House Budget Attempts to Set in Motion Savings and Process Reforms

The Fiscal Year (FY) 2017 House budget resolution released yesterday contains ambitious promises of deficit reduction to balance the budget within ten years. To take a step toward achieving those savings, the budget includes two different sets of instructions to committees to achieve deficit reduction. It also includes several budget enforcement or process reforms that attempt to keep lawmakers from worsening the fiscal situation. Here's a rundown of those proposals.

The first part involves instructions to five committees – Agriculture, Energy and Commerce, Financial Services, Judiciary, and Ways and Means – to save at least $30 billion over two years and $140 billion over ten years. This process already began last week with the Energy and Commerce and Ways and Means Committees releasing packages that would get most of the way there themselves. The budget resolution specifically mentions recovering exchange subsidy overpayments, eliminating enhanced Medicaid payments for prisoners, and ending Medicaid eligibility for lottery winners as policies that can be included – and all were already in the two packages.

The second part involves reconciliation instructions to 12 committees to achieve at least $1 billion of savings over ten years. The budget resolution describes these instructions as "a down payment on the deficit reduction necessary to achieve a balanced budget by fiscal year 2026," so this will likely be the biggest avenue to achieving some portion of the savings that the budget promises.

The third part involves a call for limits on mandatory spending. The budget resolution specifically mentions things that could be included, such as:

• Limiting the use of reclassification of discretionary spending as mandatory to circumvent discretionary spending caps
• Limiting new authorizations unless necessary to replace existing programs
• Requiring periodic review or reauthorization of mandatory programs
• Focusing pay-as-you-go rules (PAYGO) on mandatory spending increases
• Allowing reconciliation bills to include limits on mandatory spending

Some of these provisions, particularly the reclassification and review ones, would be helpful in ensuring programs operate as intended and preventing lawmakers from gaming budget rules. At the same time, lawmakers should be sure to apply PAYGO to revenue as well as mandatory spending.

The final part contains other budget process reforms, including several things the House has looked at in the past. They include a balanced budget amendment, unspecified changes to the budget baseline, and requirements related to unauthorized programs, among others.

Other parts of the budget resolution contain relevant budget process provisions as well, many of them revived from last year's joint budget resolution. They include requiring long-term scores of legislation and prohibiting mandatory spending increases greater than $5 billion in future decades, preventing Fannie Mae and Freddie Mac guarantee fees or Federal Reserve surpluses from being used as offsets, and having the Congressional Budget Office provide fair-value estimates of credit programs.

The budget also deals with current legislation to turn over air traffic control duties to a non-profit corporation. That policy will result in air traffic control spending shifting from discretionary to mandatory spending, which would increase spending unless lawmakers lower the discretionary spending caps by the amount of the spending shift. The budget creates a deficit-neutral reserve fund for air traffic control privatization, allowing the budget's numbers to be adjusted for such legislation, but only if it reduces the discretionary spending caps. This will help ensure that the legislation won't increase deficits.

In general, the provisions mentioned above should help the House work towards the savings they target in the budget resolution. Many of the budget process provisions also should help enforce fiscal responsibility, though a few are a mixed bag. We look forward to seeing what the committee instructions will produce later this year.