How Committees Could Meet Reconciliation Instructions for Mandatory Savings

(Update 7/20/2017): The House Budget Committe has since released its FY 2018 budget resolution and reconciliation instructions. You can read an updated version of this blog here.

Recent press reports have suggested that the upcoming House budget resolution for Fiscal Year 2018 may include reconciliation instructions for about $200 billion in savings from mandatory spending programs, and some lawmakers have expressed concern that achieving that level of savings could be unrealistic. On the contrary, there are many options available to meet such targets, including many that have been proposed by both Presidents Trump and Obama in their budgets.

Budget resolutions can include reconciliation instructions that identify and direct the relevant authorizing committee(s) to report legislation that achieves enough savings to meet the fiscal targets laid out in the budget resolution. While the budget resolution can suggest certain policies, it is entirely up to the committees to decide how their targets are met (for more information, see our Reconciliation 101).

The authorizing committees with major mandatory programs in their jurisdiction include:

• Agriculture oversees crop insurance and other farm subsidies, as well as nutrition programs like the Supplemental Nutrition Assistance Program (SNAP, or food stamps). Possible savings could come from enacting some or all of the SNAP reforms in the President’s budget or scaling back farm subsidies, as both Obama and Trump have proposed.
• Armed Services has jurisdiction over military retirement programs and the TRICARE program that provides health care for service members, retirees, and their families. Several options exist to reform military retirement benefits or increase cost sharing in TRICARE that would generate mandatory savings.
• Budget does not have jurisdiction over particular mandatory programs, but it does have jurisdiction over budget enforcement mechanisms and could achieve about $39 billion in mandatory savings by extending the mandatory sequester, which is scheduled to expire in 2026.
• Education and the Workforce has jurisdiction over federal education and student loan programs, which both Presidents Trump and Obama have suggested reforming. It also shares jurisdiction over the Pension Benefit Guaranty Corporation (PBGC), whose premiums Obama and Trump have both proposed raising, with Ways and Means. 
• Energy and Commerce (E&C) has a broad purview that includes most mandatory energy programs, electromagnetic spectrum auctions, various user fees, and general revenue-financed health programs like Medicaid, CHIP, and Medicare Parts B and D (partially shared with Ways and Means). In particular, savings from Medicare—the largest and second fastest-growing on-budget program—could be particularly significant and should be a part of any serious effort to control the growth of mandatory spending. As we have noted before, there are many ways to reduce Medicare expenditures without cutting benefits.
• Financial Services could generate substantial savings by eliminating mandatory spending for certain regulatory agencies or ending the Orderly Liquidation Fund created by the Dodd-Frank financial regulation reform.
• Homeland Security does not oversee any major mandatory programs but could still generate some mandatory savings by increasing Transportation Security Administration fees charged to flight passengers.
• Judiciary does not directly oversee any major mandatory spending programs, but it does have broad jurisdiction over matters relating to law and justice and could potentially generate mandatory savings through policies like medical malpractice reform. It could also rescind money from the Crime Victims Fund, which would generate savings and prevent the use of a major budget gimmick.
• Natural Resources has jurisdiction over federal lands, water projects, and mineral resources. The committee could generate mandatory savings by leasing additional federal lands, redirecting oil and gas revenues currently shared with state governments, or ending federal support for agencies currently responsible for marketing hydropower. 
• Oversight and Government Reform (OGR) has jurisdiction over federal employee pay and benefits. Potential options for savings might include reducing the generosity of federal retirement benefits or increasing employees' retirement contributions, which both Presidents Obama and Trump have proposed.
• Transportation and Infrastructure (T&I) oversees federal infrastructure programs and Highway Trust Fund spending. Possible committee savings could come from establishing new fees to fund the Inland Waterways Trust Fund or limiting Highway Trust Fund spending to dedicated tax revenues once the fund exhausts in 2021.
• Veterans Affairs oversees federal veterans programs, including health care, disability, retirement, housing, and readjustment benefits. Presidents Trump and Obama both proposed capping benefits for flight training programs and rounding down annual cost-of-living adjustments (COLAs) for disability compensation benefits to the nearest dollar, and President Trump’s budget further proposed ending Individual Unemployability benefits for veterans age 62 or older. 
• Ways and Means (W&M) has jurisdiction over all tax revenues and mandatory outlays from refundable tax credits as well as most Social Security Act programs, including Social Security (which cannot be changed in reconciliation), Supplemental Security Income (SSI), Unemployment Insurance, and Temporary Assistance for Needy Families (TANF). President Trump's budget included a number of reforms to these programs, including reducing TANF block grants and reducing SSI benefits for multi-recipient households. Ways and Means also has exclusive jurisdiction over Medicare Part A and shares jurisdiction over Part B with Energy and Commerce, and the committee should ideally be instructed to report savings that improve the solvency of Part A's Hospital Insurance Trust Fund.

Major Mandatory Savings Options by House Committee

Source: Office of Management and Budget, Congressional Budget Office.

While past GOP budgets achieved a large share of their overall savings by reforming Medicaid and repealing coverage provisions of the Affordable Care Act (which will be largely unavailable this time around, as those savings will be used for "repeal and replace" legislation), they also included substantial mandatory savings elsewhere. Then-House Budget Chairman Tom Price's (R-GA) FY 2017 budget included roughly $450 billion in Medicare savings and nearly $1.5 trillion in savings from other mandatory programs. However, those savings were assumptions with no reconciliation instructions requiring committees achieve them and were never enacted.

As we stated in our Principles for the Fiscal Year 2018 Budget Resolution, the budget resolution should include a plan to control the growth of mandatory spending and reconciliation instructions to make that plan happen. Achieving $200 billion in mandatory savings will require choices about the size and role of government, but it is also a modest goal compared to what is needed to put our debt on a sustainable path. The authorizing committees have a range of options available to meet such a target and should engage in a policymaking process to begin to address our long-term debt.