FAQ: Rep. Garret Graves’ Supplemental Nutrition Assistance Program Reform Act of 2017 (H.R. 2996)

What does this bill do?

This bill ensures the food stamp program (SNAP) has meaningful work requirements for able-bodied adults without dependents (ABAWDs) by:

  • eliminating statewide or partial waivers from the ABAWD work requirement;
  • shortening the three-month rule, which permits ABAWDs to receive food stamps without working or participating in other work activity, to one month;
  • lowering the 15 percent exemption rule, which permits states to exempt 15 percent of ABAWDs each month from the work requirement, to 5 percent; and
  • adding supervised job search as an activity that satisfies the work requirement (minimum 8 hours per week).

What are the goals of this reform?

The goals of this reform are threefold: to promote fairness, to promote self-support, and to prevent fraud.

  • Fairness in the welfare system is based on the principle of reciprocity between taxpayers and welfare system: welfare should never be a one-way handout. Aid should always be given to those in need, but constructive behavior should be required in exchange.
  • By requiring work or constructive “work activities” in exchange for food stamp benefits, this policy aims to increase self-support among able-bodied recipients without dependent children.
  • Many ABAWDs have discretionary incomes that are often used for counterproductive or non-essential purposes. For example, recent data shows that over 50 percent of ABAWDs on food stamps smoked cigarettes during the past 30 days, at an average cost of around $111 per month. The available evidence also indicates that many ABAWDs have high levels of unreported income. Having an unreported or off-the-books job enables a recipient to receive the maximum food stamp benefits without regard to actual earnings received. Requirements to engage in work activity interfere with the recipient’s informal employment and will often push the individual to leave the assistance rolls.

As President Ronald Reagan eloquently put it: “Welfare needs a purpose: to provide for the needy, of course, but more than that, to salvage these, our fellow citizens, to make them self-sustaining and, as quickly as possible, independent of welfare. We should measure welfare’s success by how many people leave welfare, not by how many are added.”

What requirements currently exist for ABAWDs on food stamps?

  • Under federal policy, ABAWDs are limited to three months of food stamp benefits in a 36-month period, unless they are working or are involved in a “work activation” program at least part-time.
  •  However, under the 1996 welfare reform law, a state could request waivers from the ABAWD work requirement for the entire state or parts of the state if the state or area has higher unemployment rates or a “lack of sufficient jobs.”
  •  In 2009, the Obama Administration also applied a blanket waiver to the ABAWD work requirement as part of the American Recovery and Reinvestment Act (ARRA), suspending the entire requirement through FY 2010 for all states. The number of ABAWDs on food stamps increased from 1.9 million in FY 2008 to almost 4 million in FY 2010.
  • States are still able to receive statewide or area-specific waivers from the ABAWD work requirement based on high unemployment or “lack of sufficient jobs.” As of late 2016, eight states and the District of Columbia have statewide ABAWD work waivers, 26 states have a partial waiver, and roughly 1,500 counties are “labor surplus areas” as designated by the Department of Labor. Due to the large number of exempted counties, the current ABAWD work requirement is virtually meaningless.
  • The number of ABAWDs on food stamps remains high at around 4.2 million.

Will this policy save taxpayers money?

An ABAWD work requirement similar to the proposed legislation was implemented in the state of Maine in December 2014. The result was an almost immediate 80 percent drop in ABAWD caseload. Based on the experience of ABAWD work requirements in Maine and other states, the nationwide work requirement provided in this bill could save taxpayers nearly $10 billion per year.

Is this policy controversial?

This policy codifies in SNAP the principle of fairness between taxpayers and welfare recipients. There is broad support among the public for this principle. Polls show:

  • Nearly 90 percent of the public agree that “able-bodied adults that receive cash, food, housing, and medical assistance should be required to work or prepare for work as a condition of receiving those government benefits.” (Source: Heritage Foundation poll)
  • Support for work requirements in welfare is consistent across party lines, with 87 percent of Democrats and 94 percent of Republicans agreeing with this statement. (Source: Heritage Foundation poll)
  • Similarly, 83 percent of American adults favor work requirements for welfare recipients, while just 7 percent oppose such requirements. (Source: Rasmussen poll)

Won’t this change increase hunger among ABAWD recipients?

