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Analysis of the 2015 House and Senate Republican Budgets

April 09, 2015

As you may have read in Wonk Tank’s previous post, the Fiscal Policy Primer, part of fiscal policy involves how the government spends the money it has raised. As can be expected, the two main political parties in the US have different ideas as to how to most effectively spend the federal government’s money. Generally, Republicans and Democrats disagree on how much the government should spend and how it should raise money. In this post, we analyze the 2015 GOP-written House and Senate budgets.

Rep. Tom Price (R-Georgia), chairman of the House Budget Committee, displays the 2015 House Republican Budget

 

For the first time in six years, the House and the Senate have passed a complete budget resolution. Even though Congressional budgets are not actually laws, they give an overall direction of how much federal programs should spend. The control over actual spending is done by the Senate and House Appropriations Committees in the form of bills that lay out the funding for each federal agency.

The predominant view of Republicans is that spending and taxes should be cut in order to decrease the federal deficit and increase economic activity. Republicans argue that based on the current levels of spending, the federal government’s debt will keep on rising to unsustainable levels. Moreover, following the Keynesian view, now that the economy is slowly returning to pre-recession levels, the government has no need to keep running a deficit.

House Budget.jpg

Senate Republican Budget

The Senate Republican Budget, passed on March 27 by a 52-46 vote, aims to balance the budget in 10 years. To do this, they will reduce spending by $5.1 trillion over these 10 years without raising taxes.

So, you might be asking yourself, where will those $5.1 trillion in spending cuts over a decade come from? Funding for domestic discretionary programs, such education, science and technology will be cut by $236 billion over these years. The budget also aims to create $430 billion in Medicare savings, however, no clear guidelines were set for how this will be done. The main spending cut that the Senate budget is counting with is $4.3 trillion cuts in mandatory spending which includes Medicaid, SNAP (food stamps) and the Affordable Care Act (Obamacare).

Repealing the Affordable Care Act, which is estimated by the CBO to have a gross cost of $2 trillion (but is projected to reduce the deficit on net) over the next 10 years, is tricky. Normally, repealing a bill like Obamacare would require a 60 vote majority; but by including it in the budget, Republicans have paved the way for something know as reconciliation, which would allow the GOP to be repeal the law with 51 votes, a number easily attainable by the Republican Senate majority. This means that Congress would have to repeal it by changing the original law that funds it, not by the Appropriations Committees.

However, not everything in the budget consists of spending cuts. One noteworthy aspect of this budget is its provision of $58 billion for a war spending account known as the Overseas Contingency Operations (OCO) fund. This $58 billion increase in the OCO is something that President Obama had asked for, demonstrating that there are potential areas of cooperation between President Obama and Senate Republicans, at least on foreign policy. Moreover, the Senate set a minimum requirement of 60 votes in order to increase this amount in the future. In regards to the direct funding that the Pentagon receives, the cap set by the Budget Control Act ($523 billion) will remain in place in 2016.

House Republican Budget

The House Republican Budget resolution, which passed with a vote of 228 - 199 aims to reduce spending by $5.5 trillion and balance the budget in 9 years.

Although the House Budget is similar to the Senate Budget, they still have some significant differences between them that would need to be worked out by the GOP:

  • Funding for discretionary non-defense spending would be cut by $759 billion.

  • This budget would also freeze the Pell Grant Award to its current amount of $5,775 for the next 10 years in addition to providing fewer financial aid to families.

  • In regards to Medicare, this budget takes the “premium support” approach. Aside from cutting funding for Medicaid, it combines it with SCHIP and converts it into a block program for states.

  • SNAP (the food stamp program) would also be cut and made into a block program administered by states.

The only increases in this budget, unsurprisingly, are aimed at defense spending. The Budget Control Act would be in place for one year only, and then the Pentagon would receive $387 billion in increases over 10 years. The OCO fund that the senate increased funding for by $58 billion would receive instead $90 billion under the House Budget.

While the Senate Budget proposes no cut in corporate and income taxes, the House Budget proposes a decrease in both. Additionally, the two budgets allow the Earned Income Tax Credit and the Child Tax Credit to expire in 2017 – effectively a tax increase for the people that qualify for these credits.

As you can see, these two budgets are similar, but there is a long road ahead for the GOP in regards to making one unified budget. There are big differences in the changes to taxes, defense discretionary spending and domestic discretionary spending that will have to be worked out. However, there are significant commonalities as well, such as the mutual focus on striking at the Affordable Care Act, arguably the Obama administration’s signature achievement.

In all likelihood, none of the ambitious reforms and massive cuts proposed by the Republicans will ultimately come to pass. But the budgets do provide a fairly clear look at Republican priorities, and are likely to be among the last serious policy reform proposals from the party before the 2016 election heats up and politicizes the budget process.

