirements.1
1 For information on budget actions during the first session of the 109th Congress, see CRS
Report RL32791, Congressional Budget Actions in 2005, by Bill Heniff Jr.

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CRS-2
Within this procedural framework, Congress will consider various budget-
related legislation in the context of what is arguably an unfavorable budget outlook.
According to the Office of Management and Budget (OMB) and CBO, current budget
projections under existing law, without any legislative changes, show annual deficits
in the unified budget (i.e., including federal funds and trust funds) in each of the next
several fiscal years. For example, OMB projects that the FY2006 unified budget
deficit will be $367 billion, with deficits continuing, but declining, through FY2011.
Similarly, CBO projects that the FY2006 unified budget deficit will be $337 billion,
with a surplus not returning until FY2012.2
Overview of the Congressional Budget Process
The congressional budget process consists of the consideration and adoption of
spending, revenue, and debt-limit legislation within the framework of an annual
concurrent resolution on the budget.
The President’s Budget
Congress begins its budget process once the President submits his budget. The
President is required by law to submit a comprehensive federal budget no later than
the first Monday in February (31 U.S.C. 1105). The President’s budget includes
estimates of direct spending and revenues under existing laws (with certain
adjustments), as well as estimates of any proposed legislative changes affecting direct
spending and revenues. In addition, the President’s budget contains requests, in
specific dollar amounts, for discretionary spending (i.e., funds controlled through the
appropriations process) for the upcoming fiscal year. Although Congress is not
bound by the President’s budget, congressional action on spending and revenue
legislation often is influenced by his recommendations, as well as subsequent
budgetary activities by the President during the year. OMB assists the President in
formulating and coordinating his budget policies and activities.
On February 6, 2006, President Bush submitted his FY2007 budget to Congress.
As is the usual practice, the President’s budget was submitted as a multi-volume set
consisting of a main document that includes the President’s budget message and
information on his 2007 proposals (Budget) and supplementary documents that
provide special budgetary analyses (Analytical Perspectives), historical budget
information (Historical Tables), and detailed account and program level information
(Appendix), among other things.3 In addition, on February 9, OMB made available
2 For further information on the current budget deficit projections, see Office of
Management and Budget, Budget of the U.S. Government, Fiscal Year 2007 (Washington:
GPO, 2006), Table S-12, p. 333; Congressional Budget Office, The Budget and Economic
Outlook: Fiscal Years 2007-2016 (Washington: CBO, 2006), Summary Table 1, p. xiv; and
CRS Report RL33282, The Budget for Fiscal Year 2007, by Philip D. Winters.
3 The President’s FY2007 budget documents are available at [http://www.gpoaccess.gov/
usbudget/fy07/browse.html]. For further information on accessing these documents, see
CRS Report RS22390, FY2007 Budget Documents: Internet Access and GPO Availability,
(continued...)

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CRS-3
a supplementary document, Major Savings and Reforms in the President’s 2007
Budget, outlining program terminations and reductions proposed in the President’s
FY2007 budget.
The President may revise his budget request any time during the year. Revisions
requested before Congress has acted on the initial request are submitted as budget
amendments. In addition, the President also may request supplemental
appropriations for the current fiscal year for unanticipated needs.4
By July 15 of each year, the President is required to submit an update of his
budget, commonly referred to as the mid-session review.5 The report contains
revised estimates of the budget deficit/surplus, receipts, outlays, and budget authority,
reflecting changed economic conditions and assumptions and congressional actions.
The Budget Resolution: Implementation
and Enforcement
The Congressional Budget Act of 1974 (Titles I-IX of P.L. 93-344, 88 Stat. 297-
332) established the congressional budget process, including a timetable for
congressional action on budgetary legislation (see Table 1). The congressional
budget process provides for an annual concurrent resolution on the budget to serve
as a framework for the consideration of budgetary legislation. The budget resolution
sets forth aggregate spending and revenue levels, and spending levels by major
functional area, for at least five fiscal years. As a concurrent resolution, the budget
resolution is not presented to the President for his signature, and thus does not
become law. Instead, it is an agreement between the House and Senate on a
congressional budget plan, providing a framework for subsequent legislative action
on the budget during each congressional session.
3 (...continued)
by Jennifer Anne Teefy.
4 These requests are available at [http://www.gpoaccess.gov/usbudget/fy07/amndsup.html].
5 For background information on the mid-session review, see CRS Report RL32509, The
Mid-Session Review of the President’s Budget: Timing Issues, by Robert Keith.

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CRS-4
Table 1. The Congressional Budget Process Timetable
Date
Action
First Monday in February
President submits budget to Congress.
February 15
Congressional Budget Office submits economic and
budget outlook report to Budget Committees.
Six weeks after President
Committees submit views and estimates to Budget
submits budget
Committees.
April 1
Senate Budget Committee reports budget resolution.
April 15
Congress completes action on budget resolution.
May 15
Annual appropriations bills may be considered in the
House, even if action on budget resolution has not been
completed.
June 10
House Appropriations Committee reports last annual
appropriations bill.
June 15
House completes action on reconciliation legislation (if
required by budget resolution).
June 30
House completes action on annual appropriations bills.
July 15
President submits mid-session review of his budget to
Congress.
October 1
Fiscal year begins.
Source: Section 300 of the Congressional Budget Act of 1974, as amended (P.L. 93-344, 2 U.S.C.
631).
Budget resolution policies are implemented through the enactment of revenue
and debt-limit legislation, appropriations and other spending measures, and, if
required by the budget resolution, one or more reconciliation bills (see Table 2).
Congress enforces budget resolution policies through points of order on the floor of
each chamber and the reconciliation process. For example, any legislation that would
cause the aggregate levels to be violated is prohibited from being considered.
Further, the total budget authority and outlays set forth in the budget resolution are
allocated among the House and Senate committees having jurisdiction over specific
spending legislation. Any legislation, or amendment, that would cause these
committee allocations to be exceeded is prohibited. Finally, the House and Senate
Appropriations Committees subdivide their allocations among their respective
subcommittees. A point of order may be raised against any appropriations measure,
or amendment, that would cause one of these subdivisions to be exceeded.6 The
budget resolution also contains spending levels by functional categories (e.g.,
national defense), but these are not enforceable. Congress also may use
6 For more detailed information on these points of order and their application, see CRS
Report 97-865, Points of Order in the Congressional Budget Process, by James V. Saturno.

