House Budget Committee FY 2016 Proposal: A Primer

Today, the House Budget Committee (HBC) released its latest budget proposal, A Balanced Budget For A Stronger America, which aims to "balance the budget, grow the economy, create more jobs and opportunity, save and strengthen vital programs, and ensure our national security," according to Members. The proposal comes a little over a month after President Obama unveiled his own budget proposal for the coming fiscal year, which NTU Foundation analyzed in depth. The two budgets differ in many ways, both on the tax and spending fronts.

The HBC budget would spend $43.15 trillion over the next ten years and collect $41.67 trillion in revenue; in 2024 and 2025, this would lead to a net surplus. Over the ten year budget window the HBC expects to incur a net deficit of just over $1.3 trillion (including macroeconomic impacts from its proposals and changes to current law; discounting those, the figure is closer to $1.48 trillion).

In that same time, the President's FY 2016 proposal would spend $50.34 trillion, collect $44.66 trillion in taxes, and incur a net deficit of $5.67 trillion.

Among the major proposals in the HBC budget:

  • Tax Reform. The HBC proposal calls for comprehensive tax reform that simplifies the current system by consolidating the existing seven income brackets into "fewer" (the legislative text does not specify an exact number); repealing the Alternative Minimum Tax; lower rates for businesses and individuals; and reducing the number of exemptions and deductions.
  • Repealing the Affordable Care Act. The Committee's budget would repeal President Obama's signature health care reform law in its entirety (NTU Foundation estimated that the savings from doing so would total about $63.9 billion per year). The HBC budget does not offer specific health care reform language in its place, instead simply urging Congress to pursue options that "enhance affordability, accessibility, quality, innovation, choices and responsiveness..."
  • Block Grant Medicaid. Federal shares of Medicaid funding are currently distributed to each state according to a formula known as the Federal Medical Assistance Percentages (by which poorer states receive more federal funding). The HBC would do away with this system and instead distribute lump sum grants to states. A similar proposal was included in last year's HBC budget introduced by then-Chairman Paul Ryan (R-WI).
  • Increase Defense Spending. The HBC budget proposal would, in Fiscal Year 2016, adhere to spending caps in place under current law. From there, it would increase defense-related spending above levels proposed by the President by $22 billion over the first five years and $151 billion over his ten-year plan; relative to current baselines, that would be a net increase of $387 billion over ten years. The total defense spending would exceed current caps under the Budget Control Act by adding to and drawing from the Overseas Contingency Operations fund.
  • Convert SNAP To A State-Based System. Federal administration of the Supplemental Nutrition Assistance Program, formerly known as food stamps, would gradually wind down through 2021. Funding would eventually be deposited into a "State Flexibility Fund" that will finance state-administered SNAP programs.
  • Repeal And Permanently Replace SGR Formula. Medicare's sustainable growth rate formula determines the amount of reimbursement medical professionals receive for certain treatments covered through the program. It is designed to control Medicare costs, but is frequently (17 times in the past decade) modified and adjusted on a temporary basis. The HBC budget would repeal the formula and institute a permanent means of determining physicians' reimbursement rates.

Overall, the latest HBC proposal draws heavily from former Committee Chairman Paul Ryan's (R-WI) Path to Prosperity budget. Much of the proposal's specifics are likely to be hammered out and debated intensely as it moves to markup and the House floor in the coming days.