Overall, the GOP’s budgets do demonstrate the unanimity of Congressional Republicans’ desire to cut spending and marginal tax rates (though that does not mean cutting taxes overall, especially for lower income individuals) – though the particulars of how the GOP plans to enact these cuts remain up in the air.

 

Further Reading (aside from the links that are throughout the article):

  1. https://www.nationalpriorities.org/analysis/2015/competing-visions-2015/

  2. http://www.washingtonpost.com/politics/federal_government/gop-budget-plan-has-a-surprise-among-list-of-cuts-for-federal-employees/2015/03/29/290d5220-d4b0-11e4-8fce-3941fc548f1c_story.html

  3. http://thehill.com/blogs/floor-action/senate/237174-senate-budget-vote

  4. http://budget.house.gov/uploadedfiles/fy16_charts.pdf

  5. http://budget.house.gov/fy2015/

  6. http://gokicker.com/2015/03/17/10-things-you-need-to-know-about-the-republican-budget-for-2016/

  7. http://talkingpointsmemo.com/fivepoints/house-gop-budget

  8. http://www.cnn.com/2015/03/25/politics/5-things-to-know-about-the-house-gop-budget/

  9. http://www.politico.com/story/2015/04/budget-negotiations-gop-116612.html

  10. http://thehill.com/policy/finance/236129-senate-gop-budget-cuts-less-than-house-balances-in-decade

  11. http://www.foxnews.com/politics/2015/04/04/house-gop-celebrates-passing-budget-but-still-faces-tough-fights-over-defense/

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  • The views expressed on the Student Blog are the author’s opinions and don’t necessarily represent the Penn Wharton Public Policy Initiative’s strategies, recommendations, or opinions.

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RESOURCE SPOTLIGHT:

