March 18, 2016

On March 16, the House Budget Committee narrowly approved a fiscal year 2017 budget resolution that would preserve the $1.07 trillion discretionary spending limit for fiscal year 2017 – the level set by last fall’s two-year budget deal (PL 114-74).  While rank-and-file members appear to generally support the resolution’s top-line spending figure, members of the conservative House Freedom Caucus are demanding a return to the previous, lower budget caps.  As such, they are seeking to reduce fiscal year 2017 spending by $30 billion.  Leaders from both parties agree that such a move could ultimately derail this year’s appropriations process.

In an effort to quell some of the backlash, GOP leaders plan to advance a stand-alone package, or “side car,” that would cut at least $30 billion from mandatory spending programs over the next two years and $140 billion over a decade.  The budget also would use a special procedural tool called reconciliation to find additional ways to reduce federal spending.  According to Budget Committee Chairman Tom Price (R-GA), the plan would eliminate federal deficits over the next decade, largely by overhauling a number of entitlement programs and repealing the Affordable Care Act (ACA).

It should be noted that the aforementioned approach has been criticized by members of the House Freedom Caucus, who do not believe that such legislation could clear the Senate.  Even with approval by the upper chamber, President Obama would undoubtedly veto the bill.  Given the continued uncertainty surrounding the prospects of the House budget, Speaker Paul Ryan (R-WI) announced this week that floor consideration of the resolution would be postponed until sometime after the upcoming spring recess. 

In the meantime, two House committees considered legislation this week that aims to achieve the aforementioned mandatory spending cuts.  On March 15, the Energy and Commerce Committee approved a measure (HR 4725) that would allow more lottery winnings to be counted as income for the purposes of determining Medicaid eligibility.  In addition, the bill would reduce Medicaid reimbursement rates for prisoners and reduce the federal matching rate for the State Children’s Health Insurance Program (CHIP).  The measure is designed to achieve approximately $25 billion in deficit reduction over the next ten years.

For its part, the Ways and Means Committee approved a separate package of mandatory spending cuts designed to achieve an estimated $98 billion in savings over the ensuing decade.  One proposal (HR 4722) would require individuals to use a Social Security number – rather than an individual taxpayer identification number (ITIN) – to claim a refund under the Child Tax Credit.  The panel also approved legislation (HR 4723) that seeks to recover health insurance subsidy overpayments.  Finally, the committee advanced a bill (HR 4724) that would repeal the Social Services Block Grant (SSBG) program.

Across Capitol Hill, it is unclear if Senate Republicans will pull together their own budget blueprint.  Amidst the uncertainty, Majority Leader Mitch McConnell (R-KY) has indicated that the upper chamber will begin moving forward with consideration of the 12 individual spending bills written at the $1.07 trillion level.