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Congress quietly passed a budget outline with $1.8 trillion in health care cuts

Will the cuts become law? Unlikely. Does the budget vision matter? Definitely.

Congressional Budget Office Director Keith Hall Testifies On Office's Long Term Fiscal Outlook
Senate Budget Committee Chair Mike Enzi (right), with ranking member Bernie Sanders.
Chip Somodevilla/Getty Images
Dylan Matthews is a senior correspondent and head writer for Vox's Future Perfect section and has worked at Vox since 2014. He is particularly interested in global health and pandemic prevention, anti-poverty efforts, economic policy and theory, and conflicts about the right way to do philanthropy.

The budget resolution adopted by the US Senate last week, and by the House of Representatives on Thursday, is not a law. It cannot be signed or vetoed by the president, and the policies it recommends are just that — recommendations.

But it still matters. The budget resolution changes the rules for passing certain legislation, especially in the Senate, and this resolution in particular will allow Republicans to pass $1.5 trillion in tax cuts (or more, depending on how they choose to do the math) over 10 years with only 51 votes.

The budget also stands as a vision of what the Republican majority wants to do, and perhaps would do if it had eight or nine more votes in the Senate. It tells you what programs they’d protect and which they’d expand, what groups would see funding boosted and who would be left holding the bag. Its underlying numbers tell you how serious the party leaders are about their stated goal of balancing the budget.

The agenda the resolution outlines is radical. The federal welfare state would be rolled back in just about every dimension, with health care programs particularly affected. All non-Medicare health programs would see a cut of $1.3 trillion, or nearly 30 percent, by 2027, according to the Center on Budget and Policy Priorities.

Medicare would be cut too, to the tune of $473 billion. There is $1 trillion over 10 years in mystery cuts to mandatory programs, cuts that would in practice almost certainly hurt programs for the poor.

It’s possible this plan is cheap talk, that if the rubber hit the road and these policies were actually in danger of being enacted, some GOPers would defect and the plan wouldn’t pass. But simply as a piece of rhetoric, the budget is important. It suggests that basically every Republican in each chamber (the only senator opposed was Rand Paul, who wanted deeper cuts) is comfortable aligning himself or herself with an agenda that radically cuts the social safety net, for the poor but also retirees and the middle class more broadly.

The budget would eviscerate spending for health care

Using numbers assembled by the Center on Budget and Policy Priorities, and analyzed further by the Committee for a Responsible Federal Budget, I compared how much spending major budget items receive under the Republican blueprint with the levels of spending predicted in the Congressional Budget Office’s most recent budget projections in June.

Funding for non-Medicare health programs, most notably Medicaid and Obamacare, would take a $1.3 trillion hit, a 20 percent cut over the course of 10 years, increasing to a 29.3 percent cut by 2027. This is even larger than the 10-year Medicaid cuts included in Graham-Cassidy or the American Health Care Act, though smaller than the massive cuts of Trump’s budget proposal, which would’ve cut Medicaid nearly in half by 2027.

Trump didn’t propose cutting Medicare, as he famously promised during the 2016 campaign to protect the program. (He promised to protect Medicaid too, but has been very willing to break that promise.) But the Republican budget does cut Medicare, by $473 billion over 10 years, or 5.5 percent, rising to a 9 percent cut by 2027.

How will the plan enact these cuts? How will it repeal Obamacare and eviscerate Medicaid funding and slash Medicare? We don’t really know.

Budget plans vary widely in their level of detail. When Paul Ryan was the top Republican on the Budget Committee, he used to list individual reforms he wanted to major spending programs, like block-granting Medicaid or converting Medicare to a “premium support” program, where the government subsidizes seniors’ purchase of private insurance.

Those ideas are still broadly popular with Republican members of Congress. But the budget offers very few specifics about which ones it would endorse. It calls for repealing Obamacare and gestures at block grants for Medicaid (“state flexibility”), but is otherwise vague.

"The budget resolution supports continued efforts to repeal and replace Obamacare," the resolution’s “committee print,” a document purporting to explain its provisions in detail, says. "It enables efforts by authorizing committees to lower health care costs and improve the quality of care for all Americans. It empowers committees to work to modernize and improve Federal health care programs, increase state flexibility, and protect the most vulnerable. In addition, the budget supports an extension in funding for the State Children's Health Insurance Program."

The section on Medicare is no clearer, hinting at cuts but offering no guidance as to how they’ll be implemented: "Medicare spending is on an unsustainable course. … Given this untenable situation, the budget resolution supports work by the authorizing committees to recommend legislative solutions extending Medicare's solvency in the near term, while pursuing policies that place the program on a sustainable long-term path."

All that we know is that a world where this budget’s limits are respected is a world where Medicare, Medicaid, and Obamacare subsidies all face substantial cuts, with a likely reduction in access, especially for Medicaid recipients, as the inevitable result. It’s a world with Obamacare repeal and then additional cuts after that.

Just about every other safety net program would suffer too

Also facing huge cuts, to the tune of $653 billion or 13 percent over 10 years (and 15.8 percent by 2027), is the “income security” spending category.

That includes a variety of major programs, most notably the Supplemental Nutrition Assistance Program (SNAP, or food stamps), Supplemental Security Income (SSI, an anti-poverty program that gives cash to seniors and disabled people), the earned income tax credit (EITC) for people too poor to pay taxes, unemployment insurance, and both military and civilian federal employee pensions.