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CRS-5
reconciliation legislation (discussed further below) to enforce the direct spending,
revenue, and debt-limit provisions of a budget resolution.
In addition, the Senate is constrained by limits on discretionary spending and a
“pay-as-you-go” (PAYGO) requirement for direct spending and revenue legislation,
which are enforced through points of order while legislation is being considered on
the Senate floor (both explained further below). The House does not provide for
similar points of order.
Expired Budget Enforcement Procedures
For FY1991 through FY2002, Congress and the President also were constrained
by statutory limits on discretionary spending and a statutory PAYGO requirement for
direct spending and revenue legislation.7 Unlike the enforcement procedures
associated with the budget resolution, which are employed while legislation is
considered on the floor of each chamber, the discretionary spending limits and
PAYGO requirement were enforced by a sequestration process, generally after
legislative action for a session of Congress ended. If either of these budget
constraints were violated, then the President was required to order a sequestration,
which involved largely across-the-board spending cuts in non-exempt programs, by
the amount of any violation. These budget enforcement mechanisms, however,
expired at the end of FY2002 (i.e., September 30, 2002).
President Bush, among others, has proposed setting new discretionary spending
limits and restoring a modified version of the PAYGO requirement, in addition to
several other budget process reforms.8 If Congress and President Bush enact budget
enforcement procedures such as these applicable to budget legislation in 2006, this
report will incorporate them accordingly.
7 These constraints were first established by the Budget Enforcement Act of 1990 (Title XIII
of P.L. 101-508, Omnibus Budget Reconciliation Act of 1990, 104 Stat. 1388-573-1388-
630), which amended the Balanced Budget and Emergency Deficit Control Act of 1985
(Title II of P.L. 99-177, 99 Stat. 1038-1101).
8 In his FY2007 budget, President Bush proposed to set discretionary spending limits for
FY2007 through FY2011 and to restore the PAYGO requirement for direct spending
legislation only, among other budget reform initiatives. See Office of Management and
Budget, Analytical Perspectives, Budget of the U.S. Government, Fiscal Year 2007, pp. 211-
217. For a contextual discussion of budget process reform, see CRS Report RS21752,
Federal Budget Process Reform: A Brief Overview, by Bill Heniff Jr. and Robert Keith.

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Table 2. Mapping Spending and Revenue Legislation through the Congressional Budget Process
The annual budget resolution functions as the centerpiece of the congressional budget process by setting forth aggregate spending and revenue levels for at least five fiscal years. Budget resolution policies are implemented
through the enactment of appropriations and other spending measures, revenue legislation, and, if required by the budget resolution, one or more reconciliation bills. Each of these types of measures follows a separate process
but must comply with the budget policies set forth in the budget resolution.
Discretionary spending policies in the budget resolution are implemented through the appropriations process.
Annual Appropriations Process: Congress considers and adopts each year regular appropriations acts providing budgetary authority for the upcoming fiscal year.
Full Appropriations Committee
E a c h o f t h e
F u l l A p p r o p r i a t i o n s
F u l l c h a m b e r
House and Senate
House and Senate
President signs each
subdivides its spending allocation
a p p r o p r i a t i o n s
Committee reports each
c o n s i d e r s a n d
resolve differences
separately agree to
appropriations act, or
[302(a) allocation] among its
subcommittees holds
appropriations act, which must
a d o p t s e a c h
i n c o n f e r e n c e
conference report to
a n o m n i b u s
s u b c o m m i t t e e s [ 3 0 2 ( b )
hearings and drafts a
not exceed the respective
appropriations act.
committees.
each appropriations
appropriations act,
allocations].
r
e
g
u l a
r
302(b) allocation.
act. From time to
into law.
appropriations act.
time, Congress merges
two or more regular
appropriations acts
into an omnibus
appropriations act.
Mandatory spending, revenue, and debt-limit policies in the budget resolution are implemented through the regular legislative process or the reconciliation process.
Regular legislative process: Congress may consider and adopt individual mandatory spending, revenue, or debt-limit legislation.
Each legislative committee
Each committee may report to its parent
Full chamber considers
House and Senate resolve
House and Senate separately
President signs individual
may hold hearings and
chamber mandatory spending or revenue
individ ua l ma nd a t ory
differences in conference
agree to conference reports
mandatory spending or
c o n s i d e r le g i s l a t i o n
legislation, which must not (1) cause
s pending or revenue
committees.
to individual mandatory
revenue legislation into
referred to it or draft
direct spending under the committee’s
legislation.
spending or revenue
law.
original legislation.
jurisdiction to exceed its spending
legislation.
ceiling [302(a) allocation]; (2) cause
revenues to fall below the revenue floor
set forth in the budget resolution; or (3)
violate the Se na te ’ s PAYGO
requirement.
Reconciliation Process: Congress may include in the budget resolution reconciliation instructions directing one or more committees to recommend legislative changes to existing law in order to bring mandatory spending,
revenues, the debt-limit, or a combination of these, into compliance with the budget resolution policies.
Each legislative committee directed to do so
Budget Committee packages the
Full chamber considers
Hous e and Senate
House and Senate
P r e s i d e n t s i g n s
recommends legislative changes to existing law
c o m m i t t e e s ’ l e g i s l a t i v e
a n y o m n i b u s
resolve differences in
separately agree to
o
m n i b
u s
to achieve the mandatory spending or revenue
recommendations into one or more
reconciliation measure
conference committee.
conference report to
r e c o n c i l i a t i o n
levels set forth in the budget resolution and
omnibus reconciliation measures,
under special procedures
omnibus reconciliation
legislation into law.
submits these reconciliation recommendations
“without any substantive revision.”
that limit the measure’s
legislation.
to the Budget Committee by a date certain.
contents and floor debate.

