Total Net Spending Agenda: -$87.08 billion (savings)
Economy, Transportation, and Infrastructure: -$4.3 billion (savings)
A. Cut Regulations:
“[Joni] supports rolling back Washington-created job-killing regulations that are crushing small business.”
Note: There are several pieces of legislation that attempt to address regulatory overreach, capture, and review. It is unclear what specific measures State Senator Ernst would support. Examples include:
- H.R. 367 (113th Congress), the Regulations from the Executive in Need of Scrutiny (REINS) Act of 2013. The bill would require a review of all major regulations, which is defined as those with a $100 million or greater impact on the economy, and allow Congress to pass resolutions of disapproval on proposed regulations. According to a cost estimate by the Congressional Budget Office (CBO) for H.R. 367, “[a]bout 85 major rules have been issued per year, on average, over the past five years. Major rules vary greatly in their nature and scope. CBO and the staff of the Joint Committee on Taxation cannot determine the budgetary effects of preventing all future major rules from going into effect, but we expect that enacting H.R. 367 would have effects on both direct spending and revenues. … Preventing some major rules from taking effect would result in costs to the federal government, while preventing others would result in savings. On net, CBO estimates that enacting H.R. 367 would have a significant effect on direct spending, but we cannot determine the magnitude or sign of those changes for any year or period of years.”
- H.R. 4874 (113th Congress), the Searching for and Cutting Regulations that are Unnecessarily Burdensome (SCRUB) Act of 2014. The bill would establish a retrospective review commission to study and recommend changes or repeals of potentially all major regulations with the goal of lowering the economic costs of regulations. The Commission would be funded by transfers of unobligated budget amounts from regulatory agencies of up to the greater of one percent or $25 million each year. A cost estimate is currently not available.
- H.R. 309 (113th Congress), the Regulatory Sunset and Review Act of 2013. The bill would require periodic review and sunset of major regulations by federal agencies. A cost estimate is currently not available. Similar to the REINS Act, it is difficult to determine the budgetary effects of the approval or rejection of regulations either already in effect or proposed.
B. Eliminate Government-Sponsored Housing Enterprises:
“We need to shutter Fannie Mae and Freddie Mac.”
Note: Related legislation has been introduced in the form of H.R. 2767 (113th Congress), the Protecting American Taxpayers and Homeowners Act of 2013. The bill would repeal the charters of Fannie Mae and Freddie Mac, suspend the issuance of new mortgages by those entities, and end their operations, but not until five years after enactment – outside of the budgetary window NTUF typically uses for cost estimates. Over its first five years, wind-down provisions in the bill would have a cost of $347 million. After the charters are repealed, savings from years six through 10 would total $48.1 billion. However, it is unclear whether or not State Senator Ernst would support immediate repeal of the Government Sponsored Enterprises’ charters or both the five-year wind-down and other measures in the bill. One measure includes new costs that would be incurred through lower principal limits in borrowing (which would result in lower loan volumes and higher subsidy rates, required to guarantee loans under law) over the first five years.
C. Repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act:
“… I think we need to repeal … laws such as Dodd-Frank.”
Cost: -$4.3 billion (-$21.5 billion over five years).
Source: Statement by Douglas W. Elmendorf, Director, CBO regarding the cost estimate for Dodd-Frank, before the Subcommittee on Oversight and Investigations, Committee on Financial Services, U.S. House of Representatives, March 30, 2011. A more recent cost estimate is unavailable.
Energy, Agriculture, and the Environment: -$8.2 billion (savings)
A. Close the Environmental Protection Agency (EPA) at the Federal Level:
“Another area that we need to look at is the Environmental Protection Agency. When we talk about the rules and regulations that are burdening business owners, whether it is in ag, whether it is in industry here in the state of Iowa, let’s shut down the federal EPA and focus on those issues here in the state where the state knows best how to protect resources.”
Cost: -$8.2 billion (one-year savings).
Source: Budget of the U.S. Government, Fiscal Year 2015, Mid-Session Review, page 60. Environmental Protection Agency spending figure based on FY 2014 estimated levels.
