In case you missed it, this morning, the House Budget Committee released its FY2016 Budget Resolution, A Balanced Budget for a Stronger America.
We’re still preparing a more in-depth analysis for you, but in the meantime, here are some key points to take away.
1. It’s better than the President’s budget… by a lot
This point should be obvious. We know that Obama’s budget plan is terrible: it spends $50 trillion over ten years and never balances, relying on questionable economic assumptions to assume economic growth and avoid a fiscal crisis.
Somewhat similar to Obama’s budget, the House plan would bring spending down relative to GDP; in this case, to 18.2 percent of GDP in 2024 and 18.3 percent in 2025. But in a marked difference, this budget aims to balance within ten years, making $5.5 trillion in spending reductions. Debt held by the public will decline from more than 74 percent of GDP today to 55 percent of GDP in 2025 to just 18 percent of GDP by 2040, under the plan.
2. Cuts aren’t drastic, but they’re meaningful
These cuts are not the slash-and-burn many fiscal conservatives rightfully want. Instead, they’re gradual and take the form of reductions in increases. To quote the plan itself [emphasis added]:
Under current policy, the Federal Government will spend $48.6 trillion over the next 10 years. Under this proposal, it will spend roughly $43.2 trillion. This budget does not make sudden cuts. Instead, it increases spending at a more manageable rate. On the current path, spending will rise by an annual average of 5.1 percent. Under this budget, it will rise by only 3.3 percent.
3. The resolution includes key entitlement reforms
In parts, the document reads like a Christmas list for entitlement reform advocates. It tackles everything from “ending Obamacare’s raid on the Medicare trust fund” to seeking a “premium support model” which would “enable beneficiaries to choose from a range of coverage options, including traditional fee-for- service Medicare,” beginning in 2024. It also seeks means testing, in which Medicare payments are adjusted based on income and illness, and wealthier seniors pay more out of pocket.
It combines Medicare A and B and establishes a single deductible along with ending the can-kicking and expensive “Doc Fix,” instead “responsibly [accounting] for a repeal of the sustainable growth rate (SGR) formula so that we ensure physician access and improve the quality of care for patients.”
It also combines CHIP and Medicaid and seeks to devolve power to the states. It seeks to prohibit the Social Security trust fund from being “raided” for other programs and creates a bipartisan commission to find and recommend Social Security savings.
4. The resolution tackles government gone wild
Entitlement reform portions will probably take up most attention, but we shouldn’t forget other measures in the budget. For one, it takes on Dodd-Frank and its bailout provisions, and seeks to privatize Fannie Mae and Freddie Mac. It also attacks “corporate welfare” such as the Hollings Manufacturing Extension Program, which subsidizes a network of nonprofit extension centers, and it entirely eliminates “Trade Promotion Activities” at the International Trade Administration.
It calls for reforming duplication in job training and assistance programs, among others, such as the 92 separate anti-poverty programs or 17 different food aid programs. It also rescinds the administration’s ability to waive work requirements for Temporary Assistance for Needy Families (TANF).
Finally, it calls for reforming the budget process itself, along with seeking greater transparency. It supports a Department of Defense audit by 2017.
5. There are some areas of disappointment and skepticism
While the budget is overall very promising, there are some areas of concern. For one, it’s worth noting that a major aspect is assuming a full repeal of Obamacare, which is a crucial but ultimately very difficult goal, even with a Republican Congress. Full savings from some entitlement reforms occur over a long time, although as others have noted, a longer time horizon makes sense for these types of reforms.
But mostly, fiscal conservatives should be concerned with Pentagon spending. Facing an incredibly tough climate in which many Republicans demanded blowing past Pentagon spending caps altogether, Rep. Price and others should be applauded for holding the line and keeping spending under the Budget Control Act limits… technically.
See, the budget hikes Pentagon spending using the Overseas Contingency Operations (OCO) budget as a slush fund, pushing the total up to almost $95 billion, albeit with some offsets. While the political climate, perhaps, could not have produced anything better, it’s hard to applaud a nearly $100 billion slush fund.
Overall, it’s perhaps fair to say this resolution is very good, could have been better, but probably not in any real-world scenario. We continue to push for much-needed oversight and reform of the OCO budget and remind conservatives that keeping America safe requires controlling spending, especially in a dangerous world.