Under the legislation, an ABAWD will have his benefits terminated only if he refuses to perform a small amount of community service or other constructive activity. The recipient can have his benefits continued or restored simply by performing the required activity. Individuals who are truly at risk of hunger will choose to perform rather than refuse the required activity.

Isn’t the real issue that welfare is discouraging upward mobility through welfare cliffs?

  • There are no welfare cliffs with respect to ABAWDs.
  • There are no welfare cliffs in the welfare system generally.
  • Multiple randomized controlled experiments show that it is not welfare cliffs or phase-out rates in welfare programs that discourage work, but rather the anti-work incentives that come from giving something for nothing.
  • Seeking reductions in “welfare cliffs” by lessening benefit phase-down rates can only greatly expand the welfare state and substantially increase welfare dependence by needlessly making millions of additional people eligible for welfare. These are long-time staple liberal policies.
  • By contrast, requiring work or other constructive activities was the core of the successful welfare reform in the 1990’s; the historical record shows this policy reduces welfare costs, dramatically reduces welfare dependence, increases employment, and reduces poverty.

Shouldn’t promoting federalism through state flexibility be the main goal for any welfare reform, including food stamp reform?

  • While promoting federalism and maintaining state flexibility is important, the priority of welfare reform should be to free Americans from poverty and government dependence by encouraging work and self-support. This priority was at the core of welfare reform 20 years ago.
  • True federalism would turn fiscal responsibility for operating and funding the SNAP program over to state governments. True federalism does not mean taxing citizens at the federal level and then turning the revenue over to states to spend as they choose. This policy has always resulted in wasteful spending; historical experience shows that state governments spend their own money far more prudently than they spend federal funds.
  • In 2016, means-tested spending on cash, food, and housing assistance was over $350 billion; the federal government provided over 90 percent of these funds. Similarly, the federal government provides over 90 percent of all SNAP funding. As long as the federal government is paying for SNAP or any other welfare program, federal legislators have an obligation to ensure the funds are spent according to conservative principles: specifically, aid should not be a one-way handout, but should be given in a manner that promotes work and marriage and reduces unnecessary dependence.
  • States that wish to provide food stamps to ABAWDs without a work requirement can do so by creating a separate state aid program with state revenue.

Will this bill increase a state government’s administrative costs?

A work activation program can operate at a fairly low cost.

  • For example, a rigorous, closely supervised 16-week job search program would cost about $250 per recipient. In one year, ten million work-capable food stamp recipients could receive this type of program at an annual cost of around $2.5 billion. This would cover all current work-eligible recipients who are non-working or underemployed, as well as many new work-eligible enrollees.
  • In addition, administrative costs would be lower than expected because most ABAWDs will likely drop off the rolls. Maine, for example, expected large numbers of ABAWDs to enroll in its training and community service programs, but most ABAWDs refused to participate despite vigorous outreach efforts by the state government to encourage participation. This indicates that these individuals had other means of supporting themselves, such as unreported income.
  • To cover to the small administrative costs of the program, states would be free to use SNAP Employment and Training (E&T) funds or Social Service Block Grant funds. Under current law, states could also use a portion of their Temporary Assistance to Needy Families (TANF) funds; these funds are supposed to be used to promote work and marriage, but most states redirect a substantial portion of the funding to unrelated activities.

Looking at the bigger picture, it is important to understand that welfare spending is growing out of control, not because of administrative costs, but because the current system provides very generous benefits to tens of millions of Americans.

  • On average, administrative costs associated with federal welfare programs are less than 10 percent of means-tested cash, food, housing, and medical spending. More than 90 percent of this spending reaches low-income households as benefits.

Where has this policy been successful before?

