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Credible research and impartial information are critical to fostering fiscal responsibility. The Institute to Reduce Spending engages in and promotes rigorous academic research and scholarship on the subject of federal spending and budgeting. We seek to create a national, nonpartisan dialogue regarding spending reform by presenting information in a publicly accessible manner.

White House Will Continue Cost-Sharing Payments


It was rumored that the Trump Administration would end the cost-sharing reduction payments to health insurers after Congress failed to pass legislation repealing and replacing the Affordable Care Act. Now, a White House spokesman has confirmed that the payments will continue in August.

These payments are made to insurance companies to subsidize lower costs for certain people who purchase health insurance. The Congressional Budget Office found that ending the payments without further reforms could lead to increased premiums for some plans and add to the federal deficit as individual plans keep becoming more expensive and individuals receive higher subsidies.


Republican Study Committee Chair Rep. Mark Walker (R-NC) released a statement saying that, “We cannot dig our hands into a hole $20 trillion deep to bail out insurance companies. Even worse, we will be adding insult to injury by masking the failures of Obamacare at the expense of hardworking taxpayers.” He called on the Senate to continue working on a plan to repeal and replace Obamacare.


Fiscal conservatives should be wary of continuing to prop up the broken health care law. Republicans have been promising to repeal the law for years, as soon as they achieved united government — and now, seem to be continuing the status quo. Taxpayers should watch closely in the coming weeks, and Congress should look for real solutions, not more of the same.

House Reveals Budget Plan For Next Fiscal Year


The House released a budget plan that hopes to cut spending and help lead the way for one of the biggest administration promises: Tax reform. The budget anticipates deficit reductions of over $200 billion over the decade and an eventual surplus by 2027. It would achieve this goal through spending cuts of $5.4 trillion over the next ten years and economic projections that boost growth. Importantly, it also would use the Reconciliation process to achieve deficit reduction — which is the first time in over a decade that this process, which requires only a majority vote, would be used specifically to cut the deficit.


However, the spending for the upcoming fiscal year seems more close to the status quo. The plan calls for over $700 billion in Pentagon spending, more than in both President Trump’s budget and the recently passed House NDAA (this includes funding for Overseas Contingency Operations). While Trump’s budget called for decreasing domestic programs to offset the increase in defense, the House bill cuts non-defense agencies by a mere $5 billion. This bill would spend billions more on defense than what is currently allowed under the Budget Control Act caps — requiring bipartisan agreement adjusting those caps.


Over the next ten years, non-defense discretionary spending would drop nearly 25% to $424 billion—compared to $554 billion the federal government will spend this year. Additionally, mandatory spending cuts would equal $203 billion over the next decade. In the bill, these mandatory cuts are forced through reconciliation instructions, the first time since 2006 that the budget reconciliation process has been used for actually reducing the deficit.


Looking for real spending reform is all too necessary, especially when Republicans have a united government and years of promises to do just that. But with an annual budget of about $4 trillion and a national debt closing in on $20 trillion, the cuts on the horizon are just a drop in the bucket of overall spending. Washington’s spend-and-borrow mentality has to change if we want to truly address the growing fiscal crisis. These cuts and reforms are a good start, but real reform requires far more serious steps — and with everything on the table.

Budget Woes in the States Should be a Warning to Washington


The end of fiscal year 2017 is quickly approaching for the federal government. At the end of September, Congress is required to pass all 12 appropriations bills — something that they have historically failed to do, as our debt nears $20 trillion.


Yet throughout the states, there are similar struggles happening, and the long-term risks for Washington’s irresponsibility come into sharp focus. After a two-year stalemate, Illinois’ Democratic-controlled legislature, along with 15 House and Senate Republicans, came together to override Governor Rauner’s vetoes and pass a budget. In order to curb the massive budget shortfall, the state income tax was hiked dramatically, while a $130 billion shortfall in pension liabilities remains unaddressed along with the $15 billion in unpaid bills the state has accumulated.


Illinois will be forced to issue bonds and borrow from various state accounts to help pay the overdue bills. The state was on the brink of seeing their credit rating fall to “junk” status, which would’ve made them the first U.S. state in history to do so.


Nearly 900 miles east in New Jersey, the state is also having their share of budget problems. Gov. Chris Christie signed a budget just before the 4th of July holiday after a 3-day budget impasse, which resulted in a partial government shutdown.
New Jersey and Illinois are not the only states that are having issues passing budgets. With just hours to go before the new fiscal year began July 1, there were 11 states that had not yet agreed on a budget.


Irresponsible budgeting at the state level has become almost a given, and occasionally the warnings of inevitable fiscal crisis can be easy to ignore. But the all-too-real experiences of several states should serve not only as a warning for them to get their own finances in order but a reminder of what can happen if Washington does not.

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