House Republicans Have a New Budget. Here Are 3 Ways it Could Affect You

Jul 18, 2017

As Senate Republicans' health care reform package appeared doomed to disaster on Tuesday, their counterparts in the House looked to reset matters with a fresh budget proposal.

The House Republicans' spending plan aims to balance the federal budget within a decade, reducing the deficit by $6.5 trillion, partially by cutting billions of dollars from entitlement programs such as Medicare and Social Security.

Like the proposal the White House released in May, the House proposal is a blueprint, not a bill set in stone. It also assumes the Senate health package will become law, an increasingly unlikely outcome. But even if this budget is not passed as written, it puts House Republicans' financial priorities on full display.

“In past years, our proposals had little chance of becoming a reality because we faced a Democratic White House," Tennessee Rep. Diane Black, chairs of the House Budget Committee, said in a statement. "But now with a Republican Congress and a Republican administration, now is the time to put forward a governing document with real solutions to address our biggest challenges."

Here are three important things to know about the House budget proposal released Tuesday.

It would increase defense spending by $70.5 billion

The House budget proposes increasing the base national defense budget by $70.5 billion, from $551 billion in fiscal year 2017 to $621.5 billion in fiscal year 2018. That's more than the $574 billion in base defense spending recently proposed by the White House.

Also included in the proposal is $75 billion to fight terrorism, as well as "significant funding" on resources for border security, which includes construction on a controversial border wall between the U.S. and Mexico.

It would cut programs like Medicare and Medicaid by $203 billion

The House budget proposes reducing spending on entitlement programs such as Medicare by $203 billion next year, instructing 11 House committees to find ways to reduce spending.

These cuts would in part come from programs like Medicare, which could face $487 billion in cuts over the next decade, and Social Security, which faces $4 billion in cuts in that same time frame. "While these programs are vital to the people they serve, their spending rates are unsustainable and the key drivers of our nation’s fiscal challenge," reads the proposal.

The proposal assumes that the Senate GOP health bill will become law, resulting in what the Congressional Budget Office estimates would be $834 billion in Medicaid cuts over the next decade. It would also implement a "mandatory work requirement for able-bodied, non-elderly, non-pregnant adults without dependents who are enrolled in Medicaid."

The House proposal also recommends reducing funding for food stamp programs, noting that spending on such initiatives doubled between 2001 and the start of the financial crisis. Spending on the Supplemental Nutrition Assistance Program, or SNAP, increased from about $18 billion in 2001 to about $33 billion in 2009, according to the USDA.

It could pave the way for Republicans to pass tax reform

The House proposal mandates that the chamber's Ways and Means Committee pass a tax reform bill that does not increase the deficit, reduces overall tax rates and simplifies the tax code. The budget also stipulates that such a bill should repeal the alternative minimum tax and reduces the corporate tax rate.

The budget instructs the committee to pass this reform through a process called reconciliation, which was primarily designed to pass budgetary laws. This means that if a tax reform plan is passed by the House, it would only need majority support in the Senate, and won't be subject to a filibuster.

That gives the Senate’s Republican leadership additional wiggle room to pass the measure; with 52 Senators, the GOP can afford two defections and have Vice President Mike Pence break a tie. However, the same strategy did not help avoid the internal party discord that has seemingly derailed their efforts to repeal and replace the Affordable Care Act.

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