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Budget Resolution
The Congressional Budget Act, as amended, establishes the concurrent
resolution on the budget as the centerpiece of the congressional budget process.9 The
budget resolution sets forth aggregate spending and revenue levels, and spending
levels by major functional area, for at least five fiscal years. Once adopted, it
provides the framework for subsequent action on budget-related legislation.
Following the submission of the President’s budget early in the year, Congress
begins formulating the budget resolution. The House and Senate Budget Committees
are responsible for developing and reporting the budget resolution. In formulating
the resolution, the Budget Committees hold hearings and receive testimony from
various Members of Congress and representatives of federal departments and
agencies, the general public, and national organizations. Two regular hearings
include separate testimony from the CBO director and the OMB director. On
February 2, 2006, CBO Acting Director Donald Marron presented CBO’s baseline
budget projections for FY2007-FY2016 during testimony to the Senate Budget
Committee.10 On February 7 and 8, OMB Director Joshua B. Bolten provided an
overview of President Bush’s budget request before the Senate and House Budget
Committees, respectively.11
The congressional budget resolution, like the President’s budget, is based on
budget baselines (see Table 3). The budget baseline is a projection of federal
revenue, spending, and deficit or surplus levels based upon current policies, assuming
certain economic conditions. Baseline projections provide a benchmark for
measuring the budgetary effects of proposed policy changes. The President’s budget
baseline, referred to as current services estimates, is included in the budget
documents submitted to Congress.12 The President’s baseline usually differs from
CBO’s baseline, referred to as baseline budget projections, because of different
economic and technical assumptions. CBO released its annual report on budget
baseline projections, The Budget and Economic Outlook: Fiscal Years 2007-2016,
on January 26, 2006.13
9 For historical information on budget resolutions, see CRS Report RL30297, Congressional
Budget Resolutions: Selected Statistics and Information Guide, by Bill Heniff Jr. and Justin
Murray.
10 Donald Marron’s written testimony to the Senate Budget Committee is available at
[http://www.cbo.gov/ftpdocs/70xx/doc7034/02-02-OutlookTestimony.pdf].
11 Joshua Bolten’s written testimony to the Senate Budget Committee is available at
[http://www.senate.gov/~budget/republican/hearingarchive/testimonies/2006/2006-02-07
Bolten.pdf]; his written testimony to the House Budget Committee is available at
[http://www.house.gov/budget/hearings/boltenstmnt020806.pdf].
12 See the summary table S-12 in the main Budget volume, p. 333, and chapter 25 of the
Analytical Perspectives volume, pp. 359-374, for the current services estimates. Office of
Management and Budget, Budget of the U.S. Government, Fiscal Year 2007.
13 The report is available on the website of the Congressional Budget Office at
[http://www.cbo.gov/ftpdocs/70xx/doc7027/01-26-BudgetOutlook.pdf].

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Table 3. Budget Baselines, FY2006-FY2011
(in billions of dollars)
Total
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2007-
FY2011
Congressional Budget Office — January 2006
[budget baseline projections]
Revenues
2,312
2,461
2,598
2,743
2,883
3,138
13,823
Outlays
2,649
2,732
2,857
2,984
3,105
3,252
14,930
Surplus/Deficit (-)
-337
-270
-259
-241
-222
-114
-1,107
On-budget
-518
-466
-476
-474
-473
-380
-2,269
Off-budgeta
181
196
217
233
250
266
1,162
Office of Management and Budget — February 2006
[current services estimates]
Revenues
2,154
2,301
2,444
2,597
2,729
3,064
13,135
Outlays
2,669
2,701
2,798
2,925
3,050
3,210
14,684
Surplus/Deficit (-)
-367
-257
-201
-196
-149
-146
-949
On-budget
-549
-449
-416
-428
-402
-420
-2,115
Off-budgeta
182
192
216
233
252
274
1,167
Sources: Office of Management and Budget, Budget of the United States Government, Fiscal Year 2007
(Washington: GPO, 2006), p. 333; Congressional Budget Office, The Budget and Economic Outlook: Fiscal
Years 2007 to 2016, Jan. 2006, p. xiv.
Note: Details may not add to totals due to rounding.
a. Off-budget surpluses comprise surpluses in the Social Security trust funds as well as the net cash flow of the
Postal Service.
Another source of input comes from the “views and estimates” of congressional
committees with jurisdiction over spending and revenues. Within six weeks after the
President’s budget submission, or by a date set by the Budget Committees, each
House and Senate committee is required to submit views and estimates of budget
matters under its jurisdiction to its respective Budget Committee. These views and
estimates, frequently submitted in the form of a letter to the chair and ranking
minority Member of the Budget Committee, typically include comments on the
President’s budget proposals and estimates of the budgetary impact of any legislation
likely to be considered during the current session of Congress. The Budget
Committees are not bound by these recommendations. The views and estimates
often are printed in the committee report accompanying the budget resolution in the
Senate and compiled as a separate committee print in the House.
The budget resolution was designed to provide a framework for making budget
decisions, leaving specific program determinations to House and Senate
Appropriations Committees and other committees with spending and revenue
jurisdiction. In many instances, however, particular program changes are considered
when the budget resolution is formulated. Program assumptions sometimes are
referred to in the reports of the House and Senate Budget Committees and usually are

