“YES” on the RSC’s Back to Basics Budget
This week the House will vote on a Fiscal Year 2015 Budget offered by the Republican Study Committee (RSC) (H.Con.Res. 96). The “Back to Basics Budget” would balance in four years, reduce discretionary spending, reestablish national defense spending to support the military, repeal and replace Obamacare, reform Medicare and Medicaid, safeguard Social Security, and enact pro-growth tax reform.
Importantly, the “Back to Basics Budget” serves as a benchmark for near-term spending levels by forgoing the elevated levels set by the recent Ryan-Murray budget agreement. Instead, it would freeze discretionary spending at $950 billion starting in FY 2015 until the federal budget is balanced. Also toward that end, it would bring spending down to an average of 18.1 percent of gross domestic product (GDP) and limiting average revenue to 18.1 percent of GDP.
At its core, the budget sets the framework for serious entitlement reform.
The budget would make serious improvements to the Medicare system in both the near and long term. In the near term, the budget would adopt commonsense, bipartisan benefit modernization, including unifying Medicare Parts A and B and rationalizing their relationship with supplemental “Medigap” plans. Then, beginning in 2019, the budget would phase in premium support for new retirees. This would inject competition into the Medicare program, forcing companies to compete to provide the highest quality of care at the lowest possible cost, while continuing to provide guaranteed security for seniors. As confirmed by the Congressional Budget Office (CBO), premium support would provide substantial savings for both seniors and taxpayers. While the RSC’s premium support proposal could be improved by fully transitioning Medicare to premium support in 2019, rather than gradually phasing it in only for new retirees, the proposal in this budget represents a significant commitment to serious Medicare reform.
The RSC’s budget would give states flexibility with regard to Medicaid. The Heritage Foundation has written about the need to give states greater flexibility to “address the complex needs” of low income individuals in need of health care. Heritage also recommends additional fundamental reforms that would lay out specific policy objectives to move more families into private health insurance and create a safety net geared toward patient-centered care. This provides a much better approach to helping the uninsured than Obamacare, which the Back to Basics budget would fully repeal.
Recognizing that “state and local officials are in a much better position to understand the needs of local commuters,” the budget would phase down federal funding for transportation and limit it to core federal duties, including the “interstate highway system, transportation infrastructure on federal land, responding to emergencies, and research.” These reforms are consistent with H.R. 3486, the Transportation Empowerment Act by Rep. Tom Graves (R-GA) 79%.
The RSC budget would recommend that the Supplemental Nutritional Assistance Program (SNAP) be subject to the annual appropriations process and decouple it from agricultural subsidies so that it is reauthorized separately and not as part of any future unified “farm bill.”
The FY15 Back to Basics Budget would safeguard Social Security by phasing in an increase in the Social Security full-retirement age, which “would continue the current-law’s gradual increase of two months per year beginning in 2022 until the full retirement age reaches 70.” It would change the formula for cost of living adjustments (COLA) by adopting a more accurate measure of inflation, a chained CPI-U. The budget also contains numerous reforms to the Social Security Disability Insurance (SSDI) program, which is projected to deplete its Trust Fund by 2016. The Heritage Foundation has discussed the urgent need to reform Social Security.
The RSC budget recognizes that a sustainable, balanced budget is not just about reforming government programs and cutting wasteful spending. Equally important to the budget is a growing economy that creates jobs and increases take-home pay. To that end, the RSC budget calls for fundamental tax reform that is flatter, simpler, and makes America more competitive. RSC’s tax reform plan would build on past efforts by incorporating JCT’s dynamic analysis of tax reform legislation rather than relying on antiquated static scoring. As Heritage has written, “it is imperative that Congress use the JCT’s dynamic analysis as the official score to provide a more accurate picture of how tax reform will affect both the economy and the budget.”
Beyond the tax and entitlement reforms described above, the RSC budget includes serious reforms to address Fannie Mae and Freddie Mac (consistent with H.R. 2767, the PATH Act sponsored by Rep. Jeb Hensarling (R-TX) 83%), federal employee compensation, the Environmental Protection Agency (EPA), the National Labor Relations Board (NLRB), federal agriculture programs, and numerous other reforms to other areas of the federal budget. It would also fulfill the federal commitment to the unborn and prohibit any federal funding for abortions.
Taken as a whole, the RSC’s “Back to Basics Budget” demonstrates a seriousness of purpose when it comes to the type of reforms we need to save the country from a fiscal crisis.
Heritage Action supports the RSC’s Back to Basics Budget and will include it as a key vote on our legislative scorecard.