Note: State Senator Ernst stated that she would support cuts to the Department of Education, the EPA, and the Internal Revenue Service “to find a way to fund our roads and infrastructure” without raising excise taxes on gasoline. It is unclear what total level of transportation and infrastructure she would support and to what extent the transfer of funds from these three program cuts would reduce the savings.
Government Reform: -$11.3 billion (savings)
A. Reform the Tax System:
“Joni believes real, fundamental tax reform will require more than tweaks to the tax code. It’s time to scrap it and start over, to broaden our tax system by making it fairer, flatter, simpler and more certain.”
“We have already talked about shutting the doors of the IRS. I think that would be a wonderful start.”
Cost: -$11.3 billion (first-year savings) (partial estimate).
Source: U.S. Department of the Treasury Budget In Brief: Internal Revenue Service: FY 2015. Internal Revenue Service spending figure based on FY 2014 enacted levels. NTUF was unable to determine additional spending changes related to reforming the tax system (see below).
Tax System Reform: It is unclear what specific tax reforms State Senator Ernst supports. Among others, four proposals have been presented or introduced in the 113th Congress:
- Camp Proposal: Congressman Dave Camp’s (R-MI) “Tax Reform Act of 2014” would implement a number of reforms that would simplify the Tax Code. It would cut the number of individual income tax brackets from seven to two and pare back the number of individual credits (including refundable credits that are scored as changes in outlays) while expanding the eligibility for the remaining deductions. Though mostly a revenue-related measure, the “Act” also would affect spending in a number of ways:
- Simplify the Tax Code: -$13.4 billion (-$67 billion over five years). According to the Joint Committee on Taxation (JCT), the Camp proposal’s tax reforms could reduce spending by a net $67 billion over five years, from 2014-2018. The bulk of savings would come from a modification of the Earned Income Tax Credit, which is “refundable” (i.e., in excess of actual tax liability). This refundable portion is counted as a spending item.
- Reduce the IRS Budget: Unknown. Not included in the JCT estimate is a projection of spending cuts resulting from decreases in IRS enforcement and investigations. As the Tax Code would be streamlined, the agency would require less enforcement and taxpayer assistance funding. A savings estimate of this item is not currently available. This item may be moot as State Senator Ernst has called to eliminate the IRS entirely, but it is unclear what she would support as a replacement (the Fair Tax proposal, mentioned below, would specify a smaller successor to the IRS).
- Other Spending Changes: The proposal also includes approximately $126.5 billion that would be spent on highway and infrastructure improvements over eight years. However, State Senator Ernst has not specified whether or not she would change current infrastructure spending or funding streams.
- Fair Tax: -$19.277 billion (-$96.385 billion over five years). H.R. 25, the Fair Tax Act. The bill would call for the repeal of the 16th Amendment and repeal all current income-based taxes. A new national sales tax system would be instituted at a 23 percent rate at point of purchase for only new goods and services. Intended as a revenue-neutral measure, the bill would also eliminate the Internal Revenue Service (replaced by a smaller agency similar to the Department of the Treasury’s Tax and Trade Bureau, funded at $96 million in FY2013). Prebates would be mailed monthly to each household in order to ensure tax-free purchases up to the federal poverty level.
- NTUF determined that the repeal of income-based taxes would include refundable tax credits, which are payments to individuals and families in excess of their tax liability and are counted by CBO as spending, totaling $86.8 billion. The elimination of the IRS would cut spending by $11.3 billion. Five-year spending increases include operating costs for the new agency, equaling $96 million annually, and prebate checks mailed to each household, which could total $240 million each year with postage, although alternate methods of distributing the prebates could reduce these estimated costs.
- Flat Tax: -$86.8 billion (first-year savings). S. 173, the Simplified, Manageable, And Responsible Tax (SMART) Act. The bill would replace the multi-bracket progressive income tax with a single 17 percent income tax rate. All income tax credits (including the outlays resulting from refundable credits), the Alternative Minimum Tax, and generation-skipping transfer taxes would be eliminated. If enacted, the bill would cut $86.8 billion in spending in the first year.
