A Modest Republican Budget Plan

National Review Online

Thursday, February 27, 2025

 

Congressional Republicans have cleared the first of many hurdles in getting a major tax package to the president’s desk. Speaker Mike Johnson was able to get all but one Republican (Representative Thomas Massie of Kentucky) to vote for a resolution setting spending targets, which begins the budget reconciliation process.

 

That unique legislative procedure allows Congress to pass a bill with a simple majority in the Senate, where Republicans control 53 seats. The budget resolution is not a budget itself. It gives instructions to congressional committees about how much money they are allowed to spend in their issue areas.

 

Democrats will shriek about draconian spending cuts, but the instructions the House has given are modest — really, too modest, if the goal is to change the long-run trajectory of the federal debt.

 

The federal government is projected to spend $86 trillion from now through fiscal year 2034, the period under consideration in the reconciliation bill. The House resolution calls for $2 trillion in spending cuts over that entire timespan. Looked at another way, Elon Musk has set a target for DOGE to reduce deficits by $1 trillion in a single year via cuts to government spending, but this resolution would reduce spending by just $2 trillion over ten.

 

The budget resolution tells the Ways and Means Committee to make $4.5 trillion in tax cuts compared to the baseline, which assumes the 2017 tax cuts expire at the end of this year. Nearly that entire “cost” is just in keeping taxes the same as they already are, a worthy goal that Republicans must achieve.

 

Passing this resolution was hard enough. In answering a question about it at an event on the Hill on Monday, Johnson said to reporters, “This is a prayer request.” Now, he’ll need more prayers that House committees are able to make the tradeoffs necessary to hit even the limited cuts called for by the resolution.

 

Reductions in Medicaid spending will be required to meet the terms of the resolution, which President Trump has said Republicans wouldn’t touch. Ideally, House Republicans would take this opportunity to reform the program, which was expanded under Obamacare and grew out of control during the Biden administration. They should implement stronger work requirements, clean up improper payments (Medicaid is likely the worst offender of any federal program on this front), and end the current policies that subsidize able-bodied single adults at higher rates than children or the disabled. They should also consider transforming federal contributions to the program into block grants to states based on population. Those grants could be capped and set to grow only at a sustainable rate.

 

Republicans should repeal Joe Biden’s perversely named Inflation Reduction Act in its entirety. The law is a $1 trillion-plus lie at the center of Biden’s legacy, and Republicans should not be ashamed to remove it from the statute books. But doing so will require buy-in from some moderate members who have become attached to certain spending provisions.

 

The hurdles aren’t only in the House. The Senate is pursuing its own reconciliation strategy parallel to the House, and it’s not yet clear which one will win out. Eventually, the House and the Senate will have to agree on the same bill to send it to the president. With narrow majorities in both chambers, even being unrestrained by the filibuster, as budget resolutions are, passage will be difficult.

 

The House budget resolution includes a $4 trillion increase in the debt ceiling, which will need to be raised sometime around June to prevent default. If the House and Senate can’t get on the same page by then, a separate bill to raise the debt ceiling will become necessary.

 

It’s certain that the reconciliation process will not be done by March 14, when the current government funding bill is scheduled to expire and trigger a partial shutdown. Congress will need to put together some kind of stopgap bill to prevent that, distracting further from the work it already has.

 

Republicans need to use their trifecta to enact major spending cuts alongside keeping the 2017 tax cuts in place. They’re still a long, long way from making that happen.