Congressional Republican Budget Conference Agreement Cuts Programs that Support the Middle Class, Working Families, and National Security

The Republican budget resolution conference agreement announced yesterday serves as a reminder of what Republicans in the House and Senate can agree on: underfunding investments that benefit middle-class families and contribute to economic growth; stripping away health insurance coverage from millions; making it harder for students to afford college; and funding national defense through a cynical, temporary budget gimmick – while shortchanging it altogether in later years.

Just as the President’s Budget reflects his priorities – making the investments needed to bring middle class economics into the 21^st Century and to strengthen our national security—yesterday’s conference agreement reflects Congressional Republican priorities: keeping taxes low for the highest-income Americans at the expense of middle-class families and those struggling to reach the middle class.  The Republican budget resolution conference agreement would:

• Cut investments in the middle class and our future economic growth by maintaining sequestration funding levels in 2016. Under the Republican budget, both non-defense and base defense discretionary funding in 2016 would be at the lowest levels in a decade, adjusted for inflation.  With votes on the first two spending bills in the House expected this week and the release of the House funding allocations for the remaining bills, we are starting to see how Republicans plan to budget at these levels. For example, the first two House appropriations bills would underfund veterans’ medical care by over half a billion dollars relative to the President’s Budget and would make deep cuts to clean energy research.  Based on House Republicans’ allocations for future appropriations bills, we can expect that their budget will result in a number of damaging cuts compared to the President’s Budget, including 46,000 fewer children in Head Start, 2.4 million fewer Americans receiving job training and employment services, and 1,400 fewer NIH grants. 

The Republican proposal cuts middle class investments even more deeply starting after 2016, doubling the size of the cuts relative to the President’s Budget.  It also eliminates roughly $90 billion in mandatory funding for the Pell Grant program. That would either require significant cuts in other domestic priorities to make up for lost funding or result in deep cuts to the Pell program, leading to cuts in scholarships for 8 million students, cuts to number of students receiving Pell Grants, or both.

• Damage national security by funding national defense with gimmicks in the near term, short-changing it altogether in the long term, and singling out key non-defense national security programs for deep cuts relative to the President’s budget.

o   For 2016, the Republican agreement tries to have it both ways on defense funding: maintaining sequestration and then using overseas contingency operations (OCO) funds intended for wars and not subject to budget caps to fund the day-to-day operations of the Pentagon. As the Secretary of Defense and the Chairman of the Joint Chiefs have explained, this is both bad budgeting and harmful to military planning. Former House Budget Chairman Paul Ryan referred to it as treating overseas contingency funding as a “slush fund,” while Senators Mike Crapo and Jeff Flake, among others, have called it a “gimmick.”  According to news accounts, House debates over the Military Construction and Veterans Affairs Appropriations bill continue to highlight ongoing, bipartisan concern over the inappropriate use of OCO.

o   The shortcomings of the Republican approach become even more obvious starting in 2017, when the Republican budget conference agreement would continue to lock in sequestration levels for defense.  Sequestration levels will damage our ability to restore readiness, advance badly-needed technological modernization, and keep faith with our troops and their families.  As Defense Secretary Carter has testified, the long-term consequences of sequestration would “almost certainly mean a smaller, less capable and less ready military” that “could translate into future conflicts that last longer, and are more costly in both lives and dollars.”

o   Meanwhile, the House Republican appropriations allocations single out key national security programs for especially deep cuts. Compared to the President’s Budget, the Republican budget allocations would impose double-digit percentage cuts to funding for U.S. diplomacy and a broad range of programs critical to the President’s National Security Strategy, at a cost to American global leadership. Other important national security activities are also funded on the non-defense side of the budget and would also be at risk of significant cuts.

• Take away health insurance from more than 16 million people who have gained coverage after five years of the Affordable Care Act (ACA). The Affordable Care Act is working. Thanks to its coverage provisions, the nation’s uninsured rate now stands at its lowest level ever – and these provisions are costing almost one third less than the Congressional Budget Office initially projected. Rolling back the ACA coverage provisions would:

o   Take away Marketplace coverage from more than 11 million Americans who have newly signed up or been re-enrolled in coverage for 2015. Some of these individuals would become uninsured, while others would end up with worse or less affordable coverage.

o   Deprive up to 130 million Americans with pre-existing conditions of the security of knowing they will still be able to buy affordable health coverage if they lose their jobs or otherwise lose their health insurance.

o   Deny millions of young adults of the option to stay on their parents’ plans if they re-enroll in school or get a job without health coverage.

o   Increase prescription drug costs for more than 5 million seniors and people with disabilities.

The Republican budget conference agreement would cut resources for Medicaid and other health programs by hundreds of billions of dollars and appears to block grant Medicaid, on top of the impact of repealing the ACA Medicaid provisions.  Medicaid currently insures almost 70 million Americans in a typical month, including millions of children, seniors, and people with disabilities. Even just repealing the ACA’s coverage provisions would nearly double the number of uninsured Americans, and these Medicaid cuts would jeopardize coverage for many millions more.

• Makes massive, mostly unspecified cuts to programs that provide critical assistance to low-income Americans, increasing poverty and hardship.  The conference agreement proposes to cut roughly $600 billion from the portion of the budget that funds “income security” programs, including nutrition assistance, Supplemental Security Income for low-income seniors and people with disabilities, and refundable tax credits for low-income working families with children. While the conference agreement is silent about where these cuts would come from, the House Republican budget proposed to obtain about $125 billion of savings from block granting the Supplemental Nutrition Assistance Program (SNAP). That would jeopardize help for the roughly 46 million Americans who depend on SNAP, the majority of them children, older Americans, or people with disabilities. 

• Meanwhile, while claiming to prioritize fiscal responsibility, the Republican budget would not ask the wealthy to contribute a single dollar to deficit reduction.  The conference agreement even dropped language endorsed by a bipartisan majority of Senators that recommended reversing sequestration through a combination of targeted spending cuts and tax expenditure reforms. 

Meanwhile, millions of working families and students would actually pay higher taxes under the Republican Budget, since it does nothing to prevent the expiration of Earned Income Tax Credit, Child Tax Credit, and education tax credit improvements that together benefit 25 million families. In the past, Congressional Republicans have made clear they would let this tax increase happen, raising taxes on those 25 million families by an average of $1,000 apiece.

While Republicans have shown what they can agree on, at great peril to our national security, middle class investments, and the safety net, the President’s Budget demonstrates a different set of priorities.  It builds on the economic progress we’ve made and makes the critical investments needed for our defense and to accelerate and sustain economic growth in the long run.

Shaun Donovan is the Director of the Office of Management and Budget