Deficit Reduction Act of 2005
Encyclopedia
The Deficit Reduction Act of 2005 is a United States
Act of Congress
concerning the budget, that became law in 2006.
Dick Cheney
. The bill passed the chamber
with no Democrats and five Republicans voting against the bill. The House
version passed by a vote of 217-215, with all Democrats, fourteen Republicans, and one Independent voting against. The Senate bill was signed by President
George W. Bush
on February 8, 2006.
of the U.S. Constitution.
Congressional leaders and administration officials point to an 1892 Supreme Court
case, Field v. Clark , which said the dispute—over differing versions of a bill that were certified by both chambers—was not a matter for the courts to decide.
The difference between the two versions is the provision regarding the length of time that Medicare would be required to pay for durable medical equipment
such as wheelchairs and oxygen equipment like CPAP machines. The Senate version of the bill restricted payments to 13 months while the House version provided for 36 months, a $2 billion difference. Just prior to the filing of the bill in the House, a change was required to alter these time periods, in three places the number 13 was changed to 36, by hand in the offices controlled by the Speaker. The change was needed to assure the requisite number of votes for passage in the Senate. This hand written drafting change gave rise to an error made by the Senate clerk later in the process.
The discrepancy resulted from what officials have called a clerical error in the transmittal of the text between the Houses. After the bill was filed in the House of Representatives and voted on, it was sent to the Senate. In that chamber, the bill was considered again. Several provisions were stricken due to a point of order under section 313 of the Congressional Budget Act (commonly known as the "Byrd Rule" after its author, Senator Robert C. Byrd (D-WV)). This necessitated return to the House to again be voted on. In preparing the text for return to the House, certain numbers related to payments in the Medicare program for certain durable medical equipment were changed by mistake. The House voted on a resolution concurring in this Senate amendment (with the legitimately stricken provisions), but the text presented contained the erroneous number changes. The approval resolution was passed in the House and the text of the bill with errors in it was returned to the Senate for the preparation to be presented to the President. There, the mistaken numbers were corrected prior to the transmittal to the President. The bill as originally intended was signed into law, but some dispute remains as to whether both Houses of Congress passed the same legislation. The clerical mistake has given rise to several legal challenges to the law, generally from those who disagree with the policies included therein.
Representative Henry Waxman
(D
-CA
) wrote a letter to Minority Leader (later Speaker) Nancy Pelosi
on February 14, 2006 saying three experts he consulted (Professor Gerhardt, Professor Dorf
, Professor Raskin) said the law was clearly unconstitutional.
Several entities brought lawsuit
s challenging the law. Public Citizen
, a legislative watchdog group, filed suit in US District Court for the District of Columbia. Attorney James Zeigler filed a similar suit in the United States District Court for the Southern District of Alabama. A case brought by an education finance company, OneSimpleLoan, went to the Supreme Court of the United States
, Docket No. 07-492, on a petition for writ of certiorari
to the Court of Appeals for the Second Circuit
. The petition was denied in February, 2008.
Representative John Conyers
, ranking member of the House Judiciary Committee
, and ten other members of the House of Representatives sued President Bush (see Conyers v. Bush
), the Cabinet Secretaries, and others in an action in district court in Detroit
; the case was dismissed on November 6, 2006, citing the representatives' lack of standing
.
and Medicaid
, changing student loan formulas, and other measures.
The reauthorization of the Temporary Assistance for Needy Families
program was also contained in the bill, as was the provision for the Digital Transition and Public Safety Act of 2005
. Part of the TANF reauthorization reduces the threshold for passport denial for child support arrearages under 42 USC 652(k) to $2,500.
Section 3005 of the Act also provided one and a half billion dollars for the Digital Transition and Public Safety Act of 2005
and defined in detail what comprised a coupon-eligible converter box
for Digital Television
broadcasts in the United States.
's "lookback" period for all asset transfers from three to five years and change the start of the penalty period for transferred assets from the date of transfer to the date when the individual transferring the assets enters a nursing home and would otherwise be eligible for Medicaid coverage. In other words, the penalty period does not begin until the nursing home resident is out of funds, meaning she cannot afford to pay the nursing home.