- Paul Ryan Roadmap: H.Con.Res. 96, a resolution establishing the budget for the United States Government for fiscal year 2015 and setting forth appropriate budgetary levels for fiscal years 2016 through 2024. Titled The Path to Prosperity, the resolution calls for comprehensive reform of the tax system, including cutting the number of individual income tax brackets from seven to two, reducing the individual tax rate to 25 percent, repealing the Alternative Minimum Tax, and reducing the corporate tax rate to 25 percent. The resolution would also repeal the Affordable Care Act, impose lower caps on discretionary spending, and increase expenditures for defense programs beyond FY 2015. An estimate for changes in spending related to tax reforms is not currently available. The measure passed the House in May, 2014.
Note: State Senator Ernst stated that she would support cuts to the Department of Education, the EPA, and the IRS “to find a way to fund our roads and infrastructure” without raising excise taxes on gasoline. It is unclear what total level of transportation and infrastructure she would support and to what extent the transfer of funds from these three program cuts would reduce the savings.
Health Care: -$67.234 billion (savings)
A. Allow for Interstate Insurance Sales:
“[There are a number of alternatives that we can propose for Obamacare] …We can allow insurers to sell their products over state lines.”
Cost: $38 million ($191 million over five years).
Note: Related legislation was introduced in the form of H.R. 2355 (109th Congress), the Health Care Choice Act of 2005. The bill would provide for cooperative governing of individual insurance coverage offered in interstate commerce. At the time, CBO estimated that the bill would increase spending by $160 million over five years ($191 million, adjusted for inflation). It is unclear whether this cost estimate would be higher or lower today given that it was originally calculated prior to the implementation of the Patient Protection and Affordable Care Act (ACA). The proposal was reintroduced in the 113th Congress in the form of H.R. 3607.
B. Allow Small Businesses to Self-Insure:
“[An alternative to Obamacare includes] allowing small businesses to self insure … .”
Cost: $8 million ($38 million over five years).
Source: CBO cost estimate for H.R. 525 (109th Congress), the Small Business Health Fairness Act of 2005. The bill would permit trade, industry, and professional associations to provide health care benefits to employees of businesses that are association members. New costs would occur from additional administrative and regulatory expenditures related to the new plans. CBO’s initial cost estimate has been adjusted for inflation. It is unclear whether this cost estimate would be higher or lower today given that it was originally calculated prior to the implementation of ACA. The bill was reintroduced in the 112th Congress in the form of H.R. 1050 but has not been introduced in the 113th Congress.
Note: Self-insurance means an employer directly pays employees’ healthcare costs, though these plans are not considered as insurance under ACA. The Administration has signaled interest in reclassifying plans to count them as insurance, which would require plans to fall under the authority of state or federal healthcare exchanges and offer mandated benefits. Traditionally, only large firms have been able to provide self-insurance plans because of their large pools of enrollees to spread and decrease risk.
Other legislation has been introduced in the form of S. 1735 (113th Congress), the Self-Insurance Protection Act. The bill would exclude employer-provided stop-loss plans (coverage in addition to regular insurance to pay for large, unforeseen medical claims that would cause financial hardship) from being reclassified as traditional insurance. A cost estimate is not currently available.
C. Cut Improper Medicare Payments:
“… [W]e need to eliminate waste … . If we look at Medicare, just in 2013 alone, there was $50 billion of waste and fraud that was identified.”
Note: It is possible that efforts to reduce waste, fraud, and abuse across the federal government would result in significant savings, but it would also probably require an upfront budgetary increase for program integrity efforts. Based on the information available, NTUF is unable to estimate the level of resources that State Senator Ernst would dedicate to such efforts; nor is NTUF able to determine with a reasonable degree of precision what level of savings those investments might generate.
Related legislation has been introduced in the form of H.R. 4053 (112th Congress), the Improper Payments Elimination and Recovery Improvement Act. The bill would intensify efforts to identify, prevent, and recover payment error, waste, fraud, and abuse within federal spending. CBO estimates that implementing H.R. 4053 would have no significant cost over the next five years because it would codify several reforms already initiated by the Executive Branch, and the estimate does not mention possible savings. The bill was signed into law in January, 2013.
Legislation to build on current law has been introduced in the form of S. 1360 (113th Congress), the Improper Payments Agency Cooperation Enhancement Act of 2014. The bill would require more coordination between federal benefits programs on data related to deceased beneficiaries. CBO found that the bill would not significantly increase spending.
D. Enact Medical Malpractice Reform:
“We also need to put caps on medical malpractice claims and we have to have tort reform.”