“Waste, fraud, and abuse continue to plague some programs,” the committee document reads. (Error rates in these programs are, in fact, low and what errors do occur tend to be unintentional and due to programs’ complexity.) It expresses concern that enrollment in these programs rose during the recession, and worries that it is not falling fast enough as the economy recovers (in fact, enrollment is falling very quickly).

The document then describes vague reforms — “providing states with flexibility” to target assistance to the neediest, “ensuring programs for vulnerable populations will be protected,” and working “to reduce spending on duplicative and wasteful programs — again alluding to the possibility of block-granting some or all of these programs to the states.

Senator and former presidential candidate Marco Rubio has proposed something like this called a “flex fund,” where states would get money currently allocated for federal entitlements like SNAP (and federal-state ones like Medicaid) and be allowed to spend it as they wish. House Republican budgets have often proposed similar block grants accompanied by cuts, and House Speaker Paul Ryan has a proposal called “opportunity grants” that strongly resembles Rubio’s.

The budget also explicitly calls for cutting retirement benefits for federal workers. “It is imperative that the Federal employee benefit system be reformed to ensure fairness to both recipients and taxpayers,” it reads.

It’s hard to estimate exactly how much people will be hurt by these cuts without more specifics, but the CBPP offers one good example. The House and Trump budgets, which were more specific than the Senate one, proposed at least $140 billion in cuts to SNAP over 10 years. If that were to be made up solely by kicking people off the program, it would mean 9 million to 10 million more people without food stamps.

The budget would further cut $800 billion from "non-defense discretionary spending," while leaving the official defense budget alone (more on that in a second). Non-defense discretionary encompasses just about everything the federal government does outside of the military and entitlement programs like Medicaid or food stamps or Social Security. It’s funding for the FBI, for the National Institutes of Health and other biomedical research, for the Centers for Disease Control and Prevention, for the State Department and Environmental Protection Agency and Treasury Department, and on and on and on.

Trump’s budget proposes more specific cuts to these groups, including slashing medical research and gutting State and the EPA especially. The Senate budget dials back some of those specific cuts. It states that funding for science and technology, and international affairs, is to stay at baseline levels. But spending on environment and natural resources falls by $14.3 billion over 10 years, "to reduce inefficiencies and combat waste, fraud, and abuse of taxpayer resources." Agriculture spending falls by $20.6 billion, and transportation by $207.7 billion (reducing spending only to what gas tax revenues can afford, ignoring infrastructure analysts who say the gas tax must be increased to fund repairs).

It’s hard to imagine cuts of that scale occurring without major reductions in services or programming. And roughly $600 billion of the $800 billion in cuts is just not specified at all. The budget claims that international affairs and science and technology wouldn’t suffer with those cuts. But with $600 billion in mystery cuts, it’s hard to take the budget at face value.

War is over (if you want it)

One part of the budget is wiped out entirely under the new blueprint: overseas contingency operations, or the war budget. This is meant to cover the additional cost of America’s operations in Afghanistan and other war theaters, though due to limits placed on the formal defense budget in the 2011 budget deal between President Obama and Republicans in the House, the “OCO” budget, as it’s called, has become something of a slush fund for defense spending.

Since the funding cut is 100 percent, I left it off the graph above. But it is an $853 billion (or 79.9 percent) cut over 10 years, and a $122 billion or 100 percent cut come 2027, relative to spending the CBO is currently assuming. That makes it an even bigger cut in dollar figures than the cuts to income security or to Medicare:

The first year’s money matches this year’s request from the Trump administration, as the committee print is sure to note. But then funding just fades away. And reading the committee print, it doesn’t appear that this is a policy statement about the wisdom of engaging in future wars.

The CBO assumes that discretionary spending keeps growing with inflation, without further changes. That’s why it shows $122 billion in war spending in 2027. But to make their budget balance more easily, Republicans in Congress have just assumed all that spending goes away.

Normal defense spending, however, they do not propose cutting at all.

Republicans balance the budget with clearly fishy math

That’s not the only odd budget gimmick embraced by Congressional Republicans. There’s also $1 trillion over 10 years in unspecified "allowances" or "government-wide savings." If that sounds like nonsense, that's because it is. It's basically a magical asterisk that assumes $1 trillion more in cuts to mandatory programs (health programs, income security, etc.) that are not otherwise specified. If obeyed, that means even steeper cuts to health care and anti-poverty programs. But more likely this just functions as a way to make the math work and have the budget balance by 2027.

Except even that gimmick, and the war spending gimmick, and the magical $600 billion in non-defense spending savings, isn’t enough for budget balance. The budget also assumes a huge, improbable increase in economic growth due to tax cuts, an increase from the average of 1.8 percent per year that the CBO projects to 2.6 percent per year. Because presumably the tax cuts would take a while to ramp up, the economic feedback being assumed is even great than that.

This increase lets congressional Republicans assume nearly $1.4 trillion more in savings, due to increased revenue and less reliance on social welfare programs in light of all this growth.

For contrast, remember that this budget authorizes a $1.5 trillion tax cut over 10 years. The budget is assuming almost $1 in new growth-derived revenue for every $1 in tax cuts. Right now, about 25 percent of economic growth goes back into the government in the form of taxes. That means that for the budget’s math to make sense, every $1 of tax cuts has to lead to $5 or more in increased economic activity. That strains credulity, to say the least.

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