The House Republicans have released an alternative to the Democrats’ budget. Instead of following the Democrats’ path of raising taxes by more than $3,000 per household to finance large spending hikes, the GOP would maintain current tax rates, repeal the Alternative Minimum Tax, and rein in runaway discretionary spending.
Importantly, the House GOP budget would take the first steps to address the escalating costs of entitlements, which are currently scheduled to increase by 6% annually over the next decade, lead by Social Security (6% annually), Medicare (7%), and Medicaid (8%). These costs represent the first down payment on the coming entitlement spending tsunami that will be driven by the retirement of 77 million baby boomers, and the general rise in health care costs.
The House Republican budget would include reconciliation instructions to reduce the growth of these entitlements by $412 billion over five years. While this is certainly a large number, it would only reduce the annual growth of entitlements from 6% to just over 4% annually — a wise first step. Furthermore, this proposal is comparable to the reconciliation bills of 1990, 1993, and 1997, which helped balanced the budget with similar-sized spending reforms (adjusted for inflation). With today’s challenges even larger than those of the 1990s, Congress should embrace these reforms.
Finally, the House Republican budget includes a one-year moratorium on earmarks and applies that $14.8 billion toward deficit reduction. It limits the creation of additional long-term spending commitments, closes PAYGO loopholes, creates an emergency reserve fund, prohibits domestic add-ons to emergency war spending bills, and requires that the House actually take a separate vote when raising the government debt limit. These reforms will bring more accountability to a budget process run amok.