Because the change in the penalty period start date will likely leave nursing homes on the hook for the care of residents waiting out extended penalty periods, ElderLawAnswers has dubbed the bill “The Nursing Home Bankruptcy Act of 2005.” Nursing homes will likely be flooded with residents who need care but have no way to pay for it. In states that have so-called "filial responsibility laws," the nursing homes may seek reimbursement from the residents’ children.
The bill also will make any individual with home equity above $500,000 ineligible for Medicaid
nursing home care, although states may raise this threshold as high as $750,000.
The legislation also:
In addition, the legislation incorporates provisions in the original budget bill passed by the Senate closing certain asset transfer "loopholes," among them:
While the federal law applies to all transfers made on or after the date of enactment (February 8, 2006), it also gives the states time to come into compliance. This gives many people in most states a little time to plan. The deadline for states to enact their own laws varies from state to state, but generally is the first day of the first calendar quarter beginning after the end of the next full legislative session.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
Act of Congress
Act of Congress
An Act of Congress is a statute enacted by government with a legislature named "Congress," such as the United States Congress or the Congress of the Philippines....
concerning the budget, that became law in 2006.
Legislative history
The Senate's version passed after a tie-breaking vote was cast by Vice PresidentVice President of the United States
The Vice President of the United States is the holder of a public office created by the United States Constitution. The Vice President, together with the President of the United States, is indirectly elected by the people, through the Electoral College, to a four-year term...
Dick Cheney
Dick Cheney
Richard Bruce "Dick" Cheney served as the 46th Vice President of the United States , under George W. Bush....
. The bill passed the chamber
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
with no Democrats and five Republicans voting against the bill. The House
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
version passed by a vote of 217-215, with all Democrats, fourteen Republicans, and one Independent voting against. The Senate bill was signed by President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
on February 8, 2006.
Dispute over legal status
A dispute arose over whether both houses of Congress had approved the same bill. Those contending that the bill is not a law argue there were different versions of the same bill, neither of which was approved by both the House and the Senate. They argue that the document signed by the President would not have the force of law, on the ground that the enacting process bypassed the Bicameral ClausePresentment Clause
The Presentment Clause of the United States Constitution outlines federal legislative procedure by which bills originating in Congress become federal law in the United States.-Text:...
of the U.S. Constitution.
Congressional leaders and administration officials point to an 1892 Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
case, Field v. Clark , which said the dispute—over differing versions of a bill that were certified by both chambers—was not a matter for the courts to decide.
The difference between the two versions is the provision regarding the length of time that Medicare would be required to pay for durable medical equipment
Durable medical equipment
Durable medical equipment is a term of art used to describe any medical equipment used in the home to aid in a better quality of living. It is a benefit included in most insurances. In some cases certain Medicare benefits, that is, whether Medicare may pay for the item...
such as wheelchairs and oxygen equipment like CPAP machines. The Senate version of the bill restricted payments to 13 months while the House version provided for 36 months, a $2 billion difference. Just prior to the filing of the bill in the House, a change was required to alter these time periods, in three places the number 13 was changed to 36, by hand in the offices controlled by the Speaker. The change was needed to assure the requisite number of votes for passage in the Senate. This hand written drafting change gave rise to an error made by the Senate clerk later in the process.
The discrepancy resulted from what officials have called a clerical error in the transmittal of the text between the Houses. After the bill was filed in the House of Representatives and voted on, it was sent to the Senate. In that chamber, the bill was considered again. Several provisions were stricken due to a point of order under section 313 of the Congressional Budget Act (commonly known as the "Byrd Rule" after its author, Senator Robert C. Byrd (D-WV)). This necessitated return to the House to again be voted on. In preparing the text for return to the House, certain numbers related to payments in the Medicare program for certain durable medical equipment were changed by mistake. The House voted on a resolution concurring in this Senate amendment (with the legitimately stricken provisions), but the text presented contained the erroneous number changes. The approval resolution was passed in the House and the text of the bill with errors in it was returned to the Senate for the preparation to be presented to the President. There, the mistaken numbers were corrected prior to the transmittal to the President. The bill as originally intended was signed into law, but some dispute remains as to whether both Houses of Congress passed the same legislation. The clerical mistake has given rise to several legal challenges to the law, generally from those who disagree with the policies included therein.
