President Trump is sending a plan to Congress that calls for stripping more than $15 billion in previously approved spending, with the hope that it will temper conservative angst over ballooning budget deficits.
Almost half of the proposed cuts would come from two accounts within the Children’s Health Insurance Program (CHIP) that White House officials said expired last year or are not expected to be drawn upon. An additional $800 million in cuts would come from money created by the Affordable Care Act in 2010 to test innovative payment and service delivery models.
Those are just a handful of the more than 30 programs the White House is proposing to Congress for “rescission,” a process of culling back money that was previously authorized. Once the White House sends the request to Congress, lawmakers have 45 days to vote on the plan or a scaled-back version of it through a simple majority vote.
If approved by Congress, the reductions would represent less than 0.4 percent of total government spending this year.
Rep. Mark Walker (R-N.C.) said in an interview that conservatives were given assurances from the White House that this package would be the first of several, and he said lawmakers were anxious to get started on the cuts. “I hope it’s never painted that this is just symbolic or a political gesture,” Walker said. “We think it’s very legitimate.”
A senior administration official said Democrats should recognize that much of this package represents untapped accounts and that cutting the money would create savings without affecting operations.
Democrats have said they are watching the process with skepticism. Many Democrats have called for expanding programs such as CHIP, not cutting them, and they are often fiercely protective of anything related to the Affordable Care Act.
“Let’s be honest about what this is: President Trump and Republicans in Congress are looking to tear apart the bipartisan [CHIP], hurting middle-class families and low-income children, to appease the most conservative special interests and feel better about blowing up the deficit to give the wealthiest few and biggest corporations huge tax breaks,” Senate Minority Leader Charles E. Schumer (D-N.Y.) said Monday.
White House officials insisted that the CHIP cuts would not affect access to health care, but they have already appeared to serve as a rallying cry for Democrats to mobilize opposition.
The package ran into trouble in the Senate before being officially released.
“One of the programs that reportedly is going to be cut is SCHIP, and that concerns me greatly,” said Sen. Susan M. Collins (R-Maine), using the program’s former name. “I would have to have an awfully good reason given to me, and maybe there is one. I don’t know why there would be funds left in the SCHIP account, but that’s a program that I was an original co-sponsor of with Sens. [Orrin] Hatch and [Edward] Kennedy years ago and it matters a lot to me.”
Republicans have a very thin majority in the Senate and would probably need near-unanimous support from their caucus to pass the bill.
White House officials and GOP leaders said the package of proposed cuts could begin to signal to conservatives that they are now taking steps to reverse a free-spending fiscal approach they have embraced since Trump took office.
Conservatives erupted in March after Trump signed a $1.3 trillion spending package that included a number of budget requests from Democrats, and they pushed for a rescission package to pare it back between $30 billion and $60 billion.
Senate Majority Leader Mitch McConnell (R-Ky.) and others argued that that would amount to going back on a bipartisan deal.
The money the White House is proposing to cut in its new request has all been appropriated at least one year ago, and the plan would not touch the $1.3 trillion spending bill Trump signed in March. The White House is working on other proposed spending reduction packages that would try to claw back some of that money, the senior administration official said, and those proposals will come later this year. All told, officials are eyeing $25 billion in cuts.
The budget strategy for both parties is uncertain heading into the November midterm elections.
Republicans must agree to a new spending deal with Democrats by Sept. 30 to avoid triggering a government shutdown, something Trump said last week he would embrace if he does not get additional money to build a wall on the U.S.-Mexico border.
Congress can “rescind” money it has previously authorized if it secures a majority of votes in the House and then the Senate using powers under the Congressional Budget and Impoundment Control Act of 1974.
The law has not been used in that way in roughly 20 years. The senior administration official said this is the biggest rescission request that has ever been sent to Congress.
The proposed cuts to CHIP would come in part from cutting $5 billion from the Children’s Health Insurance Fund, to help reimburse states for certain expenses. But the White House said the ability to use this money expired in September, meaning it can’t be legally used, even as it remains on the government’s balance sheet.
CHIP is a program created and reauthorized by Congress that provides health care to low-income children. Congress extended the program for six years several months ago.
The White House’s other proposed cut to CHIP is a $2 billion reduction would pare back the Child Enrollment Contingency Fund, meant to ensure states have access to funds if there is a higher-than-expected enrollment, the senior administration official said. States are not expecting to see a jump in enrollment, though, in part because the economy is improving.
White House officials say these reductions could get bipartisan support because Democrats and Republicans supported cuts to the same accounts several months ago.
Other reductions would come from a range of areas. They include cutting $133 million for a railroad unemployment program that expired in 2012, the administration official said.
Successfully pushing these changes through Congress could placate conservatives and put Democrats on the spot about cutting spending. A number of Senate Democrats are running for reelection in states Trump won easily in 2016, and they will probably need support from Trump voters to win reelection.
Republicans control a large majority of votes in the House, but their margin in the Senate is razor thin. They might need support from Democrats to approve the spending cuts, depending on the health of Sen. John McCain (R-Ariz.).
White House Office of Management and Budget Director Mick Mulvaney had originally hoped to design a large rescission package, but he was urged by House Speaker Paul D. Ryan (R-Wis.) to start with a narrower set of cuts and then follow up with more requests in a future package.
The March spending bill led to such outrage among Republicans that just hours before signing it into law, Trump said in a Twitter post that he might veto it. He backed down and said the spending agreement was a necessary compromise to secure more money for the Pentagon, but he vowed to never sign a bill like it again.
“After that last spending bill, we owe an apology to drunken sailors,” Walker said.
Walker is chairman of the Republican Study Committee, which represents a majority of the Republican Party. He said the committee will host Mulvaney next week to discuss the proposed cuts and the path forward.
Trump has demanded that Congress give him the power to use a “line-item veto” on spending bills, which would mean he could simply eliminate any part of a spending package he did not want. Such as veto was ruled to be unconstitutional by the Supreme Court.
In his first 14 months in office, Trump has never enforced a veto threat on spending, and Democrats have repeatedly found ways to win spending priorities by holding out during negotiations.
Through a combination of spending increases and tax cuts, the White House and the GOP-led Congress have greatly expanded the budget deficit since Trump was elected.
The government spent $3.98 trillion and brought in $3.32 trillion in revenue last year, leaving a deficit of $665 billion, according to the Congressional Budget Office. The deficit this year is projected to widen to $804 billion and then hit $981 billion in 2019. In 2020, the government will record deficits that exceed $1 trillion annually unless changes are made.
With rising interest rates, higher debt levels can prove incredibly costly. Republicans railed about government spending during the Obama administration, but they have been torn since Trump took office, as he has largely shown an indifference to spending restraint.
Last week, as aides prepared the package of spending cuts to offer Congress, Trump was demanding more spending, for example, to build a wall along the Mexico border.