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Collision Course on the U.S. Budget

Collision Course on the U.S. Budget
March 18, 2005

The two houses of Congress set themselves on a collision course over whether to get serious about cutting the federal deficit -- a fight that has major implications for spending on higher education programs.

The skirmishing took place around the chambers' consideration of their respective versions of the 2006 budget resolution, which Congress approves most years (when it can reach agreement on one) to set a broad, but nonbinding, blueprint for federal spending. The resolution gives the committees that authorize and appropriate federal programs instructions on how much they should spend on, or this year cut from, the various programs under their control.

President Bush has proposed slicing $51 billion from federal programs, including several million from the subsidies paid to providers and guarantors of student loans.

On Thursday, the House approved a budget resolution that would cut significantly more, about $69 billion. Under the House plan, about $21 billion of those funds would come from cuts in "mandatory" education and labor programs -- those that the government is committed to paying for each year, regardless of whether money is appropriated for them. The student loan programs fall in that category, and lawmakers would probably look to cut about $7 billion from the loan programs, college lobbyists say.

Late Thursday night, the Senate, in conflict with President Bush and the House, narrowly approved a $2.6 trillion budget resolution that would cut far less -- about $18 billion -- from mandatory programs.

Moderate Republicans joined Senate Democrats in supporting amendments that trimmed proposed cuts in domestic programs -- including one by Sen. Edward M. Kennedy (D-Mass.), approved on a 51 to 49 vote, that would restore billions of dollars in discretionary education spending thatPresident Bush has proposed slashing in his 2006 budget plan. It also directs lawmakers to add funds to raise the maximum Pell Grant to $4,500.

The great divide between the two budget resolutions suggests that it will be extremely difficult for Congress to agree on a compromise plan. If a budget resolution is not passed, it may be more difficult for lawmakers to reach agreement on a federal budget for the year.

And serious disagreement about how to proceed on the budget could further delay Congressional consideration and passage of a renewal of the Higher Education Act, since many of lawmakers' goals in that legislation -- including expanding the Pell program -- are tied to the savings from restructuring the loan programs.

 

 

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