House of Representatives Adopts New Rules; House Republican Conference Bans Earmarks

On January 5, 2011, the House of Representatives, which now has a Republican majority, approved a set of House rules for the 112th Congress designed in large part to reduce spending and taxes. The package of rules (H.J. Res. 5) was approved on a party line vote of 240-191.

Attached is a summary prepared by the House Rules Committee (Chaired by Representative David Dreier R-CA) of the new House Rules. House (and Senate) rules are internal documents and do not require a Presidential signature nor approval by the other Congressional body.

Among the key new House rules are:

Cut-as-you-go provision. The rules eliminate the pay-go (PAYGO) rule which required that mandatory spending increases and decreased revenues due to tax cuts be offset. In its place is a cut-as-you-go (CUTGO) provision which requires that mandatory spending increases, but not decreases in tax revenues, be offset. Several matters are exempted from the offset provision including the Republican proposal to repeal the recently enacted health care reform laws
(PL 111-148 and PL 111-152). On January 6 the Congressional Budget Office issued a preliminary analysis that the repeal of the health care reform law would add $230 billion to the federal deficit over a ten-year period (2012-2021).

Spending Reduction Accounts. The rules require that the funding resulting from floor amendments making cuts to appropriations be set aside in a spending reduction account.

Limitation on Advance Appropriations. Enactment of advance appropriations would be limited to $28 billion plus amounts for Veterans Administration medical services. An advance appropriation is funding that would become available one year or more after the year of the appropriations act in which it is contained.

Transportation. Under previous House Rules, certain protections were in place to safeguard federal spending on transportation and highway projects. The recently approved House Rules for the 112th Congress roll back some of these protections. Since 1998, the House Rules have included a point of order prohibiting consideration of appropriations bills that would reduce federal highway spending below the levels specified in the authorizing legislation (SAFETEA-LU). Congress in recent years has transferred money from the General Treasury when there are shortfalls in the Highway Trust Fund. Under the new Rules, this point of order has been eliminated.

Budget Committee Chair Authority over FY 2011 Spending. The rules include authorization for the Budget Committee Chairman to unilaterally set spending caps for the remainder of FY 2011. Budget Chairman Paul Ryan (R-WI) has committed to reducing FY 2011 funding to the FY 2008 level, something which would require enactment of a rescission bill. It is unlikely that the Senate would agree to such a reduction.

Limitation of long-term spending. Bills which would increase mandatory spending by $5 billion in ten out of 40 years would be subject to a point of order. The purpose is to limit enactment of bills whose cost would be much greater in the long- rather than the short-term.

Other. The new rules also contain provisions regarding transparency of the legislative process, limitation of committee chair terms to six years, and the requirement that that bills and amendments be accompanied by a statement of their Constitutional basis. The rules also prohibit the House delegates from Washington, D.C, American Samoa, Guam, Northern Mariana Islands, Virgin Islands and the Resident Commissioner of Puerto Rico from voting in the Committee of the Whole.

Earmarks. The House rules do not ban earmarks but that issue has been handled in the House Republican Conference internal rules which oppose earmarks. An earmark ban would be enforced by House leadership refusing to call up bills for House floor consideration if they included earmarks (or limited tax or tariff benefits). The term “congressional earmark” is the same as was adopted in the House rules for the 111th Congress:

The term “congressional earmark” means a provision or report language included primarily at the request of a Member, Delegate, Resident Commissioner, or Senator providing, authorizing or recommending a specific amount of discretionary budget authority, credit authority, or other spending authority for a contract, loan, loan guarantee, grant, loan authority, or other expenditure with or to an entity, or targeted to a specific State, locality or Congressional district, other than through a statutory or administrative formula-driven or competitive award process.

The Senate has not yet adopted its rules for the 112th Congress and indications are that they will not adopt a position opposing earmarks; hence, House-Senate appropriations conferences could be very difficult with regard to earmarks. Of note is that the definition of “congressional earmark” does not include specific requests included in the President’s proposed budget.

Please let us know if we may provide additional information regarding the new House Rules or other matters in this Memorandum.