Senate Republicans on Wednesday introduced a plan to balance the budget in 10 years by cutting federal spending by $5.1 trillion.
The budget proposal, a political document outlining Republicans’ priorities for spending and taxes, sets a stark contrast with President Obama’s plans and mirrors the House Republican budget introduced Tuesday in much of its broad outline.
It would repeal Obamacare, impose deep cuts on other healthcare and welfare programs, and lower the federal debt over 10 years.
“Today we begin the monumental task of confronting our nation’s chronic overspending and exploding debt, which threatens each and every American,” said Sen. Mike Enzi of Wyoming, the chairman of the Senate Budget Committee and author of the budget.
The Senate GOP budget differs from its House counterpart most notably in that it doesn’t include plans for the politically sensitive overhaul of the Medicare healthcare program for seniors championed by former House Budget Committee chairman and vice presidential candidate Paul Ryan.
Instead, Enzi proposes matching the Obama administration’s budget plan for $430 billion savings in Medicare through unspecified means.
Ryan’s plan envisioned transitioning Medicare to a model in which private companies bid to provide seniors health insurance and then seniors would be given a subsidy to choose between private plans or a traditional Medicare option. While that proposal has been passed by the House regularly in recent years, the newly Republican-run Senate has not coalesced around its controversial provisions.
Enzi’s budget also does not include the boost to defense spending for fiscal 2016 included in the House proposal. Many national defense hawks in the GOP have sought to boost Pentagon spending.
Like the House Budget, the Senate proposal would keep defense spending at the cap imposed in the wake of negotiations between Obama and congressional Republicans for 2016: $523 billion. The White House budget called for boosting the cap by $38 billion.
Unlike the House, however, the Senate version does not ramp up war funding to make up for the shortfall at the Department of Defense, a budget maneuver many Democrats denounced Tuesday as a gimmick. The House budget includes $90 billion in such war spending, while the Senate budget matches Obama by asking for $51 billion.
Defense spending would remain at the baseline level for the next 10 years in the GOP Senate budget, which also would include a deficit-reserve fund to allow future legislation to boost defense spending above the current statutory caps.
Over the 10-year budget window, healthcare and welfare spending cuts would account for the bulk of the $5.1 trillion in deficit reduction envisioned by Senate Republicans.
By far the biggest spending reductions, $4.2 trillion in total, would come from cuts to mandatory spending mostly dedicated to welfare programs. Less than $100 billion in cuts would come from domestic discretionary spending appropriated by Congress, a category of spending that encompasses everything from basic research to job training, and one that the Budget Committee acknowledges has already seen steep cuts in recent years.
The composition and specifics of the budget’s cuts to mandatory spending, however, are not detailed in the proposal released by Enzi on Wednesday.
One major provision, however, would be to overhaul Medicaid, the low-income health insurance program jointly administered by the federal government and states. Republicans would aim to remodel Medicaid for able-bodied adults along the lines of the Children’s Health Insurance Program, a Republican-authored program that gives states greater flexibility. Medicaid funding would not change for elderly or disabled beneficiaries, who account for the majority of spending. Overall, the budget would pare $400 billion from the $4.6 trillion currently projected to be spent through Medicaid.
Spending cuts on mandatory welfare programs such as Supplemental Security Income and food stamps would total $600 billion over 10 years, according to the committee. Spending also would be reduced through reforming mortgage buyers Fannie Mae and Freddie Mac, changing the Dodd-Frank financial reform law, and freezing Pell Grants for college students.
By cutting spending and lowering deficits, the budget would reduce spending on interest on the debt by more than $700 billion.
The deficit would total only $343 billion in 2016, according to the Senate plan, well below the Congressional Budget Office’s projections. After falling to $111 billion in 2017, it would rise in subsequent years before 2025, the last year of the budget window, in which there would be a $3 billion surplus.
Underlying those deficit figures is the assumption that cutting spending and lowering deficits will boost economic growth, generating added tax revenue. The budget includes $160 billion of tax revenues from those macroeconomic effects, using dynamic scoring.
Despite the many differences between the Senate and House budgets, one reason for conservative lawmakers in both chambers to come together is the possibility to pass legislation with only 51 votes in the Senate if they both agree on a budget resolution.
Doing so would allow them to write reconciliation legislation, which needs only a simple majority in the Senate to pass. The Senate budget, like the House version, includes reconciliation instructions for repealing Obamacare. Through that process, Republicans could, if they chose, send repeal legislation to President Obama’s desk with their current majorities.
The Senate budget resolution would not touch Social Security, other than to create a bipartisan committee to address its finances.