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CRS-9
discussed during floor action. Although these program changes are not binding,
committees may be strongly influenced by the recommendations when formulating
appropriations bills, reconciliation measures, or other budgetary legislation.
The congressional budget process timetable sets April 15 as a target date for
final adoption of the budget resolution.14 The CBA prohibits the consideration of
spending, revenue, or debt-limit legislation for the upcoming year until the budget
resolution has been adopted, unless the rule is waived or set aside.
The House and Senate consider the budget resolution under procedures
generally intended to expedite final action. In the House, the budget resolution
usually is considered under a special rule, limiting the time of debate and allowing
only a few amendments, as substitutes to the entire resolution. In contrast, the Senate
considers the budget resolution under the procedures set forth in the CBA, sometimes
as modified by a unanimous consent agreement. Debate on the initial consideration
of the budget resolution, and all amendments, debatable motions, and appeals, is
limited to 50 hours. Amendments, motions, and appeals may be considered beyond
this time limit, but without debate. Consideration of the conference report is limited
to 10 hours.
Reconciliation Legislation
Congress may implement changes to existing law related to direct spending,
revenues, or the debt limit through the reconciliation process, under Section 310 of
the Budget Act.15 The reconciliation process has two stages. First, Congress includes
reconciliation directives in a budget resolution directing one or more committees in
each chamber to recommend changes in statute to achieve the levels of direct
spending, revenues, debt limit, or a combination thereof, agreed to in the budget
resolution.
Second, each instructed committee develops legislative recommendations to
meet its reconciliation directives and reports its legislative recommendations to its
respective chamber directly or transmits such recommendations to its respective
14 In years when Congress is late in adopting, or does not adopt, a budget resolution, the
House and Senate independently may adopt “deeming resolution” provisions for the purpose
of enforcing certain budget levels. Deeming resolution provisions, typically included in a
simple resolution, specify certain budget levels normally contained in the budget resolution,
including aggregate spending and revenue levels, spending allocations to House and Senate
committees, spending allocations to the Appropriations Committees only, or a combination
of these. In some cases, an entire budget resolution, earlier adopted by one chamber, may
be deemed to have been passed. Under a deeming resolution, the enforcement procedures
related to the Congressional Budget Act, discussed later in this report, have the same force
and effect as if Congress had adopted a budget resolution. For further information on
“deeming resolutions,” see CRS Report RL31443, The “Deeming Resolution”: A Budget
Enforcement Tool, by Robert Keith.
15 For a full discussion of the reconciliation process, see CRS Report RL33030, The Budget
Reconciliation Process: House and Senate Procedures, by Robert Keith and Bill Heniff Jr.

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budget committee. Section 310(b) of the Congressional Budget Act of 1974 (Titles
I-IX of P.L. 93-344, 88 Stat. 297-332) specifies two options for the submission of
legislative recommendations to comply with reconciliation directives: (1) if one
committee is instructed, the committee reports its legislative recommendations to its
parent chamber directly; or (2) if two or more committees are instructed, the
committees submit their legislative recommendations to their respective Budget
Committee. In the latter case, the legislative language recommended by committees
is packaged “without any substantive revision” into one or more budget
reconciliation bills, as set forth in the budget resolution, by the House and Senate
Budget Committees.
Once the reconciliation legislation is reported in the House or Senate,
consideration is governed by special procedures. These procedures serve to limit
what may be included in reconciliation legislation, prohibit certain amendments, and
encourage its completion in a timely fashion. In the House, as with the budget
resolution, reconciliation legislation usually is considered under a special rule,
establishing the time allotted for debate and what amendments will be in order. In
the Senate, debate on a budget reconciliation bill, and on all amendments, debatable
motions, and appeals, is limited to not more than 20 hours. After the 20 hours of
debate has been reached, consideration of amendments, motions, and appeals may
continue, but without debate.
In both chambers, the Budget Act requires that amendments to reconciliation
legislation be germane and not increase the deficit. Also, the Budget Act prohibits
the consideration of reconciliation legislation, or any amendment to a reconciliation
bill, recommending changes to the Social Security program. Finally, in the Senate,
Section 313 of the Budget Act, commonly referred to as the Byrd rule, prohibits
extraneous matter in a reconciliation bill.16
Reconciliation Provided by the FY2006
Budget Resolution
As 2006 began, Congress had not completed action on the reconciliation
measures provided for in the FY2006 budget resolution (H.Con.Res. 95, H.Rept.
109-62), which was agreed to by Congress in 2005. The FY2006 budget resolution
provided for three reconciliation measures: (1) to cut direct (or mandatory) spending
by about $35 billion; (2) to cut taxes by $70 billion; and (3) to increase the statutory
debt limit by $781 billion. (For an extensive discussion of these reconciliation
measures, see CRS Report RL33132, Budget Reconciliation Legislation in
2005-2006 Under the FY2006 Budget Resolution, by Robert Keith.)
At the end of 2005, the House agreed to the conference report on the spending
reconciliation measure (S. 1932, the Deficit Reduction Act of 2005).17 In the Senate,
16 For detailed information on the Byrd rule, see CRS Report RL30862, The Budget
Reconciliation Process: The Senate’s “Byrd Rule,” by Robert Keith.
17 For the House consideration of the conference report to S. 1932, see Congressional
Record, daily edition, vol. 151 (Dec. 18, 2005), pp. H12233-H12241, H12269-H12277.

