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Fasten Your Seatbelts, We’re in for a Bumpy Ride. NASBO Spring Meeting April 26 , 2013 Santa Ana Pueblo, NM. Federal Funds Information for States. Where Are We Now?. Let’s Start at the Very Beginning. Focus on FY 2014. Divergent FY 2014 Budget Proposals. Health.

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fasten your seatbelts we re in for a bumpy ride

Fasten Your Seatbelts, We’re in for a Bumpy Ride

NASBO Spring Meeting

April 26, 2013

Santa Ana Pueblo, NM

Federal Funds Information for States


President: Medicare Part D rebates; Medicare provider cuts; means-testing Medicare premiums; Medicare cost sharing; federal employee health programs

House: Repeal coverage provisions of ACA; convert Medicaid and CHIP to block grants; Medicare Part D tort and means-testing; Medicare premium support proposal would kick in later

Senate: Nonspecific cuts focused on providers rather than beneficiaries, and focused on Medicare

other mandatory
Other Mandatory

President: Reduce tax fraud; reduce farm subsidies; increase federal employee retirement contributions; reduce fraud and abuse; reform PBGC

House: Increase retirement contributions; reduce farm subsidies; block grant SNAP; reform PBGC; wind down Fannie Mae and Freddie Mac; reform energy subsidies and reduce land purchases

Senate: Reform agriculture programs and PBGC


President: Reduce discretionary beyond BCA levels beginning in FY 2017

House: Reduce transportation and other discretionary spending

Senate: No specific recommendations

chained cpi
Chained CPI

President: Adopt chained CPI for most parts of federal budget and tax code, excluding means-tested programs. Savings are split -$130b on spending side, -$100b on revenue side

House: No provision but possibly amenable to president’s proposal

Senate: No provision


President: Limit value of certain exclusions and deductions (including tax-exempt bonds) to 28% tax bracket; “Buffett Rule”; cigarette tax

House: Deficit-neutral tax reform (limiting tax expenditures to allow lower rates)

Senate: No specifics beyond limiting tax expenditures and targeting “the wealthiest Americans and big corporations”


President: Repeal sequester but implement cuts to discretionary spending beyond those mandated by BCA caps, beginning in FY 2017

House: Retain sequester but reallocate cuts from defense to nondefense

Senate: Repeal sequester but implement cuts to discretionary spending beyond those mandated by BCA, beginning in FY 2015

war and sandy
War and Sandy

President: Assume a reduction from FY 2013 levels, while CBO baseline assumes continuation at inflation-adjusted levels

House: Same as president, with more modest drawdown assumptions

Senate: Same as president, with more ambitious drawdown assumptions


President: “Fix it First”; competitive transportation program; infrastructurebank; America Fast Forward Bonds; expand TIFIA; high-speed rail; payroll tax credit for employers; Department of Energy Race to the Top

House: No provisions

Senate: Infrastructure repair; fix dams; dredge ports; infrastructure bank and technology in schools

themes in president s budget
Themes in President’s Budget
  • Implement new competitive grants
    • Preschool development
    • “First in the World”
    • High school redesign
    • “Race to the Top” energy grants
  • Add competitive elements to existing formula grants
    • LIHEAP energy burden reduction
    • Child Care Development Block Grant
  • Consolidate separate funding streams
    • ESEA reauthorization
    • National Preparedness Grant Program
open questions of import
Open Questions of Import

Will the House and Senate adopt a concurrent budget resolution?

Will each chamber proceed based on its individual budget resolution?

How will the gap be bridged?

Will we end up back in Sequesterland?

The “action-forcing” event: debt ceiling

Will be reached soon, with enough wiggle room to get through July.