Policy

House Budget Would Direct $302 Billion in 10-Year Spending Cuts

‘Three-step process to give to the rich and make everyone else pay for it,’ Democrats say

Rep. Steve Womack, R-Ark., walks down the House steps after final votes of the week in the Capitol on Thursday, Feb. 15, 2018. (Bill Clark/CQ Roll Call file photo)

House Budget Chairman Steve Womack’s fiscal 2019 budget resolution charts a path to balancing the budget in nine years through a combination of steep cuts in mandatory spending programs, freezing nondefense discretionary spending and banking on robust economic growth, according to a summary.

Under the draft fiscal blueprint, which will be marked up in committee Wednesday and Thursday, the deficit would be reduced by $8.1 trillion over 10 years compared to current law or policy. The budget would produce a surplus of $26 billion in 2027 if all of the assumed policies were enacted, growing to $142 billion in 2028.

The plan includes reconciliation instructions requiring $302 billion in savings over 10 years, almost 50 percent more than the $203 billion in the initial version of the fiscal 2018 House budget resolution. Even that amount was too much for the Senate last year, resulting in almost all the reconciliation instructions for spending cuts being absent from the final version.

The Ways and Means Committee would bear responsibility for the largest savings, with a minimum target of $150 billion.

The instructions for the other committees include:

  • $45 billion for the Judiciary Committee.
  • $32 billion for Oversight and Government Reform.
  • $24 billion for Financial Services.
  • $20 billion for Energy and Commerce.
  • $20 billion for Education and the Workforce. 
  • $5 billion for Natural Resources.
  • $3 billion for Homeland Security.
  • $1 billion each for Agriculture, Armed Services and Veterans Affairs.

House Budget Committee Republicans plan to unveil the draft budget plan Tuesday. Aides to Womack, R-Ark., declined to confirm the contents of the summary, which is dated June 15.

As Womack has said, the plan will stick with higher fiscal 2019 defense and nondefense discretionary spending limits, as enacted in the two-year budget deal struck in February. House GOP conservatives oppose the 13 percent increase in the nondefense figure, to $597 billion, above what the previous statutory cap for the upcoming fiscal year would have allowed. 

Under the draft budget plan, defense would then grow by 5 percent a year through 2021, rising to $736 billion in fiscal 2028, for a total $645 billion spending increase over 10 years.

As in previous House GOP budgets, nondefense discretionary would take a hit. Nondefense would fall to prior statutory cap levels starting in fiscal 2020, which would mean a $55 billion or 9.2 percent cut from the current fiscal 2019 ceiling. Nondefense appropriations would rise slightly the following year but would then be frozen at the fiscal 2021 level, or $555 billion, through 2028.

Health care in the crosshairs

The bulk of the deficit reduction would come from $5.4 trillion in savings to mandatory or automatic spending programs, including $1 trillion from Medicaid and $537 billion from Medicare. These savings would be optional for House committees under the budget blueprint, however, since they are only directed to come up with a fraction of the total through the reconciliation process.

The Medicaid savings would come from shifting the program from an open-ended federal commitment to a capped system pegged to medical inflation rates, similar to the health care reconciliation bill that was passed by the House last year. The plan also includes enacting work requirements for able-bodied, childless Medicaid recipients.

The proposed Medicare changes include gradually raising the eligibility age to 67, similar to the eligibility increases in Social Security; combining Medicare Parts A and B, the hospital and doctors insurance parts of the program; and restructuring the program into one where recipients can choose private health care plans.

The plan assumes saving $1.3 trillion from repealing the 2010 health care law and $2.5 trillion in additional savings through the following categories:

  • Reducing improper government payments by 50 percent over a decade, saving $745 billion.
  • Cuts to welfare and federal retirement programs saving $923 billion.
  • Cuts to veterans programs intended to save $59 billion.
  • Changes to student loan programs, intended to generate $231 billion.
  • Changes to agricultural programs, which would save $23 billion.
  • Overhauling medical liability lawsuits, assumed to save $33 billion.

The plan also assumes $4 billion in savings from preventing people from receiving Social Security disability and unemployment insurance benefits at the same time, a change that both Republicans and some Democrats have favored in the past.

According to the summary, the draft budget resolution would use the Congressional Budget Office revenue projection over the next 10 years, which assumes no changes to current law, incorporating the effects of last year’s tax overhaul but not the extension of various provisions after their expiration in eight years.

But at the same time, as Womack had signaled, the plan assumes higher economic growth — an average 2.6 percent over a decade — than the CBO, which forecast less than 2 percent. That growth provides $1.67 trillion in additional deficit reduction over 10 years, according to the document.

Even if the House budget plan gets out of committee this week as expected, it’s not clear that House or Senate GOP leaders have any intention of bringing the politically risky measure to the floor of either chamber.

House Democrats are already lining up their talking points in advance of Tuesday’s release of the GOP budget plan, calling it the final step in a “three-step process to give to the rich and make everyone else pay for it,” after the 2017 tax cuts, increased deficits, and now proposed cuts to social programs.

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