Cost: -$3.38 billion (-$16.9 billion over five years).
Source: A related proposal was included in CBO’s report, Options for Reducing the Deficit: 2014 to 2023, in the form of H.R. 5 (112th Congress), the Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011. A CBO cost estimate is available. Related legislation was introduced in the 113th Congress in the form of S. 44, the Medical Care Access Protection (MCAP) Act of 2013, and S. 1860, the Steps Toward Access and Reform (STAR) Act of 2013.
E. Offer Insurance Tax Credits:
“… We can also offer tax credits to those who purchase their insurance privately.”
Note: The impact on outlays of this proposal would depend upon the extent to which subsidies or “refundable” (i.e., in excess of a filer’s actual tax liability) credits for insurance are offered. Budgetary agencies classify the refundable portion of tax credits as outlays. In his Fiscal Year 2008 Budget, President George W. Bush offered a health insurance tax credit proposal that had a refundable component. At the time, NTUF estimated the potential cost at $2.856 billion per year. However, NTUF is unable to estimate any costs in this case due to the lack of details in State Senator Ernst’s proposal.
F. Permit Health Insurance Portability:
“[An alternative to Obamacare includes] insurance portability, allowing an employee to move their insurance from employer to employer … .”
Note: In 1996, the Health Insurance Portability and Accountability Act was signed into law. The bill placed limits on employers to exclude coverage for new employees for preexisting conditions and provided additional opportunities for individuals to enroll in group health plans. It is unclear what additional portability reforms State Senator Ernst would implement.
G. Repeal the Patient Protection and Affordable Care Act:
“Joni supports immediate action to repeal Obamacare and replace it with common sense, free-market alternatives that put patients first … .”
Cost: -$63.9 billion (-$319.5 billion over five years).
Source: Repealing “Obamacare”: A Look Beyond the Media’s Misguided Deficit Focus, National Taxpayers Union Foundation, Issue Brief 164, July 2012.
Note: NTUF’s estimate is based on CBO reports for H.R. 2 (112th Congress), the Repealing the Job-Killing Health Care Law Act, and H.R. 6079, the Repeal of Obamacare Act. Several versions of bills to repeal the Patient Protection and Affordable Care Act were re-introduced in the 113th Congress, including H.R. 45 and S. 177.
Homeland Security and Law Enforcement: $3.954 billion
A. Permit States to Regulate Cannabis:
[Moderator:] “Should the federal government take a step back from marijuana regulation and allow states to [permit the use of medical marijuana] without the potential for federal intervention?”
[State Senator Ernst:] “I do think that the states need to regulate this. I did vote [in the Iowa Senate] in support of this. It is cannabis oil that is being used and I do need to explain to people that it is not a medical marijuana. It is an oil that is derived from marijuana but it has a [low] THC level … .”
Note: Related legislation has been introduced in the form of H.R. 1523 (113th Congress), the Respect State Marijuana Laws Act of 2013. The bill would exempt the federal government from regulating the production, distribution, and administration of marijuana, transferring those activities to the state level. The bill was scored in NTUF’s BillTally program as a low-cost measure that is not likely to significantly increase or decrease federal expenditures. It is possible that if H.R. 1523 is enacted, the federal government would spend less on marijuana interdiction activities; however, such an official cost estimate is not currently available. It should be noted that H.R. 1523 pertains to all types of marijuana use while State Senator Ernst is referring only to medical marijuana and marijuana oil in the above quote.
B. Secure the Border:
“I do believe that we have to secure the borders, whether it is our southern border [or] our northern border … and I would support guest-worker programs, making sure where those guest-workers are.”
“ … [O]ver the long term, we really do need to modernize our legal immigration system.”
Cost: $3.954 billion ($19.769 billion over five years).
- Border Security: $3.7 billion ($18.4 billion over five years). Related legislation has been introduced in the form of S. 744 (113th Congress), the Border Security, Economic Opportunity, and Immigration Modernization Act. The bill would streamline and overhaul costs for the immigration system and increase border security and infrastructure. Using the CBO estimate, NTUF found that the bill would allocate additional funding for border-related administrative costs, double the number of Border Patrol agents (including their benefits, training, and forgiving student loans), and adjust fees and penalties that would offset some spending. The border security provisions of S. 744 would total $18.4 billion over the first five years. This figure does not include the immigration-related spending in the bill.
