As New Congress Convenes, Republicans Scale Back Budget Cut Goal

Rep. Paul Ryan, Budget Committee Chair, tells AdvisorOne there will be 'no retreat' in cutting spending

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As the 112th Congress, along with incoming Speaker of the House John Boehner, was officially sworn in Wednesday, Republican lawmakers who gained control of the House of Representatives had vowed for months to introduce weekly legislation with the goal of cutting domestic spending by $100 billion by year-end, and repeal the health care reform law.

But according to The New York Times, Republican aides now say that the Republican leaders are scaling back the $100 billion figure by half, and that GOP lawmakers' goal is to now get annual spending for programs other than those for the military, veterans and domestic security back to the levels of 2008, before Democrats approved stimulus spending to help end the recession.

Rep. Paul Ryan, R-Wis., the new chairman of the House Budget Committee, said in an e-mail message to AdvisorOne, "There is no retreat from House Republicans' pledge to cut spending." He went on to tell AdvisorOne about the Budget Committee's plans for 2011.

"House Republicans vote to cut their own budgets by 5% this week. Next week, we will vote to cut trillions of dollars in government spending by repealing the President's health care law." In addition to what Ryan called "these immediate steps," he said House Republicans "will clean up the fiscal wreckage left by the House Democrats, setting spending limits for the remainder of FY2011 at pre-stimulus, pre-bailout levels for non-security discretionary spending."

The House Budget Committee "will also put forth a budget resolution this spring for FY2012 that puts our budget on the path to balance and helps get our economy on the path to prosperity." Ryan will likely discuss more areas of Republican budget cuts during his Jan. 6th speech at The National Press Club in Washington.

GOP leaders plan to hold a symbolic up or down vote on repeal of health care reform on Jan. 12. While odds favor such a repeal winning in the Republican-controlled House, such repeal will not make it past Democrats who still control the Senate. As the new Congress convenes, it includes 63 new Republican seats in the House and six in the Senate. Efforts are already underway by Rep. Michele Bachmann, R-Minn., to repeal, in its entirety, Dodd-Frank.

Boehner, R-Ohio, said in comments before officially taking the gavel from Nancy Pelosi, D-Calif., by a vote of 241 to 173, that the House’s “new majority will do things differently…it starts with cutting spending instead of increasing it.”

Published reports have said some areas Republicans would seek to reduce include the operating budgets for House committees as well as congressional offices, including salary cuts. They have also pledged to freeze the size of the federal workforce, except national security.

Besides repeal, Republicans will also likely introduce measures to defund health care reform, and, as we’ve already witnessed, Dodd-Frank, through the lack of funding awarded to the Securities and Exchange Commission (SEC) in the recently passed Senate spending bill.

William Donovan, a partner with the law firm Venable in Washington, said that the SEC and other agencies that were given more duties under Dodd-Frank, were now left “with tough choices” due to lack of funding under the Senate appropriations bill. Donovan doubts Republicans can defund the Consumer Financial Protection Bureau (CFPB). Defunding the operations of the CFPB “is questionable,” Donovan says, because under Dodd-Frank, the CFPB gets a portion of the Federal Reserve Board's annual operating expenses.

As for budget cuts, Senate Majority Leader Harry Reid, D-Nev., said in a Jan. 5 Op-Ed piece in Politico, that he’s “disturbed at the trend toward extremism” in the GOP, citing recent proposals from Republicans “to eliminate Social Security, roll back important civil rights legislation and eliminate the Department of Education.”

Reid also noted his worries about Republicans shutting down the federal government, instead of finding “common-sense solutions” to keeping the government running before the continuing resolution (CR) expires on March 4. “There have already been suggestions from extremist elements in the GOP that instead of working together to find responsible solutions, we should shut down the federal government and allow it, for the first time in history, to default on its existing obligations,” Reid wrote in his Op-Ed.

The Center on Budget and Policy Priorities (CBPP) is warning that the “major changes” to House procedural rules unveiled by House Republican leaders in late December and expected to be adopted Wednesday, are “designed to pave the way for more deficit-increasing tax cuts in the next two years.” The new rules announced on Dec. 22 dealing with pay-as-you-go and reconciliation “could have a substantial impact and risk making the nation’s fiscal problems significantly worse,” the CBPP says.

The new House rules “would replace pay-as-you-go with a much weaker, one-sided ‘cut-as-you-go’ rule, under which increases in mandatory spending would still have to be paid for but tax cuts would not,” CBPP says.

In addition, CBPP says, the rules would also “stand the reconciliation process on its head by allowing the House to use reconciliation to push through bills that greatly increase deficits as long as the deficit increases result from tax cuts, while barring the use of reconciliation in the House for legislation that reduces the deficit if that legislation contains a net increase in spending (no matter how small) that is more than offset by revenue-raising provisions.”

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