June 16 (Bloomberg) -- A U.S. House Appropriations subcommittee approved a spending bill that would cut funding for the Internal Revenue Service, limit the budget of the Consumer Financial Protection Bureau and deny a spending increase sought by the Securities and Exchange Commission.
The $19.9 billion bill was approved today in Washington on a voice vote by the subcommittee on financial services and general government, and heads to the full committee. It includes funding for the Treasury Department, the White House, the District of Columbia, the federal courts, the Consumer Product Safety Commission and the General Services Administration.
“We really have to make difficult choices if we’re going to reduce the federal government’s unsustainable level of spending,” said Representative Jo Ann Emerson, the committee’s chairwoman and a Missouri Republican.
Democrats opposed the bill, saying the spending cuts included in the legislation would hurt the public.
“At these funding levels, there will be a significant harm to America’s consumers, investors, taxpayers, workers, businesses, judiciary, the security of our elections and even our deficit,” said Representative Jose Serrano of New York, the top Democrat on the panel.
Limits on Funding
The bill would limit to $200 million the amount the Federal Reserve can transfer to the new consumer bureau in fiscal 2012, which starts Oct. 1.
The Dodd-Frank Act, enacted in July 2010, created the consumer bureau and called for it to be funded by a percentage of the Fed’s budget, as much as $500 million a year, with the bureau’s director deciding how much is needed.
The Republican spending bill includes the requirement that, effective Oct. 1, 2012, appropriations would be made by Congress.
Republicans have sparred with Democrats over the new agency’s funding, mission and leadership.
The bill is part of a broader Republican effort to reduce federal spending. Overall, the $19.9 billion bill would mark a $1.85 billion, or 8.5 percent, cut from this year’s spending level. It would be $5.79 billion, or 22.5 percent, below the administration’s $25.7 billion spending request.
Emerson said she tried to make a priority spending for the Small Business Administration, drug task forces and anti-terrorism programs at the Treasury Department.
Proposed IRS Cuts
The IRS, with a proposed budget of $11.5 billion, makes up more than half the spending in the bill. The agency received $12.1 billion this year and requested $13.3 billion for fiscal 2012 as it seeks to beef up tax enforcement and implement parts of the health-care law passed in 2010.
The proposed funding in the bill is similar to the level that Republicans tried to pass earlier this year for the current fiscal year. IRS Commissioner Douglas Shulman told the subcommittee March 1 that cuts of that magnitude would reduce tax enforcement and collection, increasing the budget deficit.
“The investments in our budget more than pay for themselves and directly contribute to deficit reduction,” he said then.
Serrano said the bill would cause the IRS to furlough as many as 4,100 employees.
“This is exactly the sort of short-term cut that will do much greater harm than good in the long term,” he said.
The bill also would prevent the IRS from enforcing the health-care law’s individual mandate to purchase health insurance. It would require the government to provide regular updates on a proposed regulation that would require U.S. banks to report the identities of their non-U.S. account holders. Banks and lawmakers are opposing the rule.
The Republican proposal would give the SEC $1.2 billion, the same amount the agency received this year. The administration was seeking an additional $222 million.
Serrano said the SEC wouldn’t be able to carry out the new responsibilities it received in the Dodd-Frank law.
Senator Richard Durbin, chairman of the corresponding Senate subcommittee, said in an interview today that he hadn’t reviewed the House bill. The Illinois Democrat said he didn’t know how much money his panel would have to work with because the Senate is farther behind in the budget process than the House.
The Senate hasn’t set a spending target for the year or divided that target into broad categories for the subcommittees.
“That makes it hard,” Durbin said.
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