- Guest-Worker Program: $342 million ($1.369 billion over four years). CBO estimate for S. 2611 (109th Congress), the Comprehensive Immigration Reform Act of 2006. Title VI would have established the Blue-Card Program for temporary agricultural workers. Tamper-proof cards were to be issued to individuals as a means of identification and proof of legally being in the United States. In 2006, CBO estimated that the guest-worker program would cost approximately $600 million over four years ($708 million, adjusted for inflation), the Blue-Card Program would cost $400 million over the same period ($472 million, adjusted for inflation), and $160 million in associated administrative costs ($189 million, adjusted for inflation).
- Cards: Also in S. 2611, the Social Security Administration would also be required to issue cards to the estimated 880,000 Blue-Card Program participants, which incurs a $31 per-card-cost, totaling a $27 million increase. It is unclear whether these figures reflect the full implementation costs; related bills have been reintroduced in the 113th Congress in the form of H.R. 1525 and S. 744, but no official cost estimates are available at this time. This figure does not include the border security-related spending in S. 2611, H.R. 1525, and S. 744.
National Security and International Relations: Unknown
A. Eliminate Wasteful Defense Spending:
“… [F]irst we need to eliminate waste, even with the Department of Defense. We can find examples there of contracting where we can cut back to save dollars.”
Note: Related legislation has been introduced in the form of S. 1510 (113th Congress), the Audit the Pentagon Act of 2013. The bill would require more transparency and financial disclosures to be made available from the Department of Defense. A cost estimate is not currently available.
B. Move Against ISIL:
“I think we need to do what we should to protect American interests [in Iraq].”
“There are a number of growing threats throughout this world and right now, very pressing, is the threat of [the Islamic State of Iraq and the Levant (ISIL)]. They are terrorists, they are extreme terrorists, and they must be stopped.”
Note: Due to the lack of specificity in her statement, NTUF is unable to determine what policies or strategies State Senator Ernst would support.
A. Support Veterans:
“In the Senate, [Ernst] will fight as hard for [veterans], and their families, as they have fought for us. That means caring for wounded warriors, immediately working toward the betterment of the broken [Veterans Administration] benefit system, and improving veteran education and job training programs.”
Note: The omnibus appropriations bill passed in January, 2014, included an authorization of $294 million to help the Department of Veterans Affairs reduce the claims backlog, upgrade IT systems, and increase employee training.
In August, 2014, H.R. 3230, the Veterans Access, Choice, and Accountability Act of 2014 was signed into law. The bill authorized staff increases at the Department of Veterans Affairs, expansion of new and existing medical facilities, private medical care for some veterans, and in-state tuition using Post-9/11 GI Bill funds for qualifying veterans. CBO estimated that H.R. 3230 would increase spending by a net of $12.6 billion over five years.
Other bills have been introduced in the 113th Congress to augment veterans care, family benefits, the VA health and administrative systems, and education-related programs. However, it is unclear which (if any) of these specific policies State Senator Ernst would support.
A. Establish Private Retirement Savings Accounts:
“I believe that we must first and foremost protect the promises made to our seniors … who are already paying into the system on their own pathway toward retirement. But we need real solutions for those young workers about to enter the workforce in order to ensure this safety net is there for future generations … .”
“… I agree that we have to look at some sort of a personal savings account but the bottom line is that those savings accounts should … be established so that bureaucrats should not be able to raid those savings accounts.”
- Personal Accounts: Under these types of plans, certain workers (usually those under 50 or 55 years of age) would have the option of directing a small portion of their Social Security payroll taxes into a personal investment account. These plans would require an adjustment in the timing of outlays that would otherwise occur even in the absence of reform, i.e., payments in the form of benefits that a worker would eventually receive in the future after retirement would instead be recorded as outlays as the funds are transferred to the personal accounts. Over the long-term, there would be significant savings to Social Security.
- There could be some costs associated with the administration of personal accounts, depending on the decisions made regarding “collection and processing of contributions, asset management, calculation and payment of benefits, and enforcement and oversight.
- Two proposals to allow for the establishment of personal Social Security accounts were recently introduced in Congress:?