Maine, Kansas, and Alabama have implemented ABAWD work requirements for food stamps with great success:

  • 80 percent of ABAWDs on food stamps left the rolls after Maine implemented a work requirement for ABAWDs. A preliminary report published by the Maine government found a 114 percent increase in total wages for ABAWDs who left the food stamp rolls, less dependency for those who remained on the rolls, and between $30 million and $40 million dollars in annual taxpayer savings.
  • Kansas saw a 75 percent reduction in its ABAWD food stamp caseload after reinstituting its work requirement. ABAWDs who left the food stamp rolls “saw their incomes increase by an average of 127 percent, and roughly half of those who left the rolls were employed with reported incomes above the poverty level.”
  • Alabama saw a caseload reduction of 85 percent in the 13 counties that participated.  

Have the states who have instituted these changes seen an uptick in their local work force participation?

Yes. For example, once the state of Kansas established work requirements, thousands of food stamp recipients moved into the workforce, promoting income gains and decreases in poverty. Forty percent of the individuals who left the food stamp ranks found employment within three months, and about 60 percent found employment within a year.

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September Legislative Calendar: An Opportunity for Fiscal Responsibility

Congress will return from August recess September 5th and have a mere 12 legislative days to address a number of “must pass” legislative priorities including the expiration of discretionary appropriations that must be renewed within the constraints of the Budget Control Act (BCA) for fiscal year 2018, the debt limit, the Federal Aviation Administration (FAA), the National Flood Insurance Program (NFIP), and the State Children’s Health Insurance Program (SCHIP). On top of this, Congress will also need to provide significant funding for Hurricane Harvey relief efforts.

During the Obama administration, Congress exercised little fiscal restraint (outside of the Budget Control Act of 2011) and routinely passed last-minute, short-term continuing resolutions or trillion-dollar spending packages with little to no reforms. The failures of the past must not continue. In November of 2016, the American people elected the party of “fiscal responsibility” to lead all three branches of the federal government. The Republican Party now has a clear opportunity to live up to its name by enacting fiscally responsible legislation into law this September.

Appropriations/Budget Control Act

On fiscal year 2018 appropriations, Congress should follow President Trump’s lead by sticking to the spending levels established under the BCA. Congress should break the Obama-era firewall between defense and non-defense spending and fully fund the U.S. military via corresponding cuts to domestic programs. Because the BCA has been the most effective mechanism for controlling the growth of discretionary spending, Congress should extend the overall cap through 2021. Longstanding conservative policy provisions should also be included in the appropriations measures.

Debt Limit

Our national debt is quickly approaching $20 trillion and has already exceeded annual U.S. gross domestic product (GDP). This kind of spending-induced government debt slows economic growth, restricts job creation, wage increases, and business expansion. Before Congress agrees to raise the debt limit any further, it should deliver on candidate Trump’s promise to “start to pay down our $19 trillion in debt.” Even a small step toward this promise, such as strengthening the statutory pay-go that removes the exemption for non-trust fund, mandatory spending programs, would send the right signal to the American people that the Republican Party is committed to addressing the structural nature of America’s annual deficit.

Federal Aviation Administration

The FAA’s legal authority expires September 30, 2017 and is long overdue for reform. America’s current aviation system has fallen well behind our foreign counterparts due to excessive government regulation and a broken aviation finance system. But thanks to the persistent work of Chairman Bill Shuster (R-Pa.), the House Transportation and Infrastructure Committee recently introduced the 21st Century Aviation Innovation, Reform, and Reauthorization (AIRR) Act (H.R. 2997), that would turn the Air Traffic Control (ATC) system into a standalone government-sanctioned, non-profit corporation and reauthorize the FAA for fiscal years 2018-2023. While not perfect, this bill would free air traffic control services from federal government bureaucrats and allow the new entity to innovate and improve while ensuring flight safety and saving taxpayer dollars.

National Flood Insurance Program & Hurricane Harvey

The NFIP is also set to expire September 30, 2017. Through the NFIP, the federal government maintains a monopoly on virtually all primary flood insurance for homeowners and businesses, and owes nearly $25 billion to U.S. taxpayers. The program has failed to adequately map flood risks and actually promotes development in flood zones through generous subsidies, which worsens the devastation of natural disasters. In the wake of Hurricane Harvey, reforming the NFIP is needed now more than ever. Additional borrowing authority may be necessary in order to cover claims to policyholders in the areas impacted by Harvey, but this should be accompanied by reforms that would initiate the phase-out of the national flood insurance monopoly in favor of a private insurance market.

