Responsibly Reprioritizing Sequester Savings

 House GOP Advances Efforts to Ensure Troops and Military Families Don’t Pay the Price for Washington’s Failures

The House-passed Path to Prosperity budget set in motion a process to reprioritize across-the-board spending reductions enacted as part of the Budget Control Act of 2011 (BCA). This process, called reconciliation, consists of a special procedure to give expedited consideration to bills enacting the spending, revenue, and debt policies contained in the budget resolution.

To trigger these expedited procedures, The Path to Prosperity included reconciliation instructions calling on six House committees to achieve specified amounts of deficit reduction from programs within their jurisdictions. This Reconciliation Act consists of the legislation they have recommended to achieve the same deficit reduction required by the BCA, but without the haphazard cuts—especially to national security—that an across-the-board approach would entail. 

Pursuant to the Path to Prosperity budget resolution, the House has advanced a series of reforms that replace across-the-board cuts scheduled in law with common-sense reforms that take steps to address government’s unsustainable autopilot spending.

Six House Committees have advanced legislation that will:

1.      Stop Fraud, by Ensuring that Individuals are Actually Eligible for the Taxpayer Benefits They Receive;

2.      Eliminate Government Slush Funds and Stop Bailouts;

3.      Control Runaway, Unchecked Spending;

4.      Restrain Spending on Government Bureaucracies; and

5.      Reduce Waste and Duplicative Programs.

1. Stop Fraud by Ensuring that Individuals are Actually Eligible for the Taxpayer Benefits They Receive

A troubling trend has emerged in recent years, in which eligibility restrictions intended to focus limited government resources on those who need them most have been systematically weakened or have broken down due to loopholes in the law. This Reconciliation Act protects aid for those who need it by making sure that taxpayer dollars are not going to those who don’t qualify for assistance.

• It eliminates a loophole that has allowed individuals to qualify for food stamps on such flimsy pretexts as receiving a brochure from another government program.

• It eliminates a loophole that allows individuals to increase their food-stamp benefits by as much as $130 a month for receiving as little as $1 in federal utility assistance.

• It stops the practice of sending the refundable portion of the Child Tax Credit to individuals who are ineligible to work in the United States.

• It requires anyone who receives an overpayment of health insurance subsidies under the Democrats’ health care law to repay the full amount of the overpayment.

2. Eliminate Government Slush Funds and Stop Bailouts

Recent legislation has all too often ceded too much power to unaccountable bureaucrats, and has just as often provided them with access to taxpayer money in ways that fuel wasteful spending and bailouts. This Reconciliation Act targets these indefensible slush funds and automatic subsidies for elimination.

• It protects taxpayers by eliminating the Wall Street bailout fund included as part of the 2010 Dodd-Frank financial overhaul.

• It terminates the Obama Administration’s ineffective housing bailouts, which have become the target of widespread and bipartisan criticism for actually making matters worse for homeowners.

• It reforms the National Flood Insurance Program to increase financial accountability by requiring the program to sufficiently cover risks. 

• It eliminates the unaccountable government health slush fund created by the Democrats’ health care law.

3. Control Runaway, Unchecked Spending

Federal programs across the board experienced an explosion of funding in recent years. Federal spending on food stamps has increased by 267 percent over the last decade – with part of that expansion coming from President Obama’s failed 2009 stimulus law. Medicaid spending is up 86 percent over the last ten years. And the Democrats’ health care law would increase spending by $1.6 trillion over the next ten years. This Reconciliation Act takes measures to stop the spending spree and restrain spending growth in the future.

• It repeals automatic increases in food-stamp benefits enacted as part of the President’s failed stimulus law.

• It repeals a provision of the Democrats’ health care law that allows the Secretary of Health and Human Services unprecedented authority to spend “such sums as necessary” for grants to states to comply with the law.

• It defunds the health law’s “CO-OP” program, which disburses government subsidized loans – 50 percent of which, according to the Office of Management and Budget, will never be repaid.

• It gives states more freedom and flexibility to tailor Medicaid to the needs of their unique populations.

• It prevents provisions of the health law from exacerbating problems with Medicaid’s current matching formula, which gives states and territories a perverse incentive to grow the program and little incentive to save.

4. Restrain Spending on Government Bureaucracies

The federal government has added 149,000 new workers since the President took office. It is no coincidence that private-sector employment continues to grow only sluggishly while the government expands: To pay for the public-sector’s growth, Washington must immediately tax the private sector or else borrow and impose taxes later to pay down the debt. This Reconciliation Act aims to slow the federal government’s unsustainable growth, reduce the public-sector bureaucracy, and reflect the growing frustration of workers across the country at the privileged rules enjoyed by government employees.

• It eliminates the ability of the newly created Consumer Financial Protection Bureau and Office of Financial Research to set their own budgets.

• It requires Federal employees to more equitably share in the cost of their retirement benefits.

• It eliminates the provision that pays Federal workers a special benefit if they retire early.

5. Reduce Waste and Duplicative Programs

Annual examinations of wasteful spending conducted by the Federal government’s independent auditors routinely reach the same conclusion: Government agencies and departments are rife with examples of waste, duplication and overlap. This Reconciliation Act protects taxpayers and reduces spending by eliminating wasteful and duplicative programs.

• It repeals the outdated and duplicative Social Services Block Grant, whose missions have been supplanted by dozens of newer Federal programs.

• It begins the process of consolidating the dozens of overlapping and duplicative Federal employment training programs by eliminating 50/50 cost-sharing for an employment training program tied to food stamps.

• It reforms the medical liability system by reining in unlimited lawsuits and thereby making health care delivery more accessible and affordable for families.

• It removes incentives that encourage states to add to their Medicaid rolls through careless processes that lead to billions in overpayments. 

The savings from these reforms will replace the arbitrary discretionary sequester cuts and lay the groundwork for further efforts to avert the spending-driven economic crisis before us.

To learn more about the reconciliation reforms passed by six House committees: http://budget.house.gov/BudgetAnalysis/Reconciliation.htm

Additional Resources:

-         The National Security and Job Protection Act

-          Q&A from the House Budget Committee

-          Reconciliation Myth vs. Fact  from the House Budget Committee

-          How much does the Sequester Replacement Reconciliation Act of 2012 reduce the deficit?  House Budget Committee Publication

-          Appendix II from The Path to Prosperity on Reprioritizing Sequester Savings

-          Presentation from House Republican Conference

-          Statement from House Budget Committee Chairman Paul Ryan

-         Majority Leader's Sequester Clock