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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.
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Will Congress punt on debt limit?

The fight over the debt limit and competing priorities has been building for some time, but it looks as though Congressional leaders have come together to put off the fight for several months as part of a package to send federal aid to victims of Hurricane Harvey.
 
Congressional Democrats said on Wednesday that they were willing to support a package to raise the debt limit for three months and send aid to Texas:
 

In a joint statement issued Wednesday, House Minority Leader Nancy Pelosi (D., Calif.) and Senate Minority Leader Chuck Schumer (D., N.Y.) said they would back a bill expected to come up for a vote in the House on Wednesday that would provide $7.85 billion in Harvey emergency aid.
 
Senate GOP leaders indicated Tuesday they plan to attach an increase in the debt limit, a politically difficult vote for many Republicans, to the popular Harvey aid. Already some conservative Republicans have balked at the combination, saying they won’t support raising the debt limit without taking other steps to rein in federal spending.

In times of natural disaster and public emergencies, the pressure to spend more without responsibility becomes even greater. We hope that members of Congress do not forget the disaster that looms just a few years down the road if they fail to address the nation’s runaway spending and debt.

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.

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