In evaluating the competing budget resolutions for Fiscal Year 2016, NTU considered several priorities, among them: repealing and replacing the Affordable Care Act, reforming the tax system, and complying with the Budget Control Act (BCA). While some budgets projected to reduce more spending than the BCA in the long-term, the benefit of adhering to both the spirit and the letter of the BCA in FY16 is more important for ensuring continued fiscal discipline. NTU gave strongest consideration to the short-term fiscal policies over which this current Congress – and the budget resolution it ultimately adopts – would have most control. So far, the BCA has helped to restrain spending growth and reduce deficits, which are slated to rise again in 2017 unless further action is taken. Because budgets are non-binding, the reconciliation language and top-line spending numbers are of utmost importance to taxpayers.
It is important that Congress continues to exercise the beneficial managerial discipline that BCA encourages, in order to ensure we have the balance-sheet latitude and institutional habit to tackle the increasingly urgent and more challenging fiscal problems to come. Gimmicks that violate the intention of the BCA caps make future restraint harder to achieve. With this in mind, as the House considers H. Con. Res. 27, the Fiscal Year 2016 Budget Resolution, NTU urges all Representatives to vote as follows:
- “YES” on Amendment #6, the Republican Study Committee (RSC) Substitute: The RSC budget balances in six years without raising taxes through aggressive spending restraint in many areas, repealing “Obamacare,” simplifying the Tax Code, and calling for much-needed entitlement reform. Notably, the RSC budget’s Overseas Contingency Operations (OCO) request is in line with the Pentagon’s request of $58 billion and zeroes out the slush-fund after FY19. The RSC budget is not without drawbacks. Specifically, though the budget comes in under the total BCA cap, it would propose altering the law by tearing down the strict firewalls between the two categories of discretionary spending under the BCA. This amendment will be heavily weighted and a “Yes” vote will be considered the pro-taxpayer position.
- “NO” on Amendment #7, Price #1 Substitute: This budget offers a great deal of fiscally sound proposals for taxpayers. It balances by 2024. It contains significant entitlement reforms – addressing the real drivers of our debt. It includes pro-growth tax reform, phases out the troubled Fannie Mae and Freddie Mac, and repeals the President’s health care law. Commendably, it adheres to the budget restraint called for under the BCA in FY16, but increases defense spending above the spending caps contrary to the law in subsequent years.
Whereas last year’s leadership-sponsored budget outlined an excessively high price point for OCO at $79.4 billion, there was some substance to the number in that it adhered to the placeholder in the President’s budget (this was later revised downward to $65.8 billion). The House passed version of the National Defense Authorization Act also provided $79.4 billion for OCO. The dramatic increase to $94 billion in this amendment lacks sufficient strategic rationalization. It is unclear how these dollars will be spent, further perpetuating the problematic accounting that comes from relying on OCO to avoid the tough spending decisions necessarily to restore fiscal responsibility in the Pentagon.
Most importantly, however, such large recommended boosts in one area of federal outlays inevitably invite spending hikes elsewhere. Some self-described conservatives have even indicated a willingness to contemplate tax increases in exchange for higher Pentagon spending. Economically destructive, Keynesian tactics such as these must be avoided, and are the very reason why BCA was designed to apply so broadly.
To its credit, Amendment #7 does attempt to offset a portion of this additional spending. However, the offsets are unspecified and the use of a deficit neutral reserve fund increases the risk that tax hikes, not spending reductions, could be used. We appreciate much of the hard work and are supportive of many elements that went into crafting this budget. Unfortunately, compared to last year’s budget we must on balance regrettably urge Representatives to vote NO. - “NO” on Amendment #8, Price #2 Substitute: Substantively similar to Price #1, the second GOP substitute amendment gives taxpayers much greater cause for concern. It adds $2 billion on top of the additional $36 billion for OCO, for a total of $96 billion. To put this in context, in terms of discretionary funding, this bloated OCO would be the second largest stand-alone agency (after the Department of Defense). Further, the amendment removes the provision that required offsets for funding above $73.5 billion. This amendment will be significantly weighted and a “NO” vote will be considered the pro-taxpayer position.
- “NO” on Amendment #2, the Congressional Black Caucus Substitute: The CBC budget expands government through $1.5 trillion in increased spending, eliminating the BCA caps, and raising taxes on job creators. This amendment will be significantly weighted and a “NO” vote will be considered the pro-taxpayer position.
- “NO” on Amendment #4, the Congressional Progressive Caucus Substitute: The “People’s Budget” increases spending, raises taxes on energy producers, and unrealistically touts 8.4 million new jobs through failed “stimulus” style policies such as unaffordable spending on infrastructure, public works programs, and expanding government employment. The CPC budget would exacerbate ongoing fiscal problems by repealing the BCA, doubling down on the President’s health care law with a government option, and allowing states to transition to single-payer schemes. This amendment will be significantly weighted and a “NO” vote will be considered the pro-taxpayer position.
- “NO” on Amendment #5, the Democratic Caucus Substitute: The Democratic Substitute fails to achieve budget balance. Instead, it increases taxes by $1.9 trillion on productive areas of our economy and continues out-of-control federal expenditures. It also lays out major priorities that would hurt the economy such as raising the minimum wage and perpetuating uncompetitive policies that send jobs overseas. This amendment will be significantly weighted and a “NO” vote will be considered the pro-taxpayer position.
In addition, NTU notes the troubling inclusion of “Global War on Terror” as a replacement for “Overseas Contingency Operations” or OCO in various Republican sponsored budgets. This terminology is likely to worsen the slush-fund problems associated with this account by expanding its permitted usage to non-contingency operations including domestic spending and lengthening the amount of time over which the funds can be spent. This all but ensures that OCO will become a permanent fixture of the federal budget, decreasing accountability and eliminating incentives to reduce waste. We must once again remind lawmakers that regardless of their stance on increased defense expenditures, circumventing spending caps in one category will only invite mischief across the entire budget.
Roll call votes on H. Con. Res. 27, the Budget Resolution, and the above substitute amendments will be included in our annual Rating of Congress.
If you have any questions, please contact NTU Federal Affairs Manager Nan Swift (703) 683-5700