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The House Republican Budget: A Plan to Reverse Our Economic Progress

Yesterday, House Republicans once again put forward a budget that would cut investments that help the middle class and leave struggling families behind.

Yesterday, House Republicans once again put forward a budget that would cut investments that help the middle class and leave struggling families behind in order to protect Wall Street and the wealthiest Americans. Their budget stands in stark contrast to the President’s Budget, submitted to Congress last month, which makes critical investments in innovation, opportunity and national security while putting the Nation’s finances on a strong and sustainable path.

The House Republican budget would:

  • Promise to cut taxes for millionaires and billionaires, while slashing investments that support the middle class and that we need to grow the economy, like education, job training, and research.
  • Undercut funding for critical national security priorities like counterterrorism and countering Russian aggression.
  • Take away affordable health coverage from 20 million Americans by repealing the Affordable Care Act (ACA).
  • End Medicare as we know it, transforming it from a guarantee on which seniors can count into a voucher program that risks increased costs for millions of seniors.
  • Make deep cuts to programs that serve the most vulnerable, but also rely on unspecified cuts and gimmicks to hide the true depth and damaging impact of the cuts they are proposing.
  • Protect Wall Street at the expense of American consumers by eliminating the Consumer Financial Protection Bureau (CFPB) – the watchdog agency established as part of Wall Street reform—and undermining rules that safeguard our economy from recklessness on Wall Street.
  • Cut funding for the EPA, which would put at risk the quality and safety of the air we breathe, water we drink, and places we live.

Republican leaders in the House have brought forward an additional package of cuts, reportedly at the insistence of their Members who refuse to vote for a budget that is consistent with the bipartisan agreement on 2017 funding levels unless there are further cuts targeting some of the most vulnerable Americans. 

To appease these Members, Republican leaders are advancing bills that would weaken Medicaid and the Children’s Health Insurance Program, slash preventive health services, take away critical services, such as help for children facing abuse or neglect and adult day care for vulnerable seniors, and eliminate the Child Tax Credit for millions of American children whose parents immigrated to this country, including U.S. citizen children, pushing many of these children into or deeper into poverty. Even with these additional cuts, the budget appears to lack enough support to pass on the House floor because the cuts don’t go far enough.

The consequences of the Republican budget approach for the economy and the middle-class are stark. According to the Congressional Budget Office (CBO), the House Republican budget’s deep near-term spending cuts would reduce the size of the economy by an average of 0.6 percent over the next three years, costing hundreds of thousands of jobs. Its cuts to investments in education, training, research, and manufacturing would hurt the middle-class and have lasting effects on economic growth.

With more than 14 million private-sector jobs created over the last six years, it is clear that the President’s middle-class economic agenda is working. Unemployment has fallen below five percent, the lowest level in eight years.  While there is more work to do to boost wages as the economy continues to grow, the President’s economic strategy is moving our country forward.  We need to continue policies that strengthen the economy, promote opportunity, and support middle class families, not go back to the same failed Republican top-down economics:

In a budget that claims to be fiscally responsible, House Republicans nonetheless promise large tax cuts for the wealthy and big corporations. Among the few specific tax proposals in the House Republican budget is a promise to spend hundreds of billions on high-income and business tax cuts, with up to trillions more in unspecified high-income and corporate rate reductions.  The proposals they specify would cut the tax bill of the average millionaire by more than $50,000, before factoring in promises to lower their rates which would further lower their taxes. And while drastically cutting investments and programs for middle-class Americans in the name of fiscal responsibility, their budget fails to identify a single tax loophole for the wealthy or corporations that they would close. 

The House Republican budget calls for deep cuts to discretionary investments starting in 2018 that would hurt the economy, the middle class, and Americans working hard to reach the middle class.   It proposes to cut non-defense discretionary funding 8 percent below the already harmful sequestration levels that will return in FY 2018 without Congressional action. In 2018, compared to the President’s Budget, the House Republican budget[1] cuts would lead to:

  • More than 100,000 children would lose access to Head Start services and nearly 130,000 children would not receive the full-day, full-year Head Start program they need to succeed, and instead, would remain in part-day, part-year programs. 
  • Fewer medical care services and longer wait times for veterans, since the funding reduction is equivalent to the cost of caring for roughly one million veterans.
  • More than 2.3 million workers would lose out on job training and employment services.
  • Title I education funding would be $1.8 billion lower, an amount that is enough to fund about 7,000 schools, 24,000 teachers and aides, and 2.1 million students.
  • IDEA funding would be nearly $1.1 billion lower, an amount that could support up to 18,400 special education teachers, paraprofessionals, and other related staff.
  • 300,000 fewer very low-income families receiving Housing Choice Vouchers.
  • 970 fewer medical research grants at the National Institutes of Health (NIH), plus deep cuts to other NIH research activities such as cancer, diabetes, and Alzheimer’s.
  • Nearly 2,600 fewer competitive science research awards at the National Science Foundation, affecting 28,000 researchers, technicians and students.
  • Fewer community-based services for seniors, including approximately 300,000 fewer rides to doctors and grocery stores.

