The House GOP unveiled a 2019 budget Tuesday that gives a thumbs up to the sweeping tax overhaul passed last year and the Dodd-Frank rollback bill, but seeks to gut Social Security and Medicare and repeal the Affordable Care Act.
The GOP’s Budget for a Brighter American Future seeks to, over the next decade, save $5.4 trillion on mandatory programs — including Social Security, Medicare and Medicaid — and includes reconciliation instructions for 11 House authorizing committees to find at least $302 billion in deficit reduction.
Reconciliation allows expedited passage of certain budgetary legislation on spending, revenues and the federal debt limit with a simple majority vote in both the House (218 votes) and Senate (51 votes).
The House Budget Committee plans to start marking up the legislation on Wednesday and Thursday, and pass it out of committee. A vote by the full House could come next week.
John Yarmouth, D-Ky., ranking member of the House Budget Committee, slammed the Republican budget for scrapping “any sense of responsibility to the American people and any obligation to being honest. Its repeal of the Affordable Care Act and extreme cuts to health care, retirement security, anti-poverty programs, education, infrastructure, and other critical investments are real and will inflict serious harm on American families.”
The rest of the budget, Yarmouth added, “is a fabrication, fantasy numbers solely designed to hide the deficit-exploding impact of the GOP’s $2 trillion in tax cuts for millionaires and big corporations, while forcing American families to pay the price.”
The new tax law, the GOP budget states, will grow the economy by 3% this year (on a year-by-year basis), citing the Congressional Budget Office, “which would mark the strongest growth since before the Obama administration.”
Mandatory spending, the House GOP says, “consumes approximately 70% of all federal spending. Without action, [the Congressional Budget Office] projects that mandatory spending will increase from $2.8 trillion in FY 2018 to $4.9 trillion in FY 2028.”
By that date, mandatory programs will consume 77% of total spending and will account for roughly 16.6% of GDP. Within overall noninterest mandatory spending, the two major social insurance programs are projected to continue growing faster than the economy as a whole.
The cost of Social Security is projected to rise from $984 billion in FY 2018 to $1.8 trillion in FY 2028, and Medicare spending is expected to increase from $707 billion in FY 2018 to $1.5 trillion in FY 2028.
“This level of growth is not only unsustainable but threatens each program’s solvency. In fact, CBO projects Social Security and Medicare will be insolvent by 2030 and 2026 respectively.”
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement after the budget was released that the committee is “glad that the proposed budget sets a fiscal goal that would put the debt on a downward path relative to the economy and includes reconciliation instructions to reduce projected deficits by at least $302 billion over the next decade.”
With trillion-dollar deficits “about to return and debt on course to exceed the size of the economy in a decade or so, lawmakers must pursue trillions of dollars of deficit reduction to bring the debt under control,” MacGuineas said.
While the GOP budget resolution calls for $8.1 trillion of deficit reduction relative to CBO’s baseline, MacGuineas continued, “most of these savings come from rosy economic assumptions or unreconciled and often unrealistic spending cuts. The budget also fails to account for the costs of extending the recent tax cuts or replacing the Affordable Care Act, despite continued efforts to enact these policies.”
The GOP plan also seeks to save up to $4 billion by nixing the ability to receive both unemployment insurance and Social Security Disability Insurance, giving the Social Security Administration the authority to identify fraud and prevent individuals from obtaining benefits from both programs.
The Budget for a Brighter American Future also includes policies that “assume” provisions of the House-passed Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs (Choice) Act, H.R. 10, passed by the House last June.
The House lawmakers praise the bill as “the first comprehensive reform bill” to replace the Dodd-Frank Act.
The Choice Act, the GOP argues, “allows financial institutions and markets to invest in America, without government regulation second-guessing every decision and driving up the cost of capital. It also enhances U.S. financial market resiliency by offering an ‘off ramp’ from Dodd-Frank’s suffocating regulations to well-managed and capitalized institutions with a leverage ratio of 10%.”
Fair-value accounting, which the House GOP argues assumes “market risk,” is also recommended to assess the “true costs” of student loans.
“Repeated decisions” by Congress to raise the Pell Grant program’s maximum award and expand eligibility has put the program on “financially shaky ground,” the GOP budget also states.
Between fiscal years 2006 and 2017, the Pell Grant program’s “discretionary costs ballooned from $12.8 billion to $23.4 billion,” the budget states. “Future reforms should ensure Pell Grants go to students with the greatest need, students complete school in a timely manner, and the program is financially sustainable and available for future students.”