Balanced budget takes back seat to paring spending to ’22 levels at GOP retreat
House Budget Chairman Jodey C. Arrington has a plan to trim costs over time
ORLANDO, Fla. — House Republicans gathered for their annual issues conference are lowering expectations that they can adopt a balanced-budget blueprint this year, while hyping up their commitment to cap next year’s spending at fiscal 2022 levels.
GOP majorities have long sought to balance the federal budget within the 10-year window congressional scorekeepers use to measure federal spending, revenues and deficits.
While that goal has not gone by the wayside, House Budget Chairman Jodey C. Arrington told reporters Monday it’s not the most important spending metric the GOP is eyeing in its coming fiscal 2024 budget. The Texas Republican’s comments came after he helped lead a closed-door discussion on fiscal issues with Ways and Means Chairman Jason Smith, R-Mo.
“Long-term frameworks have their value,” Arrington said. “But I think what’s most meaningful to the people in my district and … the people in our conference after that discussion — I can say this for my committee — is what are we going to do over the next year or two. And quite frankly, I think that’s the conversation that Speaker [Kevin] McCarthy is trying to have with our president and with our colleagues on the other side of the aisle.”
Arrington said Republicans remain committed to “the aspirational 10-year balance,” but he cautioned that it may not be feasible to adopt a budget resolution on the floor that achieves it.
“We have to get to 218,” he said, referring to the majority threshold needed to adopt a budget without any Democratic support. That leaves GOP leaders only four votes to spare for defections, assuming full attendance.
Budget resolutions, regardless of which party is offering them, have proved difficult to wrangle votes for because they don’t become law. Instead, budget blueprints require members to stake out positions on spending and tax policy that represent party views but not necessarily members’ individual preferences. Centrists are shy about voting for partisan budget resolutions because they’re common fodder for campaign attack ads.
“I know for me, I could cut the entire federal government in half and I wouldn’t be totally satisfied, and neither would my constituents. But I’m in a very conservative Republican district,” Arrington said later Monday in a one-on-one interview.
Centrist Republicans from more competitive districts in states like New York and Pennsylvania may not share the same views, he said, which complicates the task of cutting enough to balance the budget.
Arrington said he’s offered a menu of broad policy changes to both mandatory and discretionary spending that he believes can produce the $15 trillion in savings needed to balance the budget over 10 years. Whether Republicans’ budget will ultimately achieve those savings will depend on “the political risk appetite for the conference” and what can get 218 votes on the floor.
“We may not get every single Republican,” he said. “I’d like to.”
Other House Republicans, like Arrington, favor a balanced budget. But their public calls for one have slowed since January, when McCarthy promised his detractors in the speaker’s race he would hold a floor vote on a balanced-budget resolution.
Some of the same conservatives in the House Freedom Caucus who pushed for that commitment have since released their own proposal for cutting spending that would not balance the budget in the 10-year window.
McCarthy dodged two questions Sunday during the retreat’s opening news conference about whether his party was still committed to adopting a balanced budget. Asked again Monday, the California Republican said, “Yeah, you always want to have a balanced budget. … I was never opposed to that.”
The Freedom Caucus plan would cap spending at fiscal 2022 levels over the next 10 years while allowing for 1 percent annual growth. They estimate this would produce $3 trillion in savings over the decade.
Arrington is planning to take the same approach in the budget resolution his committee is drafting.
The only enforceable part of the budget resolution is the topline spending level for fiscal 2024. The 302(a) allocation, as it’s known in appropriations parlance, will be set around the fiscal 2022 topline of $1.5 trillion, without specifying how that 9 percent, or roughly $130 billion, cut should be split among defense and nondefense accounts, Arrington said.
“These issues ripen at different times,” said Rep. Dusty Johnson, R-S.D. “What’s ripe right now is the idea that returning to FY ’22 is doable, and in fact is an important step forward for our country. I know some people would say, well, so much of the growth is in the mandatory programs. And listen, that’s true, but kind of one thing at a time, which right now is getting back to FY ’22 levels and then slowing the growth from there on out.”
The new topline for fiscal 2024 will “reset” the 10-year budget baseline, Arrington said. He plans to use an alternative baseline that deviates from the Congressional Budget Office’s conventions.
As Arrington describes it, CBO assumes discretionary spending will grow 2.1 percent each year over the next decade, while Republicans’ budget will propose capping topline spending increases at 1 percent annually. The GOP plan would produce $1 trillion more savings over the 10-year budget window, for a total of $2.7 trillion, he said.
Arrington will further deviate from the CBO baseline in assuming the tax cuts from Republicans’ 2017 law that are set to expire in 2025 are made permanent.
CBO will score that as a net revenue loss, but Arrington said he plans to have some outside experts analyze the plan to account for the “pro-growth” effects of extending the tax cuts. There are other things Republicans will propose, like reducing regulations and spurring energy production, that Arrington also wants outside experts to include in their analyses. He expects those pro-growth policies to bring the 10-year budget savings up to $6 trillion or more.
Arrington plans to tackle more than just discretionary spending in his budget. While he will adhere to Republicans’ commitment not to cut Social Security or Medicare, he’s eyeing other mandatory spending changes that will produce more savings.
“One for sure is the work requirements for able-bodied adults in welfare programs,” Arrington said. “Another one would be program integrity, or means-tested welfare programs. For example, if you require a Social Security number for people who receive the child tax credit, you will reduce the deficit by $25 billion because you will reduce improper payments.”
Republicans’ fiscal discussion Monday was scheduled to last 90 minutes but went 30 minutes over because members were engaged in the issues, Smith said. The Ways and Means chairman said several members “would say this was the best panel that they’ve been a part of” and that the discussion reflected an attempt to unify the 222-member conference around fiscal issues.
“We’ve made it a point that how we legislate in this conference, it’s 222,” Smith said. “And that’s how we’ll move whether it’s the budget or whether it’s the debt limit.”
Tax policy issues also came up during the discussion, Smith said, without delving into details other than noting some members asked about the state and local tax deduction. Republicans capped the SALT deduction at $10,000 in their 2017 tax law, despite opposition from some New York and New Jersey lawmakers who were concerned about their constituents facing tax increases.
“It was a very good discussion,” Smith said. “As you know, even in our majority, we have some folks that [are] very concerned about the marriage penalty that’s within the state and local tax.”
Smith cited legislation that Reps. Mike Garcia, R-Calif., and Mike Lawler, R-N.Y., introduced that would double the SALT cap for married couples to $20,000, but he didn’t say whether he backed that measure.
Earlier this year as he campaigned for Ways and Means chairman, Smith said he saw an opportunity for bipartisan compromise with Democrats on the child tax credit that the GOP’s 2017 law and Democrats’ 2021 pandemic aid package expanded. Democrats’ expansion, which Republicans didn’t like in part because it would give parents benefits without working, has since lapsed.
Smith said he’s had good discussions with colleagues in both parties and both chambers about working together on the child tax credit and he’s “very confident” they can find common ground. But he reiterated that the benefit must have some strings attached.
“I’m a huge believer in work requirements. I’ve made it crystal clear,” Smith said. “We saw the disaster of eliminating work requirements and what had happened back in 2021. … Only 1.6 million people returned to the workforce. That expired Dec. 31 of ’21. Just in the months of January in February alone, 1.7 million people returned to work when they had to work in order to get the child tax credit.”