Congress Should Not Cancel Reconciliation Offsets

A bill has been introduced that would significantly worsen the fiscal effects of the already debt-increasing reconciliation law (the “One Big Beautiful Bill Act”) – only 11 days after the legislation was signed into law. The bill, introduced by Senator Josh Hawley (R-MO), would cancel Medicaid-related offsets repealing the new limits on Medicaid financing gimmicks and excessive provider payments, while doubling the size of the reconciliation law’s new rural hospital fund.  

As written, the reconciliation law is projected to add $4.1 trillion to the national debt. These changes would increase the costs by roughly $400 billion, with interest, increasing the debt impact to $4.5 trillion. The debt impact would then further grow to about $6 trillion if various temporary parts of the reconciliation law were made permanent.  

The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget: 

As if passing the most expensive reconciliation law in history didn’t cause enough fiscal damage, this bill would further add to the law’s costs.

One of the few fiscally responsible parts of this massive budget-busting law was the hard-won inclusion of significant health savings that included efforts to finally limit the ability of states and health providers to abuse the federal Medicaid match for their own benefit – a policy change that has been supported by administrations on both sides of the aisle for years.  

This new bill would not only spend over $300 billion to allow that legalized money laundering to continue, but it would also borrow an additional $50 billion for the new hospital slush fund.

The fact that supporters of a law not even two weeks old are already rushing to amend it is proof enough this wasn’t ready for prime time. But it isn’t the law’s spending cuts that are too large, it’s the borrowing.

Lawmakers need to protect and build upon the thoughtful but woefully inadequate offsets in the law. And efforts to adjust or reverse any problematic offsets should be fully paid for so they don’t add to the debt.  

In fact, lawmakers should find $2 of new offsets for every $1 of offsets they cancel or tax cuts and spending they extend. We’re going to need Super PAYGO to start digging out of the terrible fiscal mess we are in and have just made worse. Lawmakers should strongly resist any changes that would increase the deficit impact of OBBBA, and focus on bringing our deficits and debt down to less dangerous levels.  

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For more information, please contact Matt Klucher, Assistant Director for Media Relations, at klucher@crfb.org.