Senators Grassley and Braun Ask CBO to Examine a Frequently Used Budget Gimmick

Senator Chuck Grassley (R-IA), the ranking member of the Senate Budget Committee, and Senator Mike Braun (R-IN), sent a joint letter to the Congressional Budget Office (CBO) asking them to report on the Medicare Improvement Fund and the Medicaid Improvement Fund.

These two funds were established in 2008 for the Secretary of the Department of Health and Human Services (HHS) to make reforms and improvements to the two programs. But not one cent in either Fund has been used for those purposes. Instead, the Funds have become a piggy bank for other spending priorities. HHS does not even list information about the Funds in their FY 2024 budget justification nor in the HHS Appendix to the federal budget. Grassley and Braun asked the CBO to provide a budgetary history and projections of the Funds.

The request asks CBO to continue its previous series of Budget Spotlights which have examined the budget history and fiscal situation of the Army Corps of Engineers and the Federal Emergency Management Agency's Disaster Relief Fund.

NTUF applauds the Senators for requesting this deep dive from CBO. As they noted in their letter, "It is puzzling that 15 year old improvement funds have been utilized, but not as they were intended. The budgetary practices of these funds deserve sunshine."

Yes! NTUF writes extensively on similar gimmicks used to paper over spending and essentially distort the cost estimates produced by CBO. In addition to the Improvement Funds, other recent NTUF deep dives into budget gimmicks include:

  • Customs user fees: Even though these fees are are already supposed to cover the cost of customs services, lawmakers extend them nine or ten years out in the future in order to pay for a unrelated spending in the near term;

  • Medicare rebate rule: This regulatory rule dating back to 2019 was estimated to increase Medicare and Medicaid costs by an average of $21 billion per year through 2031, but has been delayed in several laws in order to "offset" other spending; and

  • Veterans loan fees: These fees are intended to cover the subsidy costs of a Department of Veterans Affairs program to provide mortgage guarantees for veterans but  lawmakers extend these fees in budget years nine and ten in order to "pay for" other programs. The very same gimmick was used in eight separate bills passed by the House in 2022 before being enacted into law through the Consolidated Appropriations Act of 2023 last December.

The results of a series of reports examining these can help lead to reforms so that CBO's cost estimates can show the true cost of impacts. For example, CBO's reports already include points of uncertainty in legislation. Cost estimates could further be enhanced by having CBO point out offsets like customs user fees or the VA gimmick that are already dedicated toward a specific federal function. In doing so, CBO can shed valuable light on these all-too-frequently used budget gimmicks that some lawmakers rely on to obfuscate spending increases.