House committee advances budget resolution

The House Budget Committee on Wednesday approved the fiscal 2018 budget resolution that would increase military spending, produce billions in cuts to mandatory spending and open the door for a Republican tax reform plan.

“With the election of President Trump, our budget goes from being a vision document to being a governing document that outlines how we build a better America for our children and grandchildren,” said committee Chairwoman Diane Black (R-Tenn.), who praised the accompanying plan to balance the budget in a decade and reduce the national debt.

The resolution passed along party lines with the 22 Republicans supporting and the 14 Democrats opposing after a grueling 12-hour markup. It allocated $621.5 billion for defense spending, $511 billion for nondefense discretionary spending and mandated $203 billion in mandatory spending cuts over the course of a decade.

It also included $87 billion in funding specifically designated for the war on terror through the Overseas Contingency Operations (OCO) fund, which is not counted in budget caps: $75 billion in defense, $12 billion in nondefense.

{mosads}Both discretionary spending figures were substantially higher than those proposed by Trump, but nondiscretionary spending was below the sequestration-level budget caps.

“The budget includes $5.4 trillion in mandatory and discretionary spending cuts, and it ultimately reduces nondefense discretionary investments to the lowest level, relative to the size of the economy, since the 1960s,” said ranking member John Yarmuth (D-Ky.).

The budget relied on a series of assumptions in order to become balanced, none of which are guaranteed to come to fruition or be put into action by the budget.

Among them is an assumption that the economy will grow at 2.6 percent on average over the course of a decade, a figure economists say is unrealistic.

The Congressional Budget Office (CBO) estimates that under current law, the economy will grow on average at just 1.9 percent a year. The difference accounted for $1.5 trillion in economic growth, $300 billion of which was set aside to count toward making tax reform deficit neutral.

The budget also makes several other policy assumptions: $204 billion in deficit reduction from the House-passed American Health Care Act (AHCA) — a more recent figure than the one previously released by the CBO, because it begins in 2018 instead of 2017; $487 billion in additional savings from Medicare; $114 billion in savings from Medicaid above and beyond those included in the AHCA; $150 billion in reductions from the Supplemental Nutritional Assistance Program, which would only kick in halfway through the decade; $20 billion from earned-income tax credit and child tax credit cuts; and $700 billion in savings that would come from reducing improper government payments by 50 percent.

The Democrats offered 28 amendments, all of which were defeated on largely partisan voting lines.

The amendments seemed designed to either tout Democratic priorities, such as climate change; embarrass Republicans, such as an amendment demanding full funding of the Russia investigation into Trump; or designed to entice some of the panel’s members, such as an amendment to eliminate the OCO, which has been used as a budget gimmick and is despised by fiscal conservatives.

Two concerns hung over the hearing.

The first was the possibility that House Freedom Caucus member Mark Sanford (R-S.C.) would introduce an amendment of his own, demanding that a controversial border-adjustment tax be excluded from tax reforms. While Republican leadership has favored the tax, the Freedom Caucus has pushed heavily against it.

Throughout the day, Sanford said he remained undecided as to whether he would introduce the amendment against the wishes of the party brass, with no certainty of whether it would pass or not.

Around 10 p.m., Sanford gave a speech citing his concerns and saying he was still at a loss as to how to proceed.

“This amounts to a $1.2 trillion tax that would ultimately be passed on to the consumer,” he said.

But Black foreclosed on the possibility, even as Democratic Rep. Sheila Jackson Lee (Texas) tried to intervene on his behalf.

“This was not on the list of amendments, and we’re going to move forward,” Black said.

The second, longer-term issue was the resolution’s prospects for passage on the House floor, which remained uncertain. The Freedom Caucus had pushed for roughly double the $203 billion in required mandatory cuts, while centrists decried the partisan approach to the budget.

Final spending bills that will be needed to fund the government come October will require Democratic support in the Senate, as will any moves to lift budget caps, which would be necessary to increase military funding on the level proposed in the House resolution.