Options for Meeting the House Budget's Reconciliation Instructions

The Fiscal Year (FY) 2018 House budget resolution includes reconciliation instructions requiring 11 House committees to report legislation that together reduces the deficit by at least $203 billion over ten years. This blog updates our previous list of savings options available to committees to reflect the contents of the reconciliation instructions as well as the Congressional Budget Office's (CBO's) scores of several provisions in President Trump's FY 2018 budget, since CBO's estimates would determine if reconciliation targets are met.

The budget resolution's reconciliation instructions assign each authorizing committee a ten-year deficit reduction target and require that they report legislation that would at least meet that target by October 6, 2017. Table 1 lists the committees included in the reconciliation instructions, their deficit reduction target, and major programs under their jurisdiction that could serve as potential sources of savings.

Table 1: Reconciliation Instructions in the FY 2018 House Budget Resolution

Committee Target Major Programs Under Jurisdiction
Agriculture $10 billion Farm bill programs; Supplemental Nutrition Assistance Program (SNAP); food safety and other user fees
Armed Services $1 billion Military retirement; TRICARE
Education and the Workforce $20 billion Child nutrition programs; federal education and student loan programs; Pension Benefit Guaranty Corporation (PBGC; shared with Ways & Means)
Energy and Commerce (E&C) $20 billion Electromagnetic spectrum auctions; Strategic Petroleum Reserve; Nuclear Waste Fund; Medicaid; CHIP; Medicare (shared with Ways & Means)
Financial Services $14 billion Consumer Financial Protection Bureau; National Flood Insurance Program; Securities and Exchange Commission
Homeland Security $3 billion Aviation security fees; Terrorism Risk Insurance Program
Judiciary $45 billion Crime Victims Fund; liability law
Natural Resources $5 billion Federal lands; water projects; mineral resources
Oversight and Government Reform (OGR) $32 billion Federal employee retirement and health benefits
Veterans' Affairs $1 billion Veterans health, disability, housing, pension, education, and readjustment benefits
Ways and Means (W&M) $52 billion Taxes and refundable credits; Supplemental Security Income (SSI); Temporary Assistance for Needy Families (TANF); Unemployment Insurance; Medicare (shared with E&C); PBGC (shared with Ed & Workforce)
Total $203 billion  

While the budget resolution includes several policy recommendations, it is ultimately up to each committee to decide how it will meet its deficit reduction target. Numerous options exist for the committees to choose from, including several policies included by both Presidents Trump and Obama in their budgets. Ideally, the committees of jurisdiction should use the opportunity to help enact reforms addressing the key drivers of our long-term debt. While Social Security cannot be changed in reconciliation, the Ways & Means and Energy & Commerce Committees have several options to reform Medicare they could report, including several that do not affect benefits and have bipartisan support.

