Committee for a Responsible Federal Budget
Budget Process

How Committees Could Meet Reconciliation Instructions for Mandatory Savings

(Update 7/20/2017): The House Budget Committe has since released its FY 2018 budget resolution and reconciliation instructions. You can read an updated version of this blog here.

Recent press reports have suggested that the upcoming House budget resolution for Fiscal Year 2018 may include reconciliation instructions for about $200 billion in savings from mandatory spending programs, and some lawmakers have expressed concern that achieving that level of savings could be unrealistic. On the contrary, there are many options available to meet such targets, including many that have been proposed by both Presidents Trump and Obama in their budgets.

Budget resolutions can include reconciliation instructions that identify and direct the relevant authorizing committee(s) to report legislation that achieves enough savings to meet the fiscal targets laid out in the budget resolution. While the budget resolution can suggest certain policies, it is entirely up to the committees to decide how their targets are met (for more information, see our Reconciliation 101).

The authorizing committees with major mandatory programs in their jurisdiction include:

  • Agriculture oversees crop insurance and other farm subsidies, as well as nutrition programs like the Supplemental Nutrition Assistance Program (SNAP, or food stamps). Possible savings could come from enacting some or all of the SNAP reforms in the President’s budget or scaling back farm subsidies, as both Obama and Trump have proposed.
  • Armed Services has jurisdiction over military retirement programs and the TRICARE program that provides health care for service members, retirees, and their families. Several options exist to reform military retirement benefits or increase cost sharing in TRICARE that would generate mandatory savings.
  • Budget does not have jurisdiction over particular mandatory programs, but it does have jurisdiction over budget enforcement mechanisms and could achieve about $39 billion in mandatory savings by extending the mandatory sequester, which is scheduled to expire in 2026.
  • Education and the Workforce has jurisdiction over federal education and student loan programs, which both Presidents Trump and Obama have suggested reforming. It also shares jurisdiction over the Pension Benefit Guaranty Corporation (PBGC), whose premiums Obama and Trump have both proposed raising, with Ways and Means. 
  • Energy and Commerce (E&C) has a broad purview that includes most mandatory energy programs, electromagnetic spectrum auctions, various user fees, and general revenue-financed health programs like Medicaid, CHIP, and Medicare Parts B and D (partially shared with Ways and Means). In particular, savings from Medicare—the largest and second fastest-growing on-budget program—could be particularly significant and should be a part of any serious effort to control the growth of mandatory spending. As we have noted before, there are many ways to reduce Medicare expenditures without cutting benefits.
  • Financial Services could generate substantial savings by eliminating mandatory spending for certain regulatory agencies or ending the Orderly Liquidation Fund created by the Dodd-Frank financial regulation reform.
  • Homeland Security does not oversee any major mandatory programs but could still generate some mandatory savings by increasing Transportation Security Administration fees charged to flight passengers.
  • Judiciary does not directly oversee any major mandatory spending programs, but it does have broad jurisdiction over matters relating to law and justice and could potentially generate mandatory savings through policies like medical malpractice reform. It could also rescind money from the Crime Victims Fund, which would generate savings and prevent the use of a major budget gimmick.
  • Natural Resources has jurisdiction over federal lands, water projects, and mineral resources. The committee could generate mandatory savings by leasing additional federal lands, redirecting oil and gas revenues currently shared with state governments, or ending federal support for agencies currently responsible for marketing hydropower. 
  • Oversight and Government Reform (OGR) has jurisdiction over federal employee pay and benefits. Potential options for savings might include reducing the generosity of federal retirement benefits or increasing employees' retirement contributions, which both Presidents Obama and Trump have proposed.
  • Transportation and Infrastructure (T&I) oversees federal infrastructure programs and Highway Trust Fund spending. Possible committee savings could come from establishing new fees to fund the Inland Waterways Trust Fund or limiting Highway Trust Fund spending to dedicated tax revenues once the fund exhausts in 2021.
  • Veterans Affairs oversees federal veterans programs, including health care, disability, retirement, housing, and readjustment benefits. Presidents Trump and Obama both proposed capping benefits for flight training programs and rounding down annual cost-of-living adjustments (COLAs) for disability compensation benefits to the nearest dollar, and President Trump’s budget further proposed ending Individual Unemployability benefits for veterans age 62 or older. 
  • Ways and Means (W&M) has jurisdiction over all tax revenues and mandatory outlays from refundable tax credits as well as most Social Security Act programs, including Social Security (which cannot be changed in reconciliation), Supplemental Security Income (SSI), Unemployment Insurance, and Temporary Assistance for Needy Families (TANF). President Trump's budget included a number of reforms to these programs, including reducing TANF block grants and reducing SSI benefits for multi-recipient households. Ways and Means also has exclusive jurisdiction over Medicare Part A and shares jurisdiction over Part B with Energy and Commerce, and the committee should ideally be instructed to report savings that improve the solvency of Part A's Hospital Insurance Trust Fund.