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CRS-11
however, the conference report failed when a point of order under the Byrd rule
(Section 313 of the Budget Act) against three provisions in the conference report was
sustained. Subsequently, the Senate agreed to a motion to concur in the House
amendment to S. 1932 with a further amendment containing the text of the
conference report with the violating provisions stricken.18 The House did not act on
the further amendment to S. 1932 before adjourning the first session of the 109th
Congress sine die.
Accordingly, at the beginning of the second session of the 109th Congress, on
February 1, the House completed action on the spending reconciliation measure, S.
1932, the Deficit Reduction Act of 2005, by agreeing to H.Res. 653 (H.Rept. 109-
366) by a 216-214 vote.19 The resolution provided that the House concur in the
Senate amendment to the House amendment to S. 1932, thereby clearing the measure
for the President. On February 8, President Bush signed S. 1932 into law (P.L. 109-
171). According to CBO, the Deficit Reduction Act of 2005 is projected to reduce
mandatory spending by about $39 billion over the five-year period of FY2006-2010.20
During 2005 as well, the House and the Senate passed different revenue
reconciliation measures (H.R. 4297, the Tax Relief Extension Reconciliation Act of
2005, and S. 2020, the Tax Relief Act of 2005, respectively). Before adjourning for
the year, however, the Senate and the House had not taken any further action on these
revenue reconciliation measures. Early in the second session of the 109th Congress,
to facilitate conference action, the Senate considered and passed H.R. 4297, as
amended by the text of the Senate-passed revenue reconciliation measure, among
other amendments, by a 66-31 vote on February 2, 2006. During consideration of
H.R. 4297, the Senate considered 14 amendments: seven amendments were adopted;
one amendment was rejected; five amendments fell on points of order; and one
amendment was withdrawn.21
On February 8 and 14, respectively, the House and the Senate agreed to a
conference to resolve the legislative differences between their respective versions of
the tax reconciliation bill, H.R. 4297. According to the Joint Committee on
Taxation, the House-passed tax reconciliation measure is projected to reduce
18 The Senate considered the conference report to S. 1932 on December 19-21, 2005. See
Congressional Record, daily edition, vol. 151 (Dec. 19-21, 2005), pp. S14015-S14024,
S14068-S14069, S14073-S14164, S14202-S14221.
19 Prior to the consideration of H.Res. 653, Representative Jim McDermott raised a point of
order against the consideration of the special rule under Section 426 of the Budget Act
(which relates to the waiving of a point of order under the Unfunded Mandates Reform Act).
Pursuant to the provisions of this section of the Budget Act, the House agreed to consider
H.Res. 653 by a vote of 226-201. See Congressional Record, daily edition, vol. 152 (Feb.
1, 2006), pp. H37-H60, H68-H114.
20 [http://www.cbo.gov/ftpdocs/70xx/doc7028/s1932conf.pdf].
21 A motion to commit the bill to the Finance Committee with instructions also was offered
and subsequently withdrawn. Two amendments to this motion to commit fell when the
motion was withdrawn. For the consideration and adoption of H.R. 4297, see Congressional
Record, daily edition, vol. 152 (Feb. 2-3, 2006), pp. S387-S436, S461, S466-S502.

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CRS-12
revenues by $55.6 billion, and the Senate-passed measure is projected to reduce
revenues by $69.4 billion, over the five-year period of FY2006-2010.22
Neither the House nor the Senate has taken action on a third reconciliation
measure changing the statutory limit on the public debt.
Revenue and Debt-Limit Legislation
Congress may adopt individual revenue and debt-limit measures without
employing the optional reconciliation process as well.
Revenue Legislation
Revenue and debt-limit legislation is under the jurisdiction of the House Ways
and Means Committee and the Senate Finance Committee. Article I, Section 7, of
the U.S. Constitution requires that revenue legislation originate in the House of
Representatives, but the Senate has considerable latitude to amend a revenue bill
received from the House.
Most of the laws establishing the federal government’s revenue sources are
permanent and continue year after year without any additional legislative action (see
Figure 1).23 Congress, however, typically enacts revenue legislation, changing some
portion of the existing tax system or renewing expiring provisions, every year.
Revenue legislation may include changes to individual and corporate income taxes,
social insurance taxes, excise taxes, or tariffs and duties.
22 [http://www.house.gov/jct/x-10-06.pdf].
23 Chart created by CRS based on data from Congressional Budget Office, The Budget and
Economic Outlook: Fiscal Years 2007-2016 (Washington: CBO, 2006), p. 142.

