Budget Rules Could Be Tightened

The House and Senate hope to reach final agreement soon on a budget outline for fiscal 2005 that could impose caps on spending that could make it harder to improve federal benefits, by discouraging new spending initiatives both on the “discretionary” and “mandatory” side of spending. Mandatory spending consists essentially of long-term obligations that aren’t renewed year to year; the retirement program is the largest such program among federal employment benefits. The Senate version, as well as a separate bill passed by the House Budget Committee (HR-3973) would require that any increases in such spending be offset-in the Senate version, any new mandatory spending that is not offset would have to pass a 60-vote hurdle. The White House meanwhile has asked Congress to impose a “pay as you go” requirement to restrain mandatory spending and new measures to control the long-term unfunded obligations of entitlement programs. That could make it difficult to improve retirement benefits by, for example, providing relief from the windfall elimination provision and government pension offset reductions in Social Security benefits that many federal retirees under CSRS suffer.