Republicans in the House of Representatives have put forth a budget that would pave the way for enormous cuts to welfare and entitlement programs, all while lowering taxes on the wealthy and increasing defense spending.
It’s quite a balancing act as it ignores some of President Donald Trump’s priorities while trying to please disparate factions within the party. As it stands now, the budget will make only $5 billion of the $54 billion in cuts to nondefense-related federal agencies and departments, like the Environmental Protection Agency, NASA, and the State Department. It also proposes cuts to Medicare and Social Security, which Trump promised to preserve.
The proposal would raise defense spending from $583 billion to $621.5 billion — $18 billion more than Trump had asked for — which includes funding for a border wall. The proposed defense spending exceeds caps on allowable spending, so they’d need Democrats’ support to lift those caps.
The budget also opens the door for draconian cuts to entitlement programs — to the tune of $203 billion in cuts over 10 years. Some Republicans have long sought to chip away funding for these welfare programs, like Medicaid, farm subsidies, food stamps, and veterans programs.
It simultaneously paves the way for a partial repeal of the Dodd-Frank Wall Street reform law that was passed in 2010 in response to the financial crisis, and proposes lowering the corporate tax rate from 35 to 15 percent.
The proposed budget operates under a rosy assumption — that economic growth will progress at a rate of 2.6 percent annually. Only by assuming growth can the GOP balance the version of the budget they’ve proposed. While less optimistic than the White House’s assumed 3 percent growth rate, both estimates far exceed the Congressional Budget Office’s more conservative 1.6 percent estimate.
The Budget Committee will vote on the proposed budget Wednesday. A full House vote is expected sometime next week.
The split over entitlements
GOP moderates are already balking at the proposed cuts to entitlement programs while hard-liners in the party say it doesn’t go far enough.
In a letter from the centrist Tuesday Group, submitted to House Speaker Paul Ryan in late June in response to a draft version of the budget, according to Politico, GOP moderates expressed their wariness about steep cuts to entitlements: “While fiscal responsibility and long-term budget stability is essential, requiring hundreds of billions — as much as $200 billion by some accounts — in budget savings from mandatory spending programs in the reconciliation package is not practical and will make enacting tax reform even more difficult than it already will be.”
Twenty Republicans in the house are members of the Tuesday Group, and if all do in fact vote against the bill, only 23 votes could tip the balance against the bill. And conservative Republicans, the 35 or so members of the Freedom Caucus, have said they won’t vote for a bill they feel doesn’t cut entitlements enough.
Even if Republicans all get on board with this budget, they’ll still need some support from Democrats in the Senate. The budget measures can be enacted with simple majority support — and Republicans hold majorities in both House and Senate — but a separate spending bill, which needs to pass for the government to stay funded, needs 60 votes in the Senate. Republicans only hold 52 of the 100 Senate seats.
Tying in tax reform
Mick Mulvaney, the director of the Office of Management and Budget, supports the proposal specifically because it tees ups tax reform: “It is a bold effort that follows the leadership of President Trump in ‘Making America Great Again,’” he said in a statement seen by the Washington Post. “Critically, this budget lays a pathway for Congress to pass, and President Trump to sign, pro-growth tax reform into law.”
In order to get a tax reform bill passed — and all Republicans are in agreement that taxes should be lowered — they’ll have to get the budget passed first. And depending on how the budget is ultimately structured, it may allow them to enact a process called “budget reconciliation” — a rule that would allow Republicans to tie their biggest agenda items to the budget. The rule allows bills tied to budget measures to be passed with a simple majority vote in both House and Senate, rather than the 60 votes usually required to overcome a filibuster in the Senate.
In other words, the GOP might not be able to get around a Democratic filibuster in the Senate if the Republican tax reform bill that all Republicans want to pass in some form before the end of the year — if they can pass the budget in the first place.