House GOP budget cuts $5.5T in spending, balances in nine years

Greg Nash

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House Republicans are offering a budget Tuesday that would balance in nine years and cut $5.5 trillion in projected spending over the next decade.

The budget would keep spending ceilings under a 2011 budget deal in place, but would provide as much as $90 billion in additional war funding — much more than the $51 billion proposed by President Obama.

{mosads}House Budget Committee Chairman Tom Price’s (R-Ga.) blueprint repeals ObamaCare and proposes a premium support system for Medicare similar to the one proposed in previous House budgets by Rep. Paul Ryan (R-Wis.), Price’s predecessor.

It does not touch Social Security but proposes that a bipartisan commission study the entitlement program’s problems and then submit proposals to Congress.

On the tax side, Price would repeal the alternative minimum tax but otherwise does not propose major tax reform, unlike last year’s budget from Ryan.

Republicans have been debating what to include under reconciliation, a budget tool that would prevent Democrats in the Senate from filibustering covered legislation. It could make it easier for Senate Republicans to pass legislation repealing ObamaCare or other policies opposed by Democrats. 

The budget resolution includes instructions for House committees to figure out how to repeal as much of ObamaCare as possible under budget reconciliation, a process that would prevent Democrats in the Senate from filibustering a budget reconciliation bill.

The instructions ask 13 House committees to produce bills that would reduce the deficit in their jurisdictions by set amounts, and to search for ways to repeal ObamaCare.

Under Price’s plan, House committees would have until July 15 to submit reconciliation bills to the House Budget Committee.   

Price’s 146-page bill, “A Balanced Budget for a Stronger America,” would balance one year earlier than Ryan’s proposal from last year.

The report on the budget did not itemize cuts, but said it would reduce $400 billion in spending from Ryan’s budget, with the cuts coming from mandatory spending, consolidating programs, streamlining regulations and eliminating waste, fraud and abuse, according to Price’s report.

The shorter timeframe is intended to win support from conservatives who saw the 10-year window as too long.

By keeping the 2011 budget ceilings, Price would impose a $1.017 trillion ceiling on spending in the fiscal year beginning on Oct. 1.

Domestic discretionary programs would get $493 billion, with $523 billion allotted for the Pentagon’s base budget. The GOP budget ignores Obama’s request for $74 billion in additional spending.

Price’s defense budget is smaller than the $566 billion Ryan proposed last year.

Defense hawks have been demanding relief from the spending limits; to appease those voices Price includes $90 billion for the Defense Department’s war funding account, known as the overseas contingency operations (OCO) fund, which falls outside the base budget and has been used to carry out the wars in Iraq and Afghanistan.

It’s unclear whether the move will win over hawks like Senate Armed Services Committee Chairman John McCain (R-Ariz.), who has characterized the use of the OCO fund as a gimmick.

By contrast, House Armed Services Committee Chairman Mac Thornberry (R-Texas) appeared on Monday to endorse the idea.

While there are differences between Price’s plan and Ryan’s blueprint, there are also similarities.

Like Ryan, Price would partially privatize Medicare and convert Medicaid into block grants. He argues the ObamaCare repeal would save more than $2 trillion. The Medicare premium support plan would not take effect until 2024, similar to previous House Republican budgets.

Price’s plan would repeal Medicaid expansion offered through ObamaCare and would instead create “State Flexibility Funds” that are essentially block grants to states. The budget also envisions combining this Medicaid proposal with the Children’s Health Insurance Program, which offers funding to states to help provide health coverage to children. The budget would include a reserve fund that would extend federal spending to CHIP, which is set to expire in September. 

The blueprint specifically asks committees to figure out a way to repeal all of ObamaCare. The deadline to produce those bills comes soon after the Supreme Court is expected to rule in the King v. Burwell case in June, which could take away subsidies from people that are used to purchase ObamaCare in 37 states through federal exchanges. 

The budget stops short of offering an ObamaCare replacement plan, but broadly says the GOP’s preference is for a “patient-centered approach” in which Washington is not in control of healthcare decisions. 

Price’s budget says that a broad overhaul of the tax code — lowering rates for individuals, corporations and small businesses alike, while scrapping a range of tax preferences — will give a jolt to the economy. But Price only specifically proposes to repeal the Alternative Minimum Tax, and move toward a system that shields offshore corporate income from U.S. taxation.

The budget would streamline the government’s energy programs in an effort to focus more on the private sector, repeal parts of the Dodd-Frank financial reform law and include a reserve fund to better address the approaching insolvency of the Highway Trust Fund. The fund, which finances infrastructure projects, is scheduled to run dry by the end of May.

Republicans are also proposing to convert the Supplemental Nutrition Assistance Program or food stamps, to a fund in which states would each run their own version of the program beginning in 2021.

The budget also includes a deficit-neutral reserve fund that would allow Price flexibility later this year to approve additional defense spending. A GOP aide, however, suggested that Price would not agree to offsetting those increases with higher taxes.

Sen. Lindsey Graham (R-S.C.) has warned he’ll oppose a budget that does not provide relief from the spending caps, and has pushed for a reserve fund to be included in the budget. Graham has said he’s open to raising taxes by closing loopholes in exchange for small entitlement spending changes.

The House budget proposes raising defense spending and cutting non-defense spending levels over the next eight years — a break from the 2011 budget deal that ushered in budget ceilings known as sequestration.

For fiscal 2017, for instance, it proposes spending $38 billion above the ceilings, while spending $44 billion less than caps on non-defense programs. Over the next decade, the blueprint proposes raising defense spending by a total of $387 billion and cutting non-defense spending by $759 billion.

Under current law, the federal government is expected to spend nearly $49 trillion over the next 10 years, but the GOP budget would ask Congress to spend just over $43 trillion.

Senate Budget Committee Chairman Mike Enzi (R-Wyo.) is expected to unveil his budget proposal on Wednesday.

Both Budget Committees are scheduled to mark up their blueprints Wednesday and Thursday and hold floor votes on them by the end of next week.

Bernie Becker contributed to this report, which was updated at 10:49 a.m.

Correction: The House GOP budget would balance in nine years. An earlier version of this story included incorrect information.

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