Major Mandatory Savings Options by House Committee

Committee(s) Policy Trump Budget Obama Budget 10-Year Savings
Agriculture Enact a retailer application fee for SNAP Yes   $2 billion
Agriculture Enact user fees for food safety, animal and plant health, and grain inspections Yes Yes $1 billion to $6 billion
Agriculture Limit SNAP work requirement waivers to high unemployment areas Yes   $21 billion
Agriculture Restrict categorical eligibility for SNAP Yes   $31 billion
Agriculture Reduce farm subsidies Yes Yes $18 billion to $38 billion
Agriculture Require states to match 25% of all SNAP costs Yes   $116 billion
Armed Services Increase annual premiums for TRICARE-for-Life enrollment   Yes $1 billion
Armed Services Increase TRICARE pharmacy copays Yes Yes $3 billion
Armed Services Introduce minimum out-of-pocket payment for TRICARE-for-Life     $27 billion
Budget Extend mandatory sequestration Yes   $39 billion
Ed & Workforce Increase origination fees for student loans from 1 to 4 percent     $19 billion
Ed & Workforce Eliminate Public Service Loan Forgiveness Yes   $27 billion
Ed & Workforce Eliminate subsidized student loans Yes   $39 billion
Ed & Workforce Consolidate income-based repayment plans into a single program Yes Yes $49 billion to $76 billion
Energy & Commerce Extend spectrum auction authority Yes Yes $7 billion
Energy & Commerce Modify Medicare Part B drug reimbursements   Yes $7 billion
Energy & Commerce Encourage use of generic drugs by low-income Medicare beneficiaries   Yes $9 billion
Energy & Commerce Accelerate manufacturer discounts for brand name drugs   Yes $12 billion
Energy & Commerce Reduce Strategic Petroleum Reserve by half Yes   $17 billion
Energy & Commerce Expand Medicare and Medicaid drug rebates   Yes Up to $150 billion
Financial Services Restructure the Consumer Financial Protection Bureau Yes   $7 billion
Financial Services Reform the National Flood Insurance Program Yes   $9 billion
Financial Services Eliminate Orderly Liquidation Fund Yes   $15 billion
Homeland Security Increase aviation passenger security fees   Yes $5 billion to $25 billion
Judiciary Rescind money from the Crime Victims Fund     $10 billion
Natural Resources Lease oil and gas in the Arctic National Wildlife Refuge Yes   $2 billion
Natural Resources Repeal Gulf of Mexico Energy Security Act payments to states Yes   $4 billion
Natural Resources Repeal borrowing authority for Western Area Power Administration Yes   $4 billion
Natural Resources Divest Bonneville Power Administration transmission assets Yes   $5 billion
OGR Peg G-Fund interest rate to 3-month Treasuries     $33 billion
OGR Reduce federal retirement benefits Yes   $35 billion
OGR Reduce COLAs for federal retirement benefits Yes   $42 billion
OGR Increase federal employees' retirement contributions Yes Yes $20 billion to $72 billion
T&I Establish user fees to fund inland waterways Yes Yes $1 billion
T&I Establish a rail safety fee     $2 billion
T&I Limit Highway Trust Fund outlays to dedicated revenues Yes   $95 billion
Veterans Affairs Cap benefits for Post-9/11 GI Bill flight training Yes Yes $1 billion
Veterans Affairs Extend round-down of COLAs for veterans' benefits Yes Yes $3 billion
Veterans Affairs Eliminate Individual Unemployability benefits for those 62 and over Yes   $41 billion
Ways & Means Improve Child Support Enforcement Yes Yes $1 billion
Ways & Means Improve Unemployment Insurance program integrity Yes Yes $1 billion to $2 billion
Ways & Means Fund Reemployment Services and Eligibility Assessments Yes Yes $2 billion to $4 billion
Ways & Means Eliminate TANF contingency fund Yes   $6 billion
Ways & Means Decrease SSI benefits for multi-recipient families Yes   $9 billion
Ways & Means Increase Customs Merchandise Processing Fee     $10 billion
Ways & Means Reduce TANF block grant Yes   $16 billion
Ways & Means Eliminate the Social Services Block Grant Yes   $17 billion
Ways & Means Require a Social Security Number for Child & Earned Income Tax Credits Yes   $40 billion
Ways & Means Reform and reduce payments for graduate medical education   Yes $15 billion to $40 billion
Ed & Workforce and W&M Increase PBGC premiums to improve solvency (multi-committee) Yes Yes $16 billion
E&C and W&M Reform Medicare cost-sharing (multi-committee)     Up to $20 billion
E&C and W&M Restrict medigap plan coverage (multi-committee)     $45 billion
E&C and W&M Expand bundled payments and promote new payment models (multi-committee)   Yes $5 to $50 billion
E&C and W&M Reduce Medicare coverage of bad debts (multi-committee)   Yes $15 to $50 billion
E&C and W&M Reduce payments to post-acute providers (multi-committee)   Yes $25 to $75 billion
E&C and W&M Adopt competitive bidding for Medicare Advantage (multi-committee)   Yes $25 to $50 billion
E&C and Judiciary Limit medical malpractice claims (multi-committee) Yes   $50 to $70 billion

Source: Office of Management and Budget, Congressional Budget Office.

While past GOP budgets achieved a large share of their overall savings by reforming Medicaid and repealing coverage provisions of the Affordable Care Act (which will be largely unavailable this time around, as those savings will be used for "repeal and replace" legislation), they also included substantial mandatory savings elsewhere. Then-House Budget Chairman Tom Price's (R-GA) FY 2017 budget included roughly $450 billion in Medicare savings and nearly $1.5 trillion in savings from other mandatory programs. However, those savings were assumptions with no reconciliation instructions requiring committees achieve them and were never enacted.

As we stated in our Principles for the Fiscal Year 2018 Budget Resolution, the budget resolution should include a plan to control the growth of mandatory spending and reconciliation instructions to make that plan happen. Achieving $200 billion in mandatory savings will require choices about the size and role of government, but it is also a modest goal compared to what is needed to put our debt on a sustainable path. The authorizing committees have a range of options available to meet such a target and should engage in a policymaking process to begin to address our long-term debt.