- H.R. 1776 (109th Congress), the Social Security Personal Savings Guarantee and Prosperity Act of 2005, also referred to as the Ryan-Sununu plan. The Social Security Administration (SSA) released a long-term analysis of the effects of the Ryan-Sununu plan in 2004. http://www.ssa.gov/oact/solvency/PRyan_20040719.pdf
- H.R. 2889 (112th Congress), the Save Social Security Act, also referred to as the McCotter plan. SSA released a long-term analysis of the McCotter plan’s impact on the Social Security system in 2011. http://www.ssa.gov/oact/solvency/TMcCotter_20110912.pdf
- There are also proposals to expand optional personal retirement savings accounts outside of the Social Security system, including H.R. 5281 (113th Congress), the Young Savers Security in Retirement Act of 2014. The bill would establish tax preferred savings accounts for individuals under age 18 similar to Roth IRAs. A cost estimate is currently not available.
- “Lock-Box”: Related legislation has been introduced in the form of S. 110 (113th Congress), the Social Security Lock-Box Act of 2013. Currently, receipts to the Social Security Trust in excess of liabilities for benefits are directed into government bonds and used to finance day-to-day federal spending, as needed. The bill would modify procedures in the House and Senate regarding consideration of budget resolutions to “prevent the Social Security Trust Funds from being used for any purpose other than providing retirement security.” A cost estimate is currently not available.
“… Joni supports a Balanced Budget Amendment to the Constitution … .”
“Joni Ernst Signs the Taxpayer Protection Pledge.”
“As long as other countries offer [Export-Import Bank options] to their exporters, I think that’s something that we need to offer to our industry also.”
“I philosophically oppose taxpayer subsidies throughout any [economic] sector … but, I would say that we have got to protect our agricultural economy in Iowa. So, knowing that, if we are to get rid of any subsidy that’s out there, it has to be done across the board in every sector and at the same time.”
“I would adamantly oppose Agenda 21. I don’t believe it is responsible, not for United States citizens.”
Note: Agenda 21 is an action plan under the UN Conference on Environment and Development released in 1992. The implementation plan calls for greater spending and efforts by signatories relating to environmental sustainability, pollution control, and utilizing groups of people and technology to achieve these goals. Some local and state governments have passed legislation or proclamations to prohibit implementing Agenda 21 policies, citing a threat to local, state, and national sovereignty. It is unclear how Agenda 21 would affect federal spending and whether or not Congress means to consider policy points in the near future.
“… [T]he Iowa way is working and that’s utilizing those policies that I have implemented with Governor Terry Branstad … . The first is by lowering taxes on all hardworking Iowans … ; we also have rolled back job-killing regulations in the state, and we have balanced our budget.”
“We have already talked about closing the door to the IRS. … But then there’s other departments that we could be looking at also and I've talked about these before. But closing the doors to the Department of Education at the federal level and not just because it would save taxpayer dollars but because I do believe that our children are better educated when it’s coming from the state and the localities. I do believe that we should do that.”
“[My proposal to eliminate the Department of Education] doesn’t do anything to those that receive Pell Grants and student loans. Those are programs that are very necessary for our college students but they can easily be housed in the Department of Treasury. Now, when it comes to the Department of Education, 94% of those that are employed by the Department of Education at the federal level were deemed by the Department as non-essential employees. So, I would rather see the dollars that go to those non-essential employees be directed back at the states so they can be utilized by our teachers, by our administrators in making sure that our Iowa students are receiving a great education.”
Note: According to the Fiscal Years 2013-2015 State Tables for the U.S. Department of Education, the Department is estimated to spend $173.3 billion in FY 2014 for state programs, of which $132.6 billion is to be spent on Pell Grants and student loans. Quotes relating to the Department appear in the “Fiscal Notes” section because State Senator Ernst is calling for a transfer of funds from federal employment to state education agencies, which would not change overall federal spending.
Note: State Senator Ernst stated that she would support cuts to the Department of Education, the EPA, and Internal Revenue Service “to find a way to fund our roads and infrastructure” without raising excise taxes on gasoline. It is unclear what total level of transportation and infrastructure she would support and to what extent the transfer of funds from these three program cuts would reduce the savings.