The House Republican budget would triple the size of these deep cuts over the next ten years, dramatically limiting our ability to invest in our national security and our economy even as our population grows and needs change.  Spending at this level is simply not possible without severely harming our national security—which relies on funding outside of the Defense Department—and our economy.  These cuts would gut funding for the Departments of Homeland Security, Justice, State and USAID.  And, they would slash investment in education and research that spurs economic growth.  For example, these severe reductions would mean that the number of children participating in Head Start would be 250,000 lower in 2026 than today, cutting enrollment by about one-quarter at a time when we need to bolster early education so that all children start school ready to succeed.[2]

In reality, the cuts to these programs – and others that support our national security and grow our economy -- would likely be even deeper, because of unavoidable factors such as the increasing costs of care for veterans.  These drastic cuts would force unacceptable tradeoffs between caring for our veterans and protecting the homeland; between fighting wildfires and being prepared for health emergencies such as Zika; between investing in our youth and caring for our seniors; and between training our workforce and investments in research and development. 

The House Republican budget undercuts funding for critical national security priorities like counterterrorism and countering Russian aggression.  The Republican budget redirects Overseas Contingency Operations (OCO) funding authorized in the Bipartisan Budget Act of 2015 towards base activities at levels that would risk undermining the stable multi-year budgeting that is critical to military planning.  Depending on how this proposal is implemented, it could result in cuts to our Counter-ISIL campaign; ongoing operations in Afghanistan, Iraq, and Syria; efforts to counter Russian aggression in Europe; humanitarian assistance for the millions of individuals affected by the conflict in Syria; or up to a third of funding for the Department of State and other international programs.

The House Republican budget takes away health insurance from 20 million people who have gained coverage under the Affordable Care Act, despite the strong and mounting evidence the ACA is working.  Thanks to the ACA’s coverage provisions, for the first time ever, more than 9 in 10 Americans have health insurance – and these provisions are now expected to cost almost one third less than the CBO initially projected. Almost exactly six years after the ACA was enacted into law, Republicans will be voting yet again to repeal these provisions. Beyond the effect on the millions who have gained health insurance coverage through the ACA Marketplaces or through Medicaid, the House Republican Budget would:

  • 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;
  • 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; and
  • Increase prescription drug costs for more than five million seniors and people with disabilities.

The House Republican budget also would end Medicare as we know it, transforming it from a guarantee seniors can count on into a voucher program that risks increased costs for millions of seniors.  The House Republican budget would end Medicare as we know it by undercutting the traditional Medicare program with a voucher program, increasing costs for millions of seniors and forcing millions out of traditional Medicare. As CBO and numerous outside analysts have found, under a voucher system, healthier, lower-cost Medicare beneficiaries would be more likely to enroll in private plans.  Meanwhile, traditional Medicare would increasingly be left with sicker, more expensive beneficiaries. 

The House Republican budget would roll back investments in our Nation’s infrastructure. At a time when our country needs to be increasing investment in our infrastructure to support high-quality jobs, reduce congestion, improve safety, and strengthen our economy, the House Republicans’ budget eliminates vital programs like the New Starts program, which strengthens local and regional public transit to help connect families to jobs and to schools, and the TIGER program, which has made $4.6 billion of investments in innovative transportation projects in all 50 states, D.C. and Puerto Rico, without taking any steps to even sustain infrastructure investment beyond the next couple years at the already-too-low current levels. By comparison, the President has put forward a plan that would fully and sustainably pay for a 50 percent increase in American investments in surface transportation infrastructure above current levels, expanding transportation options for families and businesses, reducing our reliance on oil, and cutting carbon pollution.

The House Republican budget makes deep cuts to programs that serve the most vulnerable while relying on massive, additional unspecified cuts and gimmicks that hide how much more deep and damaging cuts would need to be in order to reach their fiscal goals. On top of its cuts to middle-class investments and the ACA, the Republican budget calls for an additional nearly $3 trillion in cuts to health, safety net, and other mandatory programs. For the sixth year in a row, the budget declines to specify where almost $1.5 trillion of these savings would come from. But the budget does single out a few programs as the first places it would look to reduce the deficit, including Pell Grants, which nearly 8 million students rely on to afford college; Medicaid, which helps millions of children, seniors, people with disabilities, and working parents get the health care they need; and SNAP, which helps ensure that more than 45 million Americans, mainly children, seniors and people with disabilities, have food on the table – and has long-term benefits for children’s health and education outcomes.

The House Republican budget protects Wall Street at the expense of American consumers. The House Republican budget calls for rolling back key aspects of Wall Street Reform,. It terminates the CFPB, eliminating the only dedicated, independent watchdog focused on the rights and protection of consumers.  In addition, it risks returning us to the days of “too big to fail,” protecting Wall Street firms from important regulatory safeguards and putting ordinary citizens and the economy at risk.

The contrast is clear between the President’s vision for continued economic growth and a Republican budget that would threaten that growth and limit opportunity for the middle-class in order to benefit the wealthiest among us. The Republican budget is the wrong direction for the economy and the Nation.

[1] Because the House Republican budget does not provide specific discretionary program levels for 2018, this analysis assumes the proportional reduction necessary to meet the overall non-defense discretionary level provided in the House Republican Budget is applied mechanically across-the-board to all discretionary programs based on each program’s share of the 2016 enacted level and compared to the levels provided in the President’s 2017 Budget. To prevent cuts of this magnitude in any specific program would require deeper cuts than described in other programs. Overall, cuts are understated because this analysis does not account for unavoidable cost growth in certain areas (such as veterans’ medical care) and other inflationary factors.

[2] This analysis assumes that the share of available non-defense discretionary resources dedicated to Head Start in a given fiscal year remains constant based on its 2016 share, while factoring in the effects of inflation. To prevent impacts of this magnitude would require disproportionately larger cuts in other programs.