The RSC Budget: A Preliminary Look

Patrick Louis Knudsen / March 27, 2012

The Republican Study Committee (RSC) budget introduced today addresses six key fiscal criteria.

It launches decisive entitlement reforms, cuts spending sharply and quickly, avoids tax hikes, includes pro-growth tax reform, provides for a strong national defense, and moves aggressively—within five years—to a balanced budget.

The plan falls short in substantiating many of its significant spending cuts with adequate policy detail, but it is an ambitious effort aimed at solving the twin crises of spending and debt.

The plan contains $3.4 trillion in entitlement savings. It repeals Obamacare. It includes a solid (though very basic) step for Social Security by gradually raising the retirement age, and it boldly transforms Medicare into a premium support program, a la Paul Ryan. But these changes do not start for 10 years. This practice of “grandfathering the grandparents” forces the budget to cut more deeply in other areas.

The plan block-grants Medicaid, prevents a reckless 10 percent ($55 billion) sequestration of national defense funds in fiscal year 2013, and provides $554 billion in base defense discretionary spending in 2013. To replace the defense sequester, the RSC plan slashes other 2013 discretionary spending to $931 billion—$112 billion below the 2012 spending cap of $1.043 trillion (excluding funds for activities in Iraq and Afghanistan)—and freezes it at that level through 2017.

The plan has no tax hikes and includes the RSC’s Jobs Through Growth Act (H.R. 3400), which draws a blueprint for pro-growth tax policies that would benefit from more policy details. This collection of policies swiftly brings the budget into balance in 2017, with tax revenue at 18.5 percent of GDP.

This budget would benefit from more substantive policy detail about how it would achieve its deep and rapid spending cuts. To be sure, RSC does not have the same access to the Congressional Budget Office and other resources that budget committees do, but budgets should be driven more by policy than numerical targets.

Nevertheless, the RSC budget reflects the need to reverse the explosion of federal spending and debt that threatens the country’s economy. Notwithstanding its limitations, the aims and convictions behind this plan should not be ignored.