  • <h3>Congressional Budget Office</h3><p><img width="180" height="180" alt="" src="/live/image/gid/4/width/180/height/180/380_cbo-logo.rev.1406822035.jpg" class="lw_image lw_image380 lw_align_right" data-max-w="180" data-max-h="180"/>Since its founding in 1974, the Congressional Budget Office (CBO) has produced independent analyses of budgetary and economic issues to support the Congressional budget process.</p><p> The agency is strictly nonpartisan and conducts objective, impartial analysis, which is evident in each of the dozens of reports and hundreds of cost estimates that its economists and policy analysts produce each year. CBO does not make policy recommendations, and each report and cost estimate discloses the agency’s assumptions and methodologies. <strong>CBO provides budgetary and economic information in a variety of ways and at various points in the legislative process.</strong> Products include baseline budget projections and economic forecasts, analysis of the President’s budget, cost estimates, analysis of federal mandates, working papers, and more.</p><p> Quick link to Products page: <a href="http://www.cbo.gov/about/our-products" target="_blank">http://www.cbo.gov/about/our-products</a></p><p> Quick link to Topics: <a href="http://www.cbo.gov/topics" target="_blank">http://www.cbo.gov/topics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The World Bank Data (U.S.)</h3><p><img width="130" height="118" alt="" src="/live/image/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg" class="lw_image lw_image484 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 2x, /live/image/scale/3x/gid/4/width/130/height/118/484_world-bank-logo.rev.1407788945.jpg 3x" data-max-w="1406" data-max-h="1275"/>The <strong>World Bank</strong> provides World Development Indicators, Surveys, and data on Finances and Climate Change.</p><p> Quick link: <a href="http://data.worldbank.org/country/united-states" target="_blank">http://data.worldbank.org/country/united-states</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>NOAA National Climatic Data Center</h3><p><img width="200" height="198" alt="" src="/live/image/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg" class="lw_image lw_image483 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/198/483_noaa_logo.rev.1407788692.jpg 3x" data-max-w="954" data-max-h="945"/>NOAA’s National Climatic Data Center (NCDC) is responsible for preserving, monitoring, assessing, and providing public access to the Nation’s treasure of <strong>climate and historical weather data and information</strong>.</p><p> Quick link to home page: <a href="http://www.ncdc.noaa.gov/" target="_blank">http://www.ncdc.noaa.gov/</a></p><p> Quick link to NCDC’s climate and weather datasets, products, and various web pages and resources: <a href="http://www.ncdc.noaa.gov/data-access/quick-links" target="_blank">http://www.ncdc.noaa.gov/data-access/quick-links</a></p><p> Quick link to Text & Map Search: <a href="http://www.ncdc.noaa.gov/cdo-web/" target="_blank">http://www.ncdc.noaa.gov/cdo-web/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Aviation Administration: Accident & Incident Data</h3><p><img width="100" height="100" alt="" src="/live/image/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg" class="lw_image lw_image80 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 2x, /live/image/scale/3x/gid/4/width/100/height/100/80_faa-logo.rev.1402681347.jpg 3x" data-max-w="550" data-max-h="550"/>The NTSB issues an accident report following each investigation. These reports are available online for reports issued since 1996, with older reports coming online soon. The reports listing is sortable by the event date, report date, city, and state.</p><p> Quick link: <a href="http://www.faa.gov/data_research/accident_incident/" target="_blank">http://www.faa.gov/data_research/accident_incident/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>The Penn World Table</h3><p> The Penn World Table provides purchasing power parity and national income accounts converted to international prices for 189 countries/territories for some or all of the years 1950-2010.</p><p><a href="https://pwt.sas.upenn.edu/php_site/pwt71/pwt71_form.php" target="_blank">Quick link.</a> </p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>USDA Nutrition Assistance Data</h3><p><img width="180" height="124" alt="" src="/live/image/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg" class="lw_image lw_image485 lw_align_right" srcset="/live/image/scale/2x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 2x, /live/image/scale/3x/gid/4/width/180/height/124/485_usda_logo.rev.1407789238.jpg 3x" data-max-w="1233" data-max-h="850"/>Data and research regarding the following <strong>USDA Nutrition Assistance</strong> programs are available through this site:</p><ul><li>Supplemental Nutrition Assistance Program (SNAP) </li><li>Food Distribution Programs </li><li>School Meals </li><li>Women, Infants and Children </li></ul><p> Quick link: <a href="http://www.fns.usda.gov/data-and-statistics" target="_blank">http://www.fns.usda.gov/data-and-statistics</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>National Center for Education Statistics</h3><p><strong><img width="400" height="80" alt="" src="/live/image/gid/4/width/400/height/80/479_nces.rev.1407787656.jpg" class="lw_image lw_image479 lw_align_right" data-max-w="400" data-max-h="80"/>The National Center for Education Statistics (NCES) is the primary federal entity for collecting and analyzing data related to education in the U.S. and other nations.</strong> NCES is located within the U.S. Department of Education and the Institute of Education Sciences. NCES has an extensive Statistical Standards Program that consults and advises on methodological and statistical aspects involved in the design, collection, and analysis of data collections in the Center. To learn more about the NCES, <a href="http://nces.ed.gov/about/" target="_blank">click here</a>.</p><p> Quick link to NCES Data Tools: <a href="http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4" target="_blank">http://nces.ed.gov/datatools/index.asp?DataToolSectionID=4</a></p><p> Quick link to Quick Tables and Figures: <a href="http://nces.ed.gov/quicktables/" target="_blank">http://nces.ed.gov/quicktables/</a></p><p> Quick link to NCES Fast Facts (Note: The primary purpose of the Fast Facts website is to provide users with concise information on a range of educational issues, from early childhood to adult learning.): <a href="http://nces.ed.gov/fastfacts/" target="_blank">http://nces.ed.gov/fastfacts/#</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Internal Revenue Service: Tax Statistics</h3><p><img width="155" height="200" alt="" src="/live/image/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg" class="lw_image lw_image486 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/155/height/200/486_irs_logo.rev.1407789424.jpg 2x" data-max-w="463" data-max-h="596"/>Find statistics on business tax, individual tax, charitable and exempt organizations, IRS operations and budget, and income (SOI), as well as statistics by form, products, publications, papers, and other IRS data.</p><p> Quick link to <strong>Tax Statistics, where you will find a wide range of tables, articles, and data</strong> that describe and measure elements of the U.S. tax system: <a href="http://www.irs.gov/uac/Tax-Stats-2" target="_blank">http://www.irs.gov/uac/Tax-Stats-2</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>Federal Reserve Economic Data (FRED®)</h3><p><strong><img width="180" height="79" alt="" src="/live/image/gid/4/width/180/height/79/481_fred-logo.rev.1407788243.jpg" class="lw_image lw_image481 lw_align_right" data-max-w="222" data-max-h="97"/>An online database consisting of more than 72,000 economic data time series from 54 national, international, public, and private sources.</strong> FRED®, created and maintained by Research Department at the Federal Reserve Bank of St. Louis, goes far beyond simply providing data: It combines data with a powerful mix of tools that help the user understand, interact with, display, and disseminate the data.</p><p> Quick link to data page: <a href="http://research.stlouisfed.org/fred2/tags/series" target="_blank">http://research.stlouisfed.org/fred2/tags/series</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
  • <h3>MapStats</h3><p> A feature of FedStats, MapStats allows users to search for <strong>state, county, city, congressional district, or Federal judicial district data</strong> (demographic, economic, and geographic).</p><p> Quick link: <a href="http://www.fedstats.gov/mapstats/" target="_blank">http://www.fedstats.gov/mapstats/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>