Additional funding authorized for Harvey relief efforts should meet the requirements of emergency designated spending: necessary, sudden, urgent, unforeseen, and not permanent. Funding that does not meet this criteria should be fully offset and remain within the BCA spending caps. It is imperative to avoid the mistakes of congressional efforts to respond to Sandy in 2012.

State Children’s Health Insurance Program

This joint federal-state low-income children insurance program is also set to expire September 30, 2017. Originally designed as a federal-state partnership, the program has largely become another expensive federal program that has failed to provide the quality of care or choice our families and children deserve. Congress should convert SCHIP funding into a defined contribution program, thus giving parents the option of enrolling their children in any health plan of their choice, including, if available, employer-based coverage. Congress should require the states to share more of the cost of the program by limiting federal payment over time to coverage for children at, or below, 250 percent of the federal poverty line.  

Conclusion

While addressing all of these expiring legislative priorities in a fiscally responsible way is a challenging task, Congress has all the necessary tools at their disposal to do the right thing. President Trump and Republicans in Congress were voted into office, in part, to help get our fiscal house in order. The month of September provides Congress with multiple opportunities to do just that and show the American people it can effectively govern.

Related:
Heritage Foundation: A September Action Guide for Congress in 2017 (2017)
Heritage Foundation: Blueprint for Balance: A Federal Budget for Fiscal Year 2018 (2017)
Heritage Foundation: 2017 Debt Limit Should Trigger Spending Limit—with Enforcement (2017)
Heritage Foundation: 2018 FAA Reauthorization: Potential for Positive Air Traffic Control Reforms, But More Policy Improvements Needed (2017)
Heritage Foundation: The National Flood Insurance Program: Drowning in Debt and Due for Phase-out (2017)

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Tax Reform Toolkit

Over the past few decades, the U.S. tax code has become a significant obstacle to economic growth, job creation and higher wages for American workers.

President Donald Trump, Speaker Paul Ryan and Senate Majority Leader Mitch McConnell made it clear before the November 2016 election that pro-growth tax reform would be a major legislative priority for Republicans in 2017 if they were given the chance to govern. Now that the American people gave Republicans control of the House, Senate and White House, there is a real opportunity to achieve comprehensive, pro-growth tax reform.

A rewrite of the tax code couldn’t come soon enough. It has been far too long since Congress made major updates to the tax code. In fact, the last major reform of our nation’s tax code was under the Reagan administration in 1986, and every major effort since then has failed. After three decades of no major changes to the tax code and a stagnant economy, the time for tax reform is now.

Key Talking Points:

Our tax code currently:

  • Suppresses American business creation and growth. Our high corporate tax rate is a problem for American businesses. The U.S. corporate tax rate of 39.1 percent is the highest rate in the world and reduces domestic investment.  
  • Is far too complex for the average citizen. The individual tax system is a problem for families. In 1913, the tax code was a reasonable 400 pages long, but by 2013 it grew to over 74,000 pages. Americans spend nearly 9 billion hours complying with the tax code every year.
  • Is full of special interests. Pervasive cronyism in our tax code hurts entrepreneurs and consumers. Over decades, Congress has enacted policies that manipulate the marketplace to benefit certain business or industries.

Accordingly, tax reform should include the following principles:

  • Lower and simplify individual tax rates. Tax reforms should aim to improve the simplicity and transparency of paying taxes. Lowering overall rates will allow families and hard working Americans to keep more of their earnings.
  • Lower the corporate tax rate. Congress should lower the corporate tax rate to encourage growth and investment.
  • Permit tax free entrepreneurship: Businesses should be permitted to deduct the full cost of their capital expenses when they incur them, known as expensing, rather than over many years using cumbersome depreciation schedules currently in effect.
  • Establish a territorial tax system. High U.S. tax rates reduce domestic investment by both U.S. headquartered business and foreign businesses, stifling job creation and wage growth.
  • End cronyism. Tax reform should explicitly seek to abolish policies that Congress intended to benefit particular industries or particular groups.

To learn more read the full Sentinel brief available here.