Table 2: Possible Savings Options by House Committee

Committee(s) Policy Trump Budget Obama Budget 10-Year Savings
Agriculture Enact a retailer application fee for SNAP Yes   $2 billion
Agriculture Enact user fees for food safety, animal and plant health, and grain inspections Yes Yes $1 billion to $6 billion
Agriculture Limit SNAP work requirement waivers to high unemployment areas Yes   $22 billion
Agriculture Restrict categorical eligibility for SNAP Yes   $11 billion
Agriculture Reduce farm subsidies Yes Yes $14 billion to $29 billion
Agriculture Require states to match 25% of all SNAP costs Yes   $92 billion
Armed Services Increase annual premiums for TRICARE-for-Life enrollment   Yes $1 billion
Armed Services Increase TRICARE pharmacy copays Yes Yes $2 to $3 billion
Armed Services Introduce minimum out-of-pocket payment for TRICARE-for-Life     $27 billion
Ed & Workforce Increase origination fees for student loans from 1 to 4 percent     $19 billion
Ed & Workforce Eliminate Public Service Loan Forgiveness Yes   $24 billion
Ed & Workforce Eliminate subsidized student loans Yes   $23 billion
Ed & Workforce Consolidate income-based repayment plans into a single program Yes Yes $23 billion to $53 billion
Energy & Commerce Extend spectrum auction authority Yes Yes $1 billion
Energy & Commerce Modify Medicare Part B drug reimbursements   Yes $7 billion
Energy & Commerce Encourage use of generic drugs by low-income Medicare beneficiaries   Yes $9 billion
Energy & Commerce Accelerate manufacturer discounts for brand name drugs   Yes $12 billion
Energy & Commerce Reduce Strategic Petroleum Reserve by half Yes   $17 billion
Energy & Commerce Expand Medicare and Medicaid drug rebates   Yes Up to $150 billion
Financial Services Restructure the Consumer Financial Protection Bureau Yes   $7 billion
Financial Services Reform the National Flood Insurance Program Yes   $10 billion
Financial Services Eliminate Orderly Liquidation Fund Yes   $15 billion
Homeland Security Increase aviation passenger security fees   Yes $5 billion to $25 billion
Judiciary Rescind money from the Crime Victims Fund     $10 billion
Natural Resources Lease oil and gas in the Arctic National Wildlife Refuge Yes   $2 billion
Natural Resources Repeal Gulf of Mexico Energy Security Act payments to states Yes   $4 billion
Natural Resources Repeal borrowing authority for Western Area Power Administration Yes   $1 billion
Natural Resources Divest Bonneville Power Administration transmission assets Yes   $8 billion
OGR Peg G-Fund interest rate to 3-month Treasuries     $33 billion
OGR Reduce federal retirement benefits and cost-of-living-adjustments (COLAs) Yes   $55 billion
OGR Increase federal employees' retirement contributions Yes Yes $20 billion to $103 billion
Veterans Affairs Extend round-down of COLAs for veterans' benefits Yes Yes $2 billion
Veterans Affairs Eliminate Individual Unemployability benefits for those 62 and over Yes   $43 billion
Ways & Means Fund Reemployment Services and Eligibility Assessments Yes Yes $1 billion
Ways & Means Eliminate TANF contingency fund Yes   $6 billion
Ways & Means Decrease SSI benefits for multi-recipient families Yes   $7 billion
Ways & Means Increase Customs Merchandise Processing Fee     $10 billion
Ways & Means Reduce TANF block grant Yes   $15 billion
Ways & Means Eliminate the Social Services Block Grant Yes   $16 billion
Ways & Means Require a Social Security Number for Child & Earned Income Tax Credits Yes   $30 billion
Ways & Means Reform and reduce payments for graduate medical education   Yes $15 billion to $40 billion
Ed & Workforce and W&M Increase PBGC premiums to improve solvency (multi-committee) Yes Yes $4 billion
E&C and W&M Reform Medicare cost-sharing (multi-committee)     Up to $20 billion
E&C and W&M Restrict medigap plan coverage (multi-committee)     $45 billion
E&C and W&M Expand bundled payments and promote new payment models (multi-committee)   Yes $5 to $50 billion
E&C and W&M Reduce Medicare coverage of bad debts (multi-committee)   Yes $15 to $50 billion
E&C and W&M Reduce payments to post-acute providers (multi-committee)   Yes $25 to $75 billion
E&C and W&M Adopt competitive bidding for Medicare Advantage (multi-committee)   Yes $25 to $50 billion
E&C and Judiciary Limit medical malpractice claims (multi-committee) Yes   $50 to $73 billion

Each of the 11 authorizing committees have a number of options available to meet their reconciliation instructions and do their part to generate at least $203 billion in deficit reduction. However, lawmakers will need to go much further if they are to put debt on a sustainable downward path. If just $203 billion in savings were enacted, debt in 2027 would still rise to 90 percent of GDP, just 1 percentage point lower than what CBO currently projects under existing law. We hope that the authorizing committees will view their savings targets as the bare minimum and use this opportunity to enact meaningful reforms to put our long-term fiscal situation under control.