House Republicans released a proposal Tuesday that would balance the budget in a decade by revamping Medicare and Medicaid, repealing the Affordable Care Act and making cuts in domestic programs.
The plan, which pares more than $5 trillion from the federal budget, will instantly renew long-running hostilities with the White House and Democrats regarding spending and debt. But the biggest clash is likely to be between GOP budget hawks determined to reduce spending and defense hawks who want to bolster the Pentagon in the face of rising threats from the Islamic State and other terrorist groups.
While budget resolutions do not have the force of law, the proposal has greater significance now because Republicans control both chambers of Congress. The budget season allows the two parties to lay out their competing visions, framing a likely fiscal showdown this fall that could resemble those of previous years between President Obama and Republicans on Capitol Hill.
With the GOP running the Senate, the budget process also gives Republicans a potentially stronger hand in the annual spending process for federal agencies. It also offers them a path to passing some policy proposals that would otherwise require super-majorities in the Senate.
If Republicans fail to approve a compromise budget that passes both the House and Senate — a real possibility, given their deep divisions on fiscal policy — it will be an ignominious defeat for House Speaker John A. Boehner (R-Ohio) and Senate Majority Leader Mitch McConnell (R-Ky.). Those two leaders have made steady governance with a conservative tilt their main political goal of the year. But without a budget resolution, the funding process would be particularly unsteady and increase the possibility of at least a small-scale shutdown of parts of the federal government in October.
Most Republicans seemed inclined to support the measure, drafted by the new House Budget Committee chairman, Tom Price (R-Ga.), who hails from the conservative wing of the GOP caucus and proclaimed the proposal would “provide a contrast” to Obama’s own budget submitted last month. Price gave a guardedly optimistic assessment of the plan’s chances at winning approval in the House.
“I think so, sure, absolutely,” Price told reporters after a Capitol news conference where the plan was unveiled.
Price and many veteran lawmakers are expecting bipartisan negotiations with Obama — whose veto pen will prove powerful against most Republican proposals — in the fall, possibly leading to a repeat of the Ryan-Murray 2013 deal that set the budget framework of the past two fiscal years.
“I would look on our budget as our opening position in the negotiation,” Rep. Tom Cole (R-Okla.), a senior member of the House Budget Committee, told reporters Monday evening.
First the Republicans have to pass the proposal, with the House and Senate budget panels expected to approve their outlines later this week and have them on the floors for debate next week. Under the 1974 Budget Act, the final budget is supposed to be passed by both chambers by April 15.
The Republicans can expect no Democratic support in the process.
“Unfortunately, what we’re seeing right now is a failure to invest in education and infrastructure and research and national defense — all the things that we need to grow, to create jobs, to stay at the forefront of innovation, and to keep our country safe,” Obama told reporters at the White House.
Presumptive Democratic presidential candidate Hillary Rodham Clinton criticized Republican priorities via Twitter on Tuesday night. “Budgets reflect our priorities,” she wrote. “They should help families get ahead, educate our kids, and spark small business growth.” Repealing Obamacare would “let insurers write their own rules again,” and cuts to college aid “hold our kids back,” Clinton said.
“Not even under Enron accounting rules would their budget balance,” said Rep. Chris Van Hollen (D-Md.), the ranking member of the budget panel.
House Minority Whip Steny Hoyer (D-Md.) cited an asterisk in the plan that listed unspecified cuts of about $1.1 trillion to mandatory spending programs, such as welfare and food stamps, without any explanation as to how those programs would be pruned.
That means Boehner’s leadership team — which has repeatedly struggled to corral votes from recalcitrant conservatives — can afford to lose fewer than 30 votes from the 245 Republicans.
Overall, the plan would spend almost $3.8 trillion in 2016, $136 billion less than the current budget envisions. Spending under the GOP plan would rise to more than $4 trillion by fiscal year 2019. It projects revenue of just under $3.5 trillion for the coming fiscal year.
Republicans say their plan would balance the federal budget and create a surplus by 2024. By contrast, they say, Obama’s proposed budget would generate more than $700 billion in annual deficits by that year.
“Investors and businesses make decisions on a forward-looking basis. They know that today’s large debt levels are likely tomorrow’s tax hikes, interest rate increases, and inflation — and they behave accordingly,” the GOP’s proposal says. “It is this debt overhang, and the uncertainty it generates, that can weigh on growth, investment and job creation.”
The House Republican budget takes aim at a number of measures signed by Obama during the first two years of his tenure, including the Affordable Care Act, the Dodd-Frank financial services reform law and the 2009 stimulus bill.
The budget would eliminate the Affordable Care Act in its entirety, including Medicaid expansion adopted by 29 states and the District of Columbia. Republicans would replace the ACA with an alternative that budget writers called a “patient-centered approach” to health-care reform.
One element of the plan would merge Medicaid and the State Children’s Health Insurance Program into a single entity. It would create a reserve fund to extend federal spending on SCHIP.
The GOP plan would replace Medicaid expansion through State Flexibility Funds, which would put Medicaid coverage plans in the hands of state governments. It would leave in place some alternatives to traditional Medicaid expansion plans proposed by Republican governors in states like Indiana, where Gov. Mike Pence (R) won federal support for a program that is similar, but not identical, to the expansion envisioned under the ACA.
The budget repeals several parts of the Dodd-Frank legislation, including putting an end to the Federal Deposit Insurance Corp.’s authority to bail out creditors of institutions deemed too big to fail. It also would require Congress to appropriate funding for the Consumer Financial Protection Bureau, which currently generates its revenue from the Federal Reserve. And it would privatize Fannie Mae and Freddie Mac, the semi-public lending institutions.
Price told reporters Tuesday that if the House and Senate can reach a compromise on a single budget, this would offer the chambers a chance to use special budgetary fast-track rules to pass policy plans, such as a repeal of the ACA, without having to clear a Senate filibuster.
Without any bipartisan agreement by the fall, federal spending outlines will return to the caps set by the 2011 Budget Control Act, which ended a months-long showdown between Boehner’s then-newly empowered House GOP majority and Obama. The act is designed to achieve $2.1 trillion in savings over a decade and sets limits on the amount of defense and domestic agency spending within that framework.
The Pentagon’s spending would be limited to $523 billion in 2016, a rate that is unchanged despite increased threats at home and abroad. Sen. John McCain (R-Ariz.), chairman of the Armed Services Committee, and his House counterpart, Rep. Mac Thornberry (R-Tex.), are leading a bipartisan effort to increase the Pentagon’s spending plan to more than $570 billion.
Price’s document, unveiled Tuesday, does more than that, technically raising spending to more than $600 billion, but it does so by fiddling with funds for the war effort in the Middle East. That account is considered off the books for annual accounting, and McCain called the proposal “not legitimate.”
He plans to mount an effort during the Senate debate to increase the regular Pentagon accounts but acknowledged Tuesday that anything is better than the alternative of leaving the current budget caps, known as sequestration, in effect.
“I’d rather do my proposal, okay? But I am willing to do most anything to prevent the effects of sequestration from taking place, which is putting the lives of American servicemen and -women at risk, according to our military uniformed leaders,” McCain said.
If the GOP’s military hawks revolt against the budget, it has no hope of passing. Democrats are not expected to lend any support for a document they consider overly harsh.
Mike DeBonis and Juliet Eilperin contributed to this report.