(Make sure to insert the Twitter handle of your Representative)

  • Click to tweet: @MEMBER it’s time for Congress to pass #ProGrowth policies and #TaxReform that allows America to prosper
  • Click to tweet: @MEMBER Americans need #taxreform that levels the playing field and ends special interest handouts. #ProGrowth
  • Click to tweet: @MEMBER tax laws should not favor the well-connected over hard-working taxpayers #TaxReform
  • Click to tweet: @MEMBER our high U.S. corporate tax rates are making American companies uncompetitive. #TaxReform should lower rates.
  • Click to tweet: @MEMBER #ProGrowth #TaxReform should stand up to special interests and serve American taxpayers

General Tweets:

  • Click to tweet: It’s been too long since Congress passed meaningful #TaxReform. The time is now to push forward #ProGrowth policies
  • Click to tweet: #TaxReform could bring back more than $2.6 trillion in profits currently locked out of the U.S.
  • Click to tweet: #ProGrowth #TaxReform would encourage new business investment, job creation and wage growth
  • Click to tweet: Americans spend nearly 9 billion hours complying with the tax code every year, we need to simplify tax code #TaxReform
  • Click to tweet: True #TaxReform must be fair for all hardworking Americans. No more special interest handouts!

These are notes to use when calling your member of Congress. You can find their phone number on the Heritage Action Dashboard.

Hi, I’m [NAME] from [STATE].

It is my understanding that Congress is expected to consider tax reform legislation in the coming months. This effort is long overdue and presents a real opportunity to rewrite tax laws that are currently holding American business back, allowing IRS bureaucrats to pick ‘winners and losers,’ and enabling cronyism to pervade Washington.

Americans should not be burdened to comply with a tax code that is far too complex for the average citizen. By the same token, it is unacceptable that the tax code has been deliberately made more complex by lobbyists to benefit big business, big labor, and big government interests.

America needs tax reform. Reform should provide common sense solutions to the problems facing individual Americans – studies show that Americans spend nearly 9 billion hours complying with the tax code every year, costing our economy over $400 billion in foregone economic growth.

More importantly, business tax reforms are necessary to grow the economy and spur job creation – at an average of 39.1 percent, the U.S. corporate tax rate is the highest in the industrialized world. This rate, combined with the inability of businesses to fully deduct their cost of new capital investment, makes American companies uncompetitive with their foreign counterparts.  

Please tell the Congressman to be aware of these issues when reforming the tax code. Above all, I expect Congressman [NAME] to stand up to special interests and serve American taxpayers and [his/her] constituents. It is time to reform outdated tax laws with a principled approach – to end cronyism, simplify our tax code, and support American business with pro-growth policies.

Below is a sample letter to the editor. We encourage you to adapt and personalize the letter below. Heritage Action Regional Coordinators are always here to help edit your letter and get it published.

Congressman [X],

Today, we have an anti-growth, complex and out-of-date tax code. President Donald Trump, Speaker Paul Ryan and Senate Majority Leader Mitch McConnell made it clear before the November 2016 election that pro-growth tax reform would be a major legislative priority for Republicans in 2017 if they were given the chance to govern.  

Our tax code currently suppresses American business growth, is far too complex for the average citizen, and is full of cronyism. Accordingly, I encourage [you] to stick to the following principles on tax reform: lower and simplify individual tax rates, lower the corporate tax rate, permit “full expensing,” establish a territorial tax system, and end cronyism.

The American people gave Republicans control of the House, Senate and White House, and there is a real opportunity to achieve comprehensive, pro-growth tax reform. Congress can use this as an opportunity to pair tax reform with spending cuts in order to comply with the rules of budget reconciliation and maximize the economic benefits of tax reform. After all, the federal government has a spending problem, not a revenue problem.

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The Need for Pro-Growth Tax Reform

Background: President Donald Trump, Speaker Paul Ryan and Senate Majority Leader Mitch McConnell made it clear before the November 2016 election that pro-growth tax reform would be a major legislative priority for Republicans in 2017 if they were given the chance to govern. Now that the American people gave Republicans control of the House, Senate and White House, there is a real opportunity to achieve comprehensive, pro-growth tax reform. A rewrite of the tax code couldn’t come soon enough. It has been far too long since Congress made major updates to the tax code. In fact, the last major reform of our nation’s tax code was under the Reagan administration in 1986, and every major effort since then has failed. After three decades of no major changes to the tax code and a stagnant economy, the time for tax reform is now.

