How the House Could Meet the Budget Resolution's Reconciliation Instructions

The FY 2019 House budget resolution calls for $6.5 trillion of policy savings over ten years, but the true action is in the reconciliation instructions. The budget instructs 11 different House committees to produce savings that combined must be at least $302 billion. These instructions present a good opportunity to produce much-needed deficit reduction, and there are several options for the committees to hit their targets.

Among the instructions, about half of the $302 billion ($150 billion) comes from the Ways and Means Committee, which has jurisdiction over the tax code as well as major programs like Medicare, Supplemental Security Income, unemployment insurance, and Temporary Assistance for Needy Families. Other committees with larger instructions (savings targets greater than $20 billion each) include Judiciary, Oversight and Government Reform, Financial Services, Energy and Commerce, and Education and the Workforce. The five remaining committees – Agriculture, Armed Services, Homeland Security, Natural Resources, and Veterans Affairs – have small instructions with savings targets of $5 billion or less.

These instructions contain about $100 billion more required savings than last year's budget. Almost the entire difference comes from the Ways and Means Committee, and this year's instructions shift about $10 billion of required savings from Agriculture to Financial Services. Other committees have the same amount of required savings as last year.

Reconciliation Instructions in the FY 2019 House Budget Resolution

Getting to $302 billion of savings over ten years should not be that difficult. In each of these committees, there are several options to meet their minimum savings targets. Many of these options have already been proposed in budgets from Presidents Trump and Obama or have been included in previous legislation. Ideally, lawmakers will not just focus on meeting the specific ten-year target but will focus on policies that will address the drivers of long-term debt and save growing amounts over time.

Below are a number of spending cut options that each Committee could consider and estimate of specific policies. Some of them could be dialed up or scaled back as necessary.

Spending Options for Committees to Meet Reconciliation Targets

Sources: Congressional Budget Office.

Importantly, reconciliation instructions can also be met with revenue. While many revenue options exist, policymakers could easily meet a large share of these instructions simply by making improvements to the Tax Cuts and Jobs Act or incorporating policies already supported in the House. For example, lawmakers could close loopholes the current law inadvertently creates with the state and local tax deduction limit and deduction for pass-through businesses, or they could incorporate House proposals to repeal and reform tax breaks in an earlier version of the then-proposed tax bill. Some options are listed below.

Revenue Options for Ways and Means Committee to Meet Reconciliation Target

Source: Joint Committee on Taxation, CRFB calculations.

These options and others would get the committees to their targets. $302 billion over ten years is a very doable amount of deficit reduction and is much needed after lawmakers increased deficits by a much greater amount with recent legislation. Ideally, the House committees will aim much higher than their targets and focus on policies that will substantially reduce the growth of debt over the long term.