The House Budget Proposals: Radical, Risky, and Unrealistic

While news reports focus on an impending shutdown of the federal government, the real story coming out of Washington this week is the House Budget Resolution that would result in a radical, risky, and unrealistic restructuring of our federal government. Radical because it would dramatically reduce and reshape the role of the federal government, largely at the expense of the lowest-income Americans. Risky because it would compromise the nation’s ability to invest in the programs and structures that provide the foundations for a healthy economy. Unrealistic because the plan produces little true deficit reduction, while dramatically scaling back spending on core public services.

The federal government will shut down all but the most essential services at midnight tonight unless House Republicans reach agreement with the President and the Senate on a continuing resolution that would fund the remainder of the current budget year. The House Budget Resolution, in contrast, provides a framework for the budget in the upcoming year and beyond. Initial analyses of this proposal show that:

  • Approximately two-thirds of the spending cuts hit programs that serve lower-income Americans, including deep reductions in support for Medicaid, food stamps, and the Pell grant student aid programs.

  • A large share of the spending cuts would be used to finance tax cuts for high-income earners and corporations. An analysis by the Tax Policy Center at the Urban Institute and Brookings Institution estimates that approximately one-third of the $2.9 trillion tax cut would go to corporations, while the remaining two-thirds would go entirely to higher-individual individuals.
  • Increase health care costs for the elderly, and require states to pay more or significantly scale back their Medicaid programs. The Congressional Budget Office (CBO) writes that, under the proposal, states would probably be required “to decrease payments to Medicaid providers, reduce eligibility for Medicaid, provide less extensive coverage to beneficiaries, or pay more themselves than would be the case under current law” and “most elderly people would pay more for their health care than they would pay under the current Medicare system.”

Overall, the CBO notes that, “the proposal specifies a path for all other spending (excluding interest and Social Security) that would cause such spending to decline sharply as a share of GDP – from 12 percent in 2010 to 6 percent in 2022 and 3½ percent by 2050. For comparison, spending in this category has exceeded 8 percent of GDP in every year since World War II.”

The battle over the level of spending cuts in the continuing resolution, their impact on a still-weak economy, and conditions that are imposed on the expenditure of federal dollars is a fight worth waging. The even larger, and more important, fight over the upcoming budget is yet to come. We concur with Center on Budget and Policy Priorities’ President Bob Greenstein’s statement on the House plan that “Taken together, its proposals would produce the largest redistribution of income from the bottom to the top in modern U.S. history, while increasing poverty and inequality more than any measure in recent times and possibly in the nation’s history.”

— Jean Ross