The Other Fiscal Implications of the New House Rules
The recently adopted House rules for the 114th Congress are getting attention in the budget world mostly for their requirement that the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) take into account macroeconomic effects when scoring budget legislation, a process known as dynamic scoring. But that requirement isn't the only new rule with fiscal implications. Below we discuss other ways in which the House changed its budget rules that could affect fiscal policy in the next two years.
Social Security Trust Fund
The new rules make it out of order to consider any legislation that reduces the balance of the Social Security Old Age and Survivors' Insurance (OASI) trust fund by at least 0.01 percent of payroll unless the legislation improves the combined Social Security trust fund's balance. Since existing budget rules already prohibit consideration of legislation reducing the balance of the combined Old Age, Survivors and Disability (OASDI) trust fund, the practical effect of the rule is to apply to consideration of legislation shifting payroll tax revenue from OASI to the Disability Insurance (DI) trust fund to avert the latter fund's pending insolvency in late 2016.
To be clear, it wouldn't disallow any reallocation of revenue from OASI to DI, which at this point may be needed in the short term to avoid depletion of the DI trust fund, but it would require that any reallocation be accompanied by reforms to improve solvency of the combined Social Security trust fund. The requirement could be met by reforms in the DI program or by reforms reducing costs or increasing revenues in Social Security overall. Considering the timing of DI's insolvency, this rule will place pressure on lawmakers to work toward agreement on reforms to improve Social Security solvency. Practically, it is important to remember that points of order can be waived when a bill comes to the floor by a majority vote on the rule under which a bill is considered.
The Independent Payment Advisory Board (IPAB)
The IPAB was established in the Affordable Care Act as a backstop to control Medicare spending. Starting this year, the law requires the Board to submit a proposal to Congress to reduce Medicare spending if per-capita growth will exceed the average of overall inflation and medical inflation in any year through 2019 and GDP growth plus 1 percent after 2019. The Board's proposal can be modified by Congress, but it must achieve equivalent savings or otherwise be overridden with a supermajority. If Congress does not act, the proposal automatically goes into effect. Thanks to the Medicare spending slowdown, the Board won't have to make changes until 2022 according to the Medicare Trustees and until at least 2025 according to CBO.
Nonetheless, the House rules states that section 1899A(d), which lays out the Congressional consideration of IPAB recommendations, would not apply in this Congress. This change would allow the House to overturn IPAB's recommendations without alternate savings. Even if this rule will likely mean little in this Congress, it sets a worrying precedent for controlling Medicare spending.
There are a few different rules in the House package that pertain to the budget resolution.
The first carries over provisions from previous House budget resolutions setting spending and revenue levels for budget enforcement until a new budget resolution is adopted. Specifically, it uses the FY 2015 budget resolution's ten-year budget numbers (with an adjustment allowed for a bill which maintains Highway Trust Fund solvency) and the FY 2014 resolution's deficit-neutral reserve funds, and enforcement provisions on items such as war spending. These spending and revenue levels would apply to consideration of the appropriations bill for the Department of Homeland Security as well as any legislation affecting mandatory spending or revenues, with any legislation violating these levels subject to a point of order.
The second would continue the requirement from the previous Congress that future budget resolutions show the growth rate of means-tested and non-means tested spending for the previous ten years and for the years covered by the budget resolution.
The package continues the rule from last Congress that allows any committee chair to request an analysis from the Government Accountability Office to see if new programs contained in legislation are duplicative or whether a program has been identified in GAO's previous reports on duplication. This rule will help lawmakers see how programs fit into accomplishing broad policy goals and whether these goals can be reached in a better way through an existing program.
The fiscal-related rules in the House package are a mixed bag. In some cases, they strengthen the budget by favoring fiscal responsibility and smart policy, but in others they make irresponsibility easier. Ultimately, though, rules are only as binding as lawmakers' willingness to live by them. Ideally, the House and Senate are more willing -- at a minimum -- to do no harm on debt, unlike last year.
For additional budget process resources including specific options for reform, visit our Better Budget Process Initiative home page.