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CRS-13
Figure 1. Actual FY2005 Revenues by Source
Individual income taxes ($927.2 billion)
43%
Corporate income taxes ($278.3 billion)
13%
Miscellaneous ($33.0 billion)
3%
Excise taxes ($73.1 billion)
2%
1%
1%
Customs duties ($23.4 billion)
37%
Estate and gift taxes ($24.8 billion)
Social insurance taxes ($794.1 billion)
Revenue legislation is not considered automatically in the congressional budget
process on an annual basis. Frequently, however, the President proposes and
Congress considers changes in revenue laws to effect adjustments in the rates of
taxation or the distribution of the tax burden, or for other purposes. An initial step
in the congressional budget process is the publication of revenue estimates of the
President’s budget by CBO. These revenue estimates usually differ from the
President’s, since they are based on different economic and technical assumptions
(e.g., growth of the economy and change in the inflation rate). Cost estimates of any
congressional revenue proposals are prepared by the Joint Committee on Taxation
(JCT). They are published in committee reports or in the Congressional Record and
are available on JCT’s website.24
The budget resolution recommends yearly revenue levels, based on baseline
estimates of federal government revenues, which are based on the continuation of
existing laws and any proposed policy changes to them. Revenue levels in the budget
resolution provide the framework for any action on revenue measures during the
session. A point of order may be raised against consideration of legislation that
causes revenues to fall below the agreed upon levels for the first fiscal year or the
total for all fiscal years in the budget resolution. This point of order may be set aside
by unanimous consent, or waived by a special rule in the House or by a three-fifths
vote in the Senate (i.e., 60 Senators if there are no vacancies).
A Senate “pay-as-you-go” (PAYGO) point of order, under Section 505 of the
FY2004 budget resolution (H.Con.Res. 95, 108th Congress), also may be raised
24 [http://www.house.gov/jct/].

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CRS-14
against any revenue legislation not assumed in the most recently adopted budget
resolution that would increase or cause an on-budget deficit for the first fiscal year,
the period of the first five fiscal years, or the following five fiscal years, covered by
the most recently adopted budget resolution.25 A motion to waive the point of order
requires a three-fifths vote.
As noted above, the House and the Senate have acted on revenue reconciliation
legislation (H.R. 4297) projected to reduce revenues by $55.6 billion and $69.4
billion, respectively, over the five-year period of FY2006-2010. On February 8 and
14, respectively, the House and the Senate agreed to a conference to resolve the
legislative differences between their respective versions of H.R. 4297. (For
information on the consideration of this legislation, see section “Reconciliation
Provided by the FY2006 Budget Resolution,” above.)
Debt-Limit Legislation
The amount of money the federal government is allowed to borrow generally is
subject to a statutory limit (31 U.S.C. 3101). From time to time, Congress considers
and adopts legislation to change this limit.26
Federal debt consists of debt held by the public plus debt held by government
accounts. The debt held by the public represents the total net amount borrowed from
the public to cover all or most of the federal government’s budget deficits. By
contrast, the debt held by government accounts represents the total net amount of
federal debt issued to specialized federal accounts, primarily trust funds (e.g., Social
Security). Trust fund surpluses by law must be invested in special (non-negotiable)
federal government securities, and thus are held in the form of federal debt. The
combination of both types of debt is subject to the statutory public debt limit.
Therefore, budget deficits or trust fund surpluses may contribute to the federal
government reaching the existing debt limit.
The annual congressional budget resolution specifies the appropriate level of the
public debt for each fiscal year covered by the resolution. Although the budget
resolution does not become law itself, the specified debt limits serve as a guide for
any necessary debt-limit legislation.
Congress may develop debt-limit legislation in any of three ways: (1) under
regular legislative procedures; (2) under House Rule XXVII; or (3) as part of
reconciliation legislation (as described above). Regardless of the process by which
debt-limit legislation is developed, the House Ways and Means Committee and the
Senate Finance Committee maintain exclusive jurisdiction over debt-limit legislation.
25 See the Senate Budget Committee’s Budget Bulletin dated February 3, 2006, available at
[http://www.senate.gov/~budget/republican/analysis/2006/bb01-2006.pdf].
26 For further information on debt-limit legislation, see CRS Report RS21519, Legislative
Procedures for Adjusting the Public Debt Limit: A Brief Overview, by Robert Keith and Bill
Heniff Jr.; and CRS Report RL31967, The Debt Limit: The Ongoing Need for Increases, by
Philip D. Winters.

