RSC Budget a Promising Contribution to Fiscal Responsibility Efforts

The Republican Study Committee (RSC) has released the latest version of its RSC Budget aimed at the 2023 fiscal year. At a time of historical levels of inflation and federal debt, there are many thoughtful proposals in this budget to promote fiscal responsibility and reduce federal spending, all while keeping taxes low.

While the budget is incredibly detailed and covers dozens of distinct topics, at NTU we’ll focus on a few areas that caught our attention.

Tax Policy

While the RSC acknowledges the crippling effects of massive federal debt on the American economy, Budget Task Force Chair Kevin Hern (R-OK) and his colleagues understand that the federal government should not be balanced on the backs of the American taxpayers. Accordingly, the RSC Budget aims to take a pro-growth and pro-worker approach, providing proposals that would both lower taxes and simplify tax code. While President Biden’s tax agenda could cost American taxpayers an extra $2.5 trillion in tax hikes, the RSC Budget’s plan would save Americans over $2 trillion in taxes in 10 years.

The RSC Budget would make permanent the individual tax code provisions of the Tax Cuts and Jobs Act (TCJA), including lower income tax rates for working families. The budget also would protect lower and middle-income households from capital gains taxes with an increase in the income threshold before taxpayers face capital gains taxes. The RSC Budget also would eliminate estate taxes upon the passing of families’ and business’ loved ones, a policy  that has been  endorsed by NTU.

On the business side, the RSC Budget would raise American wages and promote economic growth through proposals such as making permanent TCJA provisions allowing businesses to expense investments in equipment. The Budget would also reverse TCJA’s proposed five-year amortization for research and development (R&D) costs, returning R&D treatment to full and immediate expensing, and would allow companies to fully expense education and training services for their workers. The proposal would directly promote American manufacturing and bolster supply chains by adopting pro-growth tax proposals such as Rep. Jackie Walorski’s (R-IN) and Rep. Jim Banks’ (R-IN) Renewing Investment in American Workers and Supply Chains Act. This legislation would  allow businesses to more quickly recover the costs they incur for structures, incentivizing investment in new facilities for American workers.

In part to help pay for pro-growth tax cuts, the RSC would fully repeal the state and local tax (SALT) deduction. SALT is a highly regressive tax break that mostly benefits wealthy households in high-tax states. In addition, the RSC Budget would eliminate tax breaks and carve-outs for special interest groups, such as those in the renewable energy sector, promoting a more fair and neutral tax code.

Spending and Budget Process Reform

The RSC Budget deserves praise for its dedication to tackling the current federal debt crisis, where total federal debt stands at $30.4 trillion. The RSC Budget supports the adoption of a federal Balanced Budget Amendment (BBA), an initiative long-supported by NTU. In fact, the RSC Budget supports former Rep. Bob Goodlatte’s (R-VA) BBA proposal, in which the federal government is prevented from spending in excess of 20 percent of GDP each year and is prevented from relying on tax increases to balance the budget.

The RSC Budget would also reverse House rule changes made by House Democrats that make it easier for the government to increase taxes, spending, and debt. It also includes a new rule that would require committees passing bills that increase spending and taxes to release a report on the estimated inflationary impact of each bill and how that inflationary impact would affect low and middle-income families.

The RSC Budget takes aim at both mandatory and discretionary spending. The RSC Budget would ensure that mandatory spending programs – which make up 77 percent of federal spending today – are no longer on “budgetary autopilot” but rather receive annual Congressional accountability and oversight.

In addition, the RSC Budget supports sensible reforms to both mandatory and discretionary spending. For example, the RSC Budget would rescind all unspent COVID-19 funds and use that money to help with the federal budget. The budget would also remove unnecessary and unused federal programs that waste government money. Furthermore, it would only fund non-defense discretionary programs that “fall within Congress’s explicitly delegated authorities.” Over the next decade, the RSC Budget would reduce non-defense discretionary spending by $3.37 trillion.

Regulatory Reforms

The RSC Budget acknowledges the economic burden of too much government regulation, and emphasizes the importance of reining in the size and scope of the federal government given current levels of inflation.

The RSC Budget would roll back many of the Biden administration's new regulations. For example, the RSC Budget would adopt the Red Tape Reduction Act, which would reinstitute former President Trump’s deregulatory executive orders.

The RSC Budget also supports several initiatives that NTU has endorsed before, such as:

The RSC Budget further supports the creation of a regulatory budget, as established in Rep. Bill Posey’s (R-FL) Article 1 Regulatory Budget Act. Through this initiative, Congress would set limits on how much executive agencies can cost the economy through new regulations, inevitably saving money for Americans.

The RSC Budget correctly identifies American energy production as an area hurt by new federal regulations. They acknowledge that regulatory actions from the Biden administration have contributed to recent and huge increases in gas prices. In order to save Americans from unaffordable energy costs, the RSC Budget would adopt policies and support initiatives that would bolster the production of energy in America. For example, the RSC Budget supports policies that would reverse many of President Biden’s executive actions that halted oil drilling on federal land. In addition, the RSC Budget supports policies that promote the production of American pipelines (such as the Keystone XL Pipeline) and that remove burdensome energy standards that make American energy uncompetitive on the global stage (such as those set in the Paris Accords). Furthermore, the RSC Budget opposes President Biden’s “Build Back Better” agenda, which includes $80 billion in new taxes on domestic energy producers.

Conclusion

Overall, the RSC Budget proposes many excellent recommendations for tackling historic levels of inflation and debt, while also reducing taxes and regulatory burdens that harm the American worker. NTU appreciates their thoughtful contribution on behalf of taxpayers, and hopes both parties in Congress give serious consideration to proposals within the Budget.