The Budget for Fiscal Year 2006

Publication Date: August 2006

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

Type:

Abstract:

Much higher than expected receipts reduced the estimated deficits for fiscal year (FY) 2006 in both the Administration's Mid-Session Review (July 2006; $296 billion) and in the Congressional Budget Office's (CBO) The Budget and Economic Outlook: An Update (August 2006; $260 billion). These were over $100 billion below Administration's previous estimate (February 2006) and $70 billion below CBO's previous baseline estimate (March 2006). The new Administration estimate was also $75 billion below the FY2006 deficit proposed in the President's FY2006 budget (February 2005). The longer-term budget outlook did not improve in either report.

On March 17, 2005, the House (H.Con.Res.95) and Senate (S.Con.Res.18) adopted their respective budget resolutions for FY2006. After extensive leadership discussions, a conference reached agreement (H.Rept. 109-62) on April 28; both chambers adopted it later that day. The conference agreement included reconciliation instructions for mandatory spending reductions, tax reductions, and an increase in the statutory debt limit.

The July 2005 mid-year budget report from the Administration had an improved deficit outlook through FY2010, while CBO's August 2005 mid-year report included a somewhat worsened baseline deficit outlook.

Congress passed three continuing resolutions (CRs) on appropriations during the fall and early winter to fund otherwise unfunded activities. It needed the time to complete action on the regular appropriation bills for FY2006. The last two cleared Congress on December 21, almost three months after the start of FY2006.

The Senate (S. 1932, November 3, 2005) and the House (H.R. 4241, November 18) each passed spending reduction reconciliation bills (of $35 billion and $50 billion from baseline estimates over five years, respectively). A conference agreement (H.Rept 109-362) of approximately $40 billion in reductions was reached on December 19, and, after some difficulties, cleared Congress on February 1, 2006. The President signed it into law (P.L.109-171) on February 8.

After extended deliberations, Congress cleared a $70 billion revenue reduction reconciliation bill on May 11, 2006. The President signed it on May 17 (P.L.109222). The net effect of the two adopted reconciliation bills would raise the deficit in FY2006 and over the next five years above baseline estimates.

In mid-March 2006, the House passed a $92 billion supplemental appropriation (H.R. 4939) for FY2006 for overseas military activity and additional hurricane recovery efforts. The Senate passed an amended bill, raising funding to almost $110 billion, on May 4. A conference agreement set the funding at $94.5 billion (June 8). Congress cleared it and the President signed it into law(P.L.109-234) on June 15.

This report will be updated as events warrant.