Representative Henry Waxman
Henry Waxman
Henry Arnold Waxman is the U.S. Representative for , serving in Congress since 1975. He is a member of the Democratic Party. He is considered to be one of the most influential liberal members of Congress...
(D
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...
-CA
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...
) wrote a letter to Minority Leader (later Speaker) Nancy Pelosi
Nancy Pelosi
Nancy Patricia D'Alesandro Pelosi is the Minority Leader of the United States House of Representatives and served as the 60th Speaker of the United States House of Representatives from 2007 to 2011...
on February 14, 2006 saying three experts he consulted (Professor Gerhardt, Professor Dorf
Michael C. Dorf
Michael C. Dorf is an American law professor and a noted U.S. constitutional law scholar. He is currently a Professor of Law at Cornell Law School. In addition to constitutional law, Professor Dorf has taught courses in civil procedure and federal courts...
, Professor Raskin) said the law was clearly unconstitutional.
Several entities brought lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
s challenging the law. Public Citizen
Public Citizen
Public Citizen is a non-profit, consumer rights advocacy group based in Washington, D.C., United States, with a branch in Austin, Texas. Public Citizen was founded by Ralph Nader in 1971, headed for 26 years by Joan Claybrook, and is now headed by Robert Weissman.-Lobbying Efforts:Public Citizen...
, a legislative watchdog group, filed suit in US District Court for the District of Columbia. Attorney James Zeigler filed a similar suit in the United States District Court for the Southern District of Alabama. A case brought by an education finance company, OneSimpleLoan, went to the Supreme Court of the United States
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
, Docket No. 07-492, on a petition for writ of certiorari
Certiorari
Certiorari is a type of writ seeking judicial review, recognized in U.S., Roman, English, Philippine, and other law. Certiorari is the present passive infinitive of the Latin certiorare...
to the Court of Appeals for the Second Circuit
United States Court of Appeals for the Second Circuit
The United States Court of Appeals for the Second Circuit is one of the thirteen United States Courts of Appeals...
. The petition was denied in February, 2008.
Representative John Conyers
John Conyers
John Conyers, Jr. is the U.S. Representative for , serving since 1965 . He is a member of the Democratic Party...
, ranking member of the House Judiciary Committee
United States House Committee on the Judiciary
The U.S. House Committee on the Judiciary, also called the House Judiciary Committee, is a standing committee of the United States House of Representatives. It is charged with overseeing the administration of justice within the federal courts, administrative agencies and Federal law enforcement...
, and ten other members of the House of Representatives sued President Bush (see Conyers v. Bush
Conyers v. Bush
Honorable John Conyers, Jr., et al. v. George W. Bush, et al., No. 2:06-CV-11972, 2006 WL 3834224 , is a lawsuit in which Rep. John Conyers Jr. and others alleged that President George W...
), the Cabinet Secretaries, and others in an action in district court in Detroit
United States District Court for the Eastern District of Michigan
The United States District Court for the Eastern District of Michigan is the Federal district court with jurisdiction over of the eastern portion of the state of Michigan. The Court is based in Detroit, with courthouses also located in Ann Arbor, Bay City, Flint, and Port Huron...
; the case was dismissed on November 6, 2006, citing the representatives' lack of standing
Standing (law)
In law, standing or locus standi is the term for the ability of a party to demonstrate to the court sufficient connection to and harm from the law or action challenged to support that party's participation in the case...
.
Provisions
The Act saves nearly $40 billion over five years from mandatory spending programs through slowing the growth in spending for MedicareMedicare (United States)
Medicare is a social insurance program administered by the United States government, providing health insurance coverage to people who are aged 65 and over; to those who are under 65 and are permanently physically disabled or who have a congenital physical disability; or to those who meet other...
and Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
, changing student loan formulas, and other measures.
The reauthorization of the Temporary Assistance for Needy Families
Temporary Assistance for Needy Families
Temporary Assistance for Needy Families is one of the United States of America's federal assistance programs. It began on July 2, 1997, and succeeded the Aid to Families with Dependent Children program, providing cash assistance to indigent American families with dependent children through the...
program was also contained in the bill, as was the provision for the Digital Transition and Public Safety Act of 2005
Digital Transition and Public Safety Act of 2005
The Digital Television Transition and Public Safety Act of 2005 is a United States Congress legislation enacted on October 20, 2005. This act deals with the cessation of the broadcasting of analog television and the subsequent implementation of digital television...