Problem: Over the past few decades, the U.S. tax code has become a significant obstacle to economic growth, job creation and higher wages for American workers. This is due to a number of reasons.

1.)    Our tax code suppresses business creation, expansion and reinvestment here in America due to high rates, double taxation, and how foreign profits are taxed. At an average of 39.1 percent, the U.S. corporate tax rate is the highest in the industrialized world making Americans companies uncompetitive with their foreign counterparts. Small businesses, who mostly file taxes through the individual income tax code as pass-through entities, also have a difficult time competing as they experience an average top marginal income tax rate of 47.2 percent. High tax rates encourage businesses to raise prices, decrease wages for workers, or even leave the country altogether.

If this wasn’t enough, the tax code inherently punishes saving and investment, the lifeblood of economic growth. Income that is saved or invested is often taxed two, three, or more times. The same dollar can be hit by individual income taxes, again by the corporate income tax, and yet again by the capital gains and dividends tax. After all this, before your family can inherit your small business or farm, the government levies a final death tax. These forms of double taxation discourage saving and investment, the most essential components of economic growth.

In addition, the U.S. is one of a very few countries that operate under a worldwide tax system rather than a territorial one. This means domestic companies are double taxed on profits they earn overseas – once by the foreign country they earn profits in, and once again when they bring those profits back to the U.S. This system encourages domestic companies to keep their profits out of the country, preventing more than $2.6 trillion in profit from being reinvested here at home.

2.)    Our tax code is far too complex for the average citizen. In 1913, the tax code was a reasonable 400 pages long, but by 2013 it grew to over 74,000 pages. Americans spend nearly 9 billion hours complying with the tax code every year costing our economy over $400 billion in foregone economic growth. The complexity of the tax code allows individuals and businesses with the best lawyers and accountants to game the system and pay the least amount of taxes possible.

3.)    Our tax system is full of cronyism that allows a few well-connected actors to game the system over hard-working taxpayers. The combination of tax credits, deductions and carve outs littered throughout the tax code due to special interest lobbying allow the most powerful and established individuals and businesses to pay low taxes while suppressing their competition.

Solution: Congress must pass comprehensive, pro-growth tax reform that lowers rates for individuals and businesses, simplifies the tax code, ends cronyism, and encourages domestic business creation, expansion, and investment. To do this, tax reform should include the following principles:

1.)    Lower and simplify individual tax rates: This can be accomplished by increasing the standard deduction for low-income earners and lowering rates for high-income earners and small businesses that use the individual code. The current standard deduction, which is the fixed amount of income not taxable, is $6,350 for an individual and $12,700 for a married couple. Lowering and simplifying rates will allow hard-working taxpayers to keep more of their money while encouraging small business owners to expand their companies and create more jobs.

2.)    Lower the corporate tax rate: Taxes on businesses should be cut as much as possible to encourage job creation and higher wages for workers who end up paying more than 70 percent of all business taxes through lower wages. The federal corporate tax rate is 35 percent plus the state corporate income tax rate. The average U.S. combined federal and state rate is the highest among developed countries and is making American companies uncompetitive.

3.)    Permit tax free entrepreneurship: Allow all businesses to deduct the full cost of capital investments from their taxable income, replacing the current system of depreciation, a convoluted multi-year accounting system that only allows a partial deduction. Full expensing would encourage new business investment, job creation and wage growth.

4.)    Establish a territorial tax system: A territorial tax system only taxes U.S. companies on the profits they earn in America. This will encourage foreign business investment here in America and help bring back more than $2.6 trillion in profits currently locked out of the U.S. by our broken and outdated tax system.