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CRS-15
Under House Rule XXVII (commonly referred to as the Gephardt rule after its
author, former Representative Richard Gephardt), a joint resolution specifying the
amount of the debt limit contained in the budget resolution automatically is
engrossed and deemed to have passed the House by the same vote as the conference
report on the budget resolution, thereby avoiding a separate vote on the debt-limit
legislation.27 The Senate has no comparable automatic engrossment procedure; if it
chooses to consider a House-passed joint resolution, it does so under the regular
legislative process.
The most recent increase in the public-debt limit was enacted as an independent
measure (P.L. 108-415, 118 Stat. 2337) in November 2004. The debt-limit measure
increased the statutory limit by $800 billion, from $7.384 trillion to $8.184 trillion.
At the end of 2005, the Department of the Treasury informed Congress that it would
not be able to finance government operations beyond mid-March 2006 without an
increase to the statutory debt limit.28
As noted above, the FY2006 budget resolution (H.Con.Res. 95) provided for a
reconciliation measure increasing the statutory limit on the public debt by $781
billion. Neither the House or the Senate, however, have acted on such a measure.
Appropriations and Other Spending Legislation
Federal spending is categorized into two different types: discretionary or
mandatory spending. Discretionary spending is controlled through the annual
appropriations acts, while mandatory, or direct spending (which consists mostly of
entitlement programs), is determined by existing law.
Actual FY2005 federal outlays totaled $2,472.2 billion (see Figure 2).29 Of this
total amount, $967.9 billion, or 39%, was discretionary spending (exploded slices in
Figure 2), while $1,504.3 billion, or 61%, was mandatory spending.
27 For further information, see CRS Report RL31913, Developing Debt-Limit Legislation:
The House’s “Gephardt Rule,” by Bill Heniff Jr.
28 See, for example, Jonathan Nicholson, “Snow Seeks Boost in Debt Limit In Advance of
Mid-February Deadline,” BNA’s Daily Report for Executives (Jan. 3, 2006), p. A-17.
29 Chart created by CRS based on data from CBO, The Budget and Economic Outlook:
Fiscal Years 2007-2016 (Washington: CBO, 2006), pp. 144, 146, and 148. The chart
excludes offsetting receipts, which are treated as negative spending (i.e., they are deducted
from spending in the budget totals); offsetting receipts totaled $125.8 billion in FY2005.
Percentages do not add to 100% due to rounding.

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CRS-16
Figure 2. Actual FY2005 Outlays
by Major Spending Category
Defense discretionary ($493.6 billion)
Non-defense discretionary ($474.3 billion)
18%
19%
Social Security ($518.7 billion)
20%
7%
Net interest ($184.0 billion)
7%
8%
3%
6%
13%
Income Security ($195.9 billion)
Medicaid ($181.7 billion)
Other mandatory programs ($69.1 billion)
Medicare ($333.1 billion)
Other Retirement and Disability ($147.6 billion)
As noted above, the total budget authority and outlays set forth in the budget
resolution are allocated among the House and Senate committees with jurisdiction
over specific spending legislation. These allocations, commonly referred to as 302(a)
allocations after the applicable section of the Congressional Budget Act, are specified
in the joint explanatory statement accompanying the conference report to the budget
resolution. A point of order may be raised against any legislation that would cause
a committee’s spending allocation to be exceeded. The budget resolution typically
provides for periodic revisions of these allocations if certain conditions, specified in
reserve fund provisions, for instance, are met.
Discretionary Spending
Discretionary spending is under the jurisdiction of the House and Senate
Appropriations Committees. Soon after the budget resolution is adopted by
Congress, the House and Senate Appropriations Committees subdivide their
spending allocations among their subcommittees and formally report these
subdivisions to their respective chambers. These subdivisions, referred to as 302(b)
allocations after the applicable section of the Congressional Budget Act, represent
the spending ceilings on the individual regular appropriations acts. During the
appropriations process, these suballocations usually are revised several times.
In addition to the spending ceilings associated with the 302(b) subdivisions, the
total spending amount provided in appropriations bills for each fiscal year covering
FY2006 through FY2008 is constrained by the discretionary spending limits
contained in the FY2006 budget resolution (see Section 404 of H.Con.Res. 95). The

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CRS-17
spending limits may be enforced in the Senate by a point of order.30 A motion to
waive the point of order requires a three-fifths vote (i.e., 60 Senators if there are no
vacancies).
Congress passes three main types of appropriations measures. Regular
appropriations acts provide budget authority for the next fiscal year, beginning on
October 1.31 (From time to time, Congress merges two or more of these regular
appropriations acts into an omnibus appropriations act.) Supplemental
appropriations acts provide additional funding for unexpected needs while the fiscal
year is in progress. Continuing appropriations acts, commonly referred to as
continuing resolutions, provide stop-gap funding for agencies that have not received
regular appropriations by the start of the fiscal year.
The President’s budget includes recommendations for the agencies, programs,
and activities funded in the annual appropriations measures; account and program
level detail about these recommendations is included in the Appendix volume of the
President’s budget documents. In addition, agencies submit justification materials
to the House and Senate Appropriations Committees. The budget justifications
provide more detailed information about an agency’s program activities than is
contained in the President’s budget documents and are used in support of agency
testimony during appropriations subcommittee hearings on the President’s budget
request.
The House and Senate appropriations subcommittees begin holding extensive
hearings on appropriations requests shortly after the President’s budget is submitted.
By custom, appropriations measures originate in the House. In recent years, the
Senate Appropriations Committee has adopted and reported original Senate
appropriations measures, allowing the Senate to consider appropriations measures
without having to wait for the House to adopt its version. Under this practice, the
Senate version is considered and amended on the floor, and then inserted into the
30 Section 404 of H.Con.Res. 95 also provided for the adjustment of the FY2006
discretionary spending limits to accommodate spending for continuing disability reviews,
Internal Revenue Service tax enforcement, health care fraud and abuse control program, and
unemployment insurance improper payments. These discretionary spending limits for
FY2006 were adjusted on July 28, 2005. See Congressional Record, daily edition, vol. 151
(July 28, 2005), pp. S9274-S9275.
31 Each subcommittee of the House and Senate Appropriations Committees typically is
responsible for one of the regular appropriations acts. At the beginning of the 109th
Congress, the House Appropriations Committee reduced the number of its subcommittees
to 10. It also reduced the number of regular appropriations bills to 11, with each
subcommittee responsible for one regular appropriations act and the full Committee
responsible for the accounts and programs of the Legislative Branch. Similarly, the Senate
Appropriations Committee also reduced the number of its subcommittees to 12, with a
corresponding number of regular appropriations bills. At the end of the 109th Congress, 1st
sess., the House and the Senate passed a total of 11 regular appropriations acts for FY2006.
For additional information on changes to the appropriations subcommittee structure, see
CRS Report RL31572, Appropriations Subcommittee Structure: History of Changes from
1920-2005, by James V. Saturno.