. Part of the TANF reauthorization reduces the threshold for passport denial for child support arrearages under 42 USC 652(k) to $2,500.
Section 3005 of the Act also provided one and a half billion dollars for the Digital Transition and Public Safety Act of 2005
Digital Transition and Public Safety Act of 2005
The Digital Television Transition and Public Safety Act of 2005 is a United States Congress legislation enacted on October 20, 2005. This act deals with the cessation of the broadcasting of analog television and the subsequent implementation of digital television...
and defined in detail what comprised a coupon-eligible converter box
Coupon-eligible converter box
A coupon-eligible converter box was a digital television adapter that met eligibility specifications for subsidy "coupons" from the United States government...
for Digital Television
Digital television
Digital television is the transmission of audio and video by digital signals, in contrast to the analog signals used by analog TV...
broadcasts in the United States.
The Impact on the Elderly
The legislation will extend MedicaidMedicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
's "lookback" period for all asset transfers from three to five years and change the start of the penalty period for transferred assets from the date of transfer to the date when the individual transferring the assets enters a nursing home and would otherwise be eligible for Medicaid coverage. In other words, the penalty period does not begin until the nursing home resident is out of funds, meaning she cannot afford to pay the nursing home.
Because the change in the penalty period start date will likely leave nursing homes on the hook for the care of residents waiting out extended penalty periods, ElderLawAnswers has dubbed the bill “The Nursing Home Bankruptcy Act of 2005.” Nursing homes will likely be flooded with residents who need care but have no way to pay for it. In states that have so-called "filial responsibility laws," the nursing homes may seek reimbursement from the residents’ children.
The bill also will make any individual with home equity above $500,000 ineligible for Medicaid
Medicaid
Medicaid is the United States health program for certain people and families with low incomes and resources. It is a means-tested program that is jointly funded by the state and federal governments, and is managed by the states. People served by Medicaid are U.S. citizens or legal permanent...
nursing home care, although states may raise this threshold as high as $750,000.
The legislation also:
- Establishes new rules for the treatment of annuities, including a requirement that the state be named as the remainder beneficiary.
- Allows Continuing Care Retirement Communities (CCRCs) to require residents to spend down their declared resources before applying for medical assistance.
- Sets forth rules under which an individual's CCRC entrance fee is considered an available resource.
- Requires all states to apply the so-called “income-first” rule to community spouses who appeal for an increased resource allowance based on their need for more funds invested to meet their minimum income requirements.
- Extends long-term care partnership programs to any state.
- Authorizes states to include home and community-based services as an optional Medicaid benefit. (Previously, states had to obtain a waiver to provide such services.)
In addition, the legislation incorporates provisions in the original budget bill passed by the Senate closing certain asset transfer "loopholes," among them:
- The purchase of a life estateLife estateA life estate is a concept used in common law and statutory law to designate the ownership of land for the duration of a person's life. In legal terms it is an estate in real property that ends at death when there is a "reversion" to the original owner...
will be included in the definition of "assets" unless the purchaser resides in the home for at least one year after the date of purchase. - Funds to purchase a promissory notePromissory noteA promissory note is a negotiable instrument, wherein one party makes an unconditional promise in writing to pay a determinate sum of money to the other , either at a fixed or determinable future time or on demand of the payee, under specific terms.Referred to as a note payable in accounting, or...
, loan or mortgage will be included among assets unless the repayment terms are actuarially sound, provide for equal payments and prohibit the cancellation of the balance upon the death of the lender. - States will be barred from "rounding down" fractional periods of ineligibility when determining ineligibility periods resulting from asset transfers.
- States will be permitted to treat multiple transfers of assets as a single transfer and begin any penalty period on the earliest date that would apply to such transfers.
While the federal law applies to all transfers made on or after the date of enactment (February 8, 2006), it also gives the states time to come into compliance. This gives many people in most states a little time to plan. The deadline for states to enact their own laws varies from state to state, but generally is the first day of the first calendar quarter beginning after the end of the next full legislative session.