5.)    End cronyism: This includes all the special interest handouts, tax credits, deductions, and exemptions in exchange for lower tax rates across the board. For businesses this includes getting rid of tax subsidies to green energy, special economic development zones, nuclear power, and every other preference in the tax code. For individuals, tax reform should remove as many special deductions and exemptions as possible, including the state and local tax deduction which subsidizes high tax states at the expense of fiscally responsible states. Removing tax preferences must be paired with lower rates, so average Americans receive a tax cut.

According to recent analysis, this kind of pro-growth tax reform has the potential to grow the economy by 10 percent over the next 10 years and increase the average American family’s wages by more than 7 percent or about $4,000 for someone earning $50,000 a year.

Conclusion: In order to bypass a Democrat-led filibuster in the Senate, Republicans intend to use a powerful tool called budget reconciliation to pass tax reform. While this path allows Congress to fast-track tax reform in the Senate, it prohibits the consideration of legislation that increases the federal deficit outside the adopted budget window. Although somewhat restrictive, Congress can use this as an opportunity to pair tax reform with spending cuts in order to comply with the rules of budget reconciliation and maximize the economic benefits of tax reform. After all, the federal government has a spending problem, not a revenue problem. Federal revenues are expected to rise to 20 percent of the economy by 2021, a dangerous level seen only once since the end of World War II. Reducing federal spending alongside tax reform would ensure tax reform is permanent; whereas simply cutting taxes through the budget reconciliation process would result in the expiration of those tax cuts in 10 years. Regardless of the approach taken, by enacting pro-growth tax reform Republicans can fulfill their promise to create jobs, increase wages, and restore our stagnant economy back to sustainable long-term growth.

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End the Obamacare Exemption for Congress

Background: Back in 2013, the Obama administration’s Office of Personnel Management (OPM) exempted members of Congress and their staff from the full burden of Obamacare by letting them enroll in the D.C. small business exchange to receive taxpayer subsidized plans, even though a small business was defined as fewer than 50 employees. Now, as millions of Americans continue to watch their health insurance premiums increase, members of Congress and their staffs remain exempt from the rising costs.

Problem: Indicative of the lawlessness of the Obama administration, Congress actually pleaded behind closed doors for the president to grant them a special exemption. Although Obamacare was signed into law in 2010, its provisions that pertain to Congress were phased in years later — just when Obamacare was starting to unravel. With their personal interest now at stake, members took a closer look at what the law required of them. A Heritage Foundation legal memoexplained at the time:

“One such provision is Section 1312(d)(3)(D), which reads: ‘Notwithstanding any other provision of law … the only health plans that the Federal Government may make available to Members of Congress and congressional staff … shall be health plans that are … created under this Act … or … offered through an Exchange established under this Act….’. Under this provision, it is clear that Members of Congress and their staff should lose their current employer-sponsored health insurance program.”

Members and their staff were initially required to opt-into Obamacare; however, President Obama’s OPM stepped in at the last minute to grant a taxpayer subsidized exemption — by redefining Congress to qualify as a “small business” under a separate part of the law. Heritage
Action explained in a coalition letter:

“Obama directed OPM to issue a rule purporting that Congress, which has thousands of employees, is a small business and therefore: ‘the DC Health Link Small Business Market administered by the DC Health Benefit Exchange Authority, is the appropriate SHOP from which Members of Congress and designated congressional staff will purchase health insurance in order to receive a Government contribution.’”

This maneuvering is the exact problem in Washington, D.C. — premiums double for the American people and Congress illegally forces taxpayers to subsidize their premiums.

Solution: Fortunately, just as the Obama administration’s OPM unilaterally established the Congressional exemption, so also can the Trump administration’s OPM rescind the rule. A coalition of conservative groups, including Heritage Action, sent a letter to President Trump on July 21, 2017, urging the President to take this step. Weeks later, the Senate essentially abandoned its effort to repeal and replace Obamacare.

If the Republican-controlled Senate cannot deliver on their promise to repeal and replace Obamacare, President Trump should subject Congress to the full brunt of the law until they do so. Trump should unilaterally undo Obama’s illegal exemption, requiring members of Congress to live under the law it forced onto the American people. Facing the reality of double-digit premium increases, Congress may feel pressure to come back to the negotiating table and follow through on years of promises to finally end the Obamacare nightmare.

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