The FY 13 budget and appropriations process continues in earnest this week with a number of House committees holding mark-ups to conform to reconciliation instructions included in the House-passed budget resolution, which went further than the August 2, 2011 compromise struck under the "Budget Control Act" (aka BCA or "debt deal"). Reconciliation instructions are contained only in budget resolutions and direct one or more committees to develop and submit bills that change spending, revenues, and/or the debt-limit so they align with the budget resolution. In total, six committees are working to identify – by April 27th – $261 billion in savings that will be spread over a ten year time frame. This amount will result in Congress enacting both the equivalent of the first-year of sequester plus additional spending cuts beyond those of the BCA. The last time Congress enacted a reconciliation bill was in conjunction with the passage of health care reform in 2010.

Last week, the Ways and Means Committee reported out a bill that reduces spending over ten years by $53 billion. The cuts are comprised of: the elimination of the Social Services Block Grant; rescinding the child tax credit; and defunding the subsidies in the Patient Protection and Affordable Care Act (aka health reform).

Tuesday, the Energy and Commerce Committee began work on its measure, which will reduce spending by $98 billion over ten years. Items expected to be on the chopping block include: grants for state exchanges (the funds that have not yet been spent/obligated); the Public Health and Prevention Fund (it likely will be eliminated entirely); and Medicaid DSH (rebasing allotments starting in FY 22).

Once all six committees have marked-up and reported their respective bills, the House Budget Committee will weave all the proposals and cuts together and report a single measure out to the full House, which is expected to consider the omnibus spending cut package in May. It is important to note that the Senate is unlikely to do anything similar as both Senate Democrats and Republicans have indicated their preference for sticking with the BCA numbers – at least for now. Senate Majority Leader Reid previously announced he is not bringing a budget measure to the Senate floor because FY 13 spending caps were previously set by the BCA. As such, there are no movements afoot in the Senate for a budget or reconciliation at this time. Therefore the Senate has leapfrogged over the budget and moved straight to moving the FY 13 appropriations bills, which taken all 12 together fund all the activities of the government.

Last week President Obama issued a veto threat for any appropriations measures that cut funding further than BCA amounts. While Senate Democrats are holding to the BCA numbers because they want to safeguard programs, Senate Republicans indicate they are sticking to the BCA numbers in an effort to move appropriations bills through the chamber on the front end, with the hope that they can negotiate further cuts in conference at the end of the annual process.

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