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CRS-18
House-adopted version, when available, as a substitute amendment, thereby retaining
the House-numbered bill for final action.
In addition to the regular appropriations acts, Congress typically acts on at least
one supplemental appropriations measure during a session. On February 16,
President Bush submitted two request for FY2006 supplemental appropriations for
ongoing activities in Iraq and Afghanistan and for ongoing hurricane recovery efforts
in the Gulf states, among other things.32 The House and Senate Appropriations
Committees are expected to act on these supplemental requests before they begin
drafting the regular appropriations acts for FY2007.
Congress also often adopts one or more continuing resolutions each year
because of recurring delays in the appropriations process. For example, Congress
passed three continuing resolutions before completing action on the FY2006 regular
appropriations acts.33
Mandatory Spending
Mandatory spending is under the jurisdiction of the various legislative
committees of the House and Senate. Some entitlement programs, such as Medicaid
and certain veterans’ programs, are funded in annual appropriations acts, but such
spending is not considered discretionary and is not controlled through the annual
appropriations process.
In addition to the committee spending allocations, under the Section 302 process
mentioned above, mandatory spending legislation is limited by the Senate’s PAYGO
requirement. As with revenue legislation mentioned above, a point of order, under
Section 505 of the FY2004 budget resolution (H.Con.Res. 95, 108th Congress), may
be raised against any mandatory spending legislation not assumed in the most
recently adopted budget resolution that would increase or cause an on-budget deficit
for the first fiscal year, the period of the first five fiscal years, or the following five
fiscal years, covered by the most recently adopted budget resolution.34 A motion to
waive the point of order requires a three-fifths vote (i.e., 60 Senators if there are no
vacancies).
On several occasions in the past, Congress has included reserve funds in the
budget resolution to accommodate specific mandatory spending legislation, often
3 2 F o r t h e P r e s i d e n t ’ s s u p p l e m e n t a l r e q u e s t s , s e e
[http://www.whitehouse.gov/omb/budget/amendments.htm].
33 Initially, Congress passed, and President Bush signed into law, a continuing resolution
(H.J.Res. 68, P.L. 109-77) to provide temporary appropriations through November 18, 2005,
for agencies and programs funded in the regular appropriations acts not enacted by the start
of the fiscal year. Subsequently, Congress and President Bush extended the temporary
funding through December 17 (H.J.Res. 72, P.L. 109-105) and December 31 (H.J.Res. 75,
P.L. 109-128).
34 See the Senate Budget Committee’s Budget Bulletin dated February 3, 2006, available at
[http://www.senate.gov/~budget/republican/analysis/2006/bb01-2006.pdf].

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CRS-19
requiring that the legislation be deficit neutral.35 Under the provisions of a reserve
fund, the chairmen of the House and Senate Budget Committees may revise the
committee spending allocations and other budget resolution levels if certain
legislation is reported by the appropriate committee. Without such an adjustment,
mandatory spending legislation might be subject to points of order if it were not
assumed in the budget resolution spending amounts.
35 See, for example, CRS Report RS21038, Reserve Funds in the FY2002 Budget Resolution,
by Bill Heniff Jr.

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CRS-20
Chronology
February 6, 2006
President Bush submitted his FY2007
budget to
Congress.
February
1,
2006
The House completed action on
the
spending
reconciliation measure, S. 1932, the Deficit Reduction
Act of 2005, by concurring in the Senate amendment to
the House amendment to S. 1932, thereby clearing the
measure for the President. [On February 8, President
Bush signed S. 1932 into law (P.L. 109-171).]
January 26, 2006
CBO released its annual report on budget baseline
projections, The Budget and Economic Outlook: Fiscal
Years 2007-2016.
For Additional Reading
Congressional Hearings, Reports, and Documents
Congressional Budget Office. The Budget and Economic Outlook: Fiscal Years
2007-2016. Washington: CBO, January 2006.
CRS Products
CRS Report RL32791. Congressional Budget Actions in 2005, by Bill Heniff Jr.
CRS Report RL30297. Congressional Budget Resolutions: Selected Statistics and
Information Guide, by Bill Heniff Jr. and Justin Murray
CRS Report RL33132. Budget Reconciliation Legislation in 2005-2006 Under the
FY2006 Budget Resolution, by Robert Keith.
CRS Report RL33030. The Budget Reconciliation Process: House and Senate
Procedures, by Robert Keith and Bill Heniff Jr.
CRS Report 98-721. Introduction to the Federal Budget Process, by Robert Keith
and Allen Schick.
CRS Report 97-684. The Congressional Appropriations Process: An Introduction,
by Sandy Streeter.
CRS Report RL30343. Continuing Appropriations Acts: Brief Overview of Recent
Practices, by Sandy Streeter.
CRS Report RS22390. FY2007 Budget Documents: Internet Access and GPO
Availability, by Jennifer Anne Teefy.

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CRS-21
CRS Report RL32812. The Budget for Fiscal Year 2006, by Philip D. Winters.
CRS Report RL33282. The Budget for Fiscal Year 2007, by Philip D. Winters.

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