Senate Republicans passed budget reconciliation instructions last week that are far weaker on spending cuts than those House Republicans passed in February, which could set up a debt explosion should the Senate get its way when the final reconciliation bill is written later this year.
The top-line budget numbers in the House reconciliation bill call for $4.5 trillion in tax cuts partially offset by $2 trillion in spending cuts. But for every dollar that House committees fail to deliver on spending cuts, the bill also lowers the amount in taxes Congress is allowed to cut. So, if House committees only identified $1.5 trillion in spending cuts, Congress could only cut taxes by $4 trillion. This is a good forcing mechanism to make sure the spending cuts happen. Functionally, for every dollar Republicans cut, they get to cut taxes by that same amount. It’s a strong incentive to cut deep.
The Senate budget instruction does not have such a forcing mechanism. In fact, instead of setting a $2 trillion spending cut target, the Senate bill only calls for $4 billion in cuts. This is a recipe for tax cuts not offset by spending reductions and an explosion in federal deficits.
Senate Republicans claim the paltry $4 billion target is just a placeholder for later cuts, but there is simply no guarantee those cuts will ever come. “The only thing you can trust in the United States Congress and in Washington, D.C., is an airtight budget target that’s enforceable,” House Budget Committee Chairman Jodey Arrington (R-TX) told the Washington Examiner. “Everything else is just wishful thinking. And I’m tired of wishful thinking.” We are tired of wishful thinking, too.
The reality is that too many Republicans in the Senate don’t have the courage to cut the programs that are truly driving federal spending. Medicaid spending is expected to rise from $618 billion this year to $1.02 trillion in 2035. This is after Medicaid grew by 105% over the last decade, far outpacing spending growth in Social Security and Medicare.
Originally designed to help pregnant women, children, elderly people, and disabled people, Medicaid has exploded in size as more and more able-bodied adults have been added to the program. Between 2013 and 2022, over 20 million such adults were added to Medicaid, compared to just 2.5 million children, 1.2 million seniors, and 400,000 disabled people. Worse, the federal government reimburses states at higher rates for the medical care provided to able-bodied adults than it does for the traditional recipients. This only incentivizes states to add more able-bodied adults to the program when states should be focused on providing the best care for pregnant women, children, and the disabled.
CONGRESS MUST TAKE BACK THE TARIFF POWER
House Republicans have taken the bold step of admitting slowing Medicaid growth is essential for bringing deficits under control. The House budget instructions include $880 billion in savings from the House Energy and Commerce Committee, which is the committee that oversees the Medicaid program. The reason Senate Republicans set such a ridiculously low spending cut target is that they are not yet willing to tell the truth about what programs will need to be cut to meet a $2 trillion cut target. The only “flexibility” Senate Republicans are preserving for themselves is the flexibility to cut nothing and just send the bill to future taxpayers in the form of higher interest payments on the federal debt.
Governing is hard. House Republicans took the difficult step of setting bold spending cut targets and then linking them to tax cuts to ensure they would happen. Hopefully, when the actual reconciliation bills are written, the House bill with real spending cuts prevails.