Republican Study Committee Offers Bold Vision for a More Prosperous Future

COMMENTARY Budget and Spending

Republican Study Committee Offers Bold Vision for a More Prosperous Future

May 2nd, 2019 6 min read
Justin Bogie

Part-Time Senior Policy Analyst in Fiscal Affairs

Justin Bogie serves as a part-time senior policy analyst in fiscal affairs at The Heritage Foundation.
The Republican Study Committee's proposed budget would prioritize core constitutional functions of the federal government. Omar Chatriwala/Getty Images

As news circulated Tuesday that President Donald Trump, House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., are eyeing a $2 trillion infrastructure spending package, the House Republican Study Committee introduced a budget proposal that recognizes that America’s $22 trillion—and rapidly growing—national debt is unsustainable, and that Congress must change course. 

Preserving American Freedom,” the Republican Study Committee’s comprehensive fiscal 2020 budget proposal, would rein in Washington’s spending addiction by prioritizing core constitutional functions. 

By reducing inappropriate and wasteful spending and right-sizing the federal government, the committee’s proposal would balance the budget in six years and start paying down the national debt.

Here are six takeaways from the 2020 Republican Study Committee budget.

1. Balances the budget. 

The GOP committee’s budget would downsize the federal bureaucracy and focus spending on constitutional responsibilities. It would also take steps to rein in autopilot mandatory spending such as Social Security and health care programs, saving money and putting those programs back on a path to solvency.

In total, the proposal would cut spending by $12.6 trillion over the next decade. By 2025, the Republican Study Committee plan would reverse trillion-dollar deficits and balance the budget, without raising taxes. 

The national debt held by the public would quickly stabilize and then decrease to $18 trillion by 2029, $10.7 trillion below Congressional Budget Office projections.

2. Prioritizes defense spending within the total Budget Control Act cap. 

“Preserving American Freedom” provides $745 billion in total defense funding in 2020. Over the next decade, national defense would receive more than $7.7 trillion.

The proposal promotes a threat-oriented budget. It allocates resources to defense based on the missions that have been assigned to our military, rather than an arbitrary cap. 

It would also move so-called overseas contingency operations to the base budget, eliminating what has far too often been a gimmick to increase spending. 

The Republican Study Committee budget would pay for additional defense resources through cuts to improper and wasteful domestic programs. 

Total discretionary spending would remain below the Budget Control Act cap level through 2021. 

Congress should follow the committee’s approach to discretionary spending instead of contemplating another two-year budget deal to bust the caps. 

3. Creates a more targeted Social Security system.

The Republican Study Committee budget proposes commonsense entitlement reforms that would make Social Security solvent without raising taxes on workers, while also increasing benefits for lower-income earners. 

Most notably, the committee’s budget would shift toward a flat benefit for both Social Security’s retirement and disability insurance programs; increase the minimum benefit for lower-income earners; adjust the retirement eligibility age to account for changes in longevity; use a more accurate inflation measure to adjust benefits; and phase out auxiliary benefits for higher-income earners.  

Preserving American Freedom” would also improve the efficiency and fairness of the Social Security Disability Insurance program, as well as its finances, through changes such as implementing a needs-based benefit period; updating the eligibility criteria to reduce the role of non-medical factors; prohibiting double-dipping between unemployment insurance and disability insurance; eliminating the Social Security Administration as the middleman in payments to Social Security Disability Insurance representatives; reducing fraud; improving the application and appeals process; and providing options to utilize more efficient and effective private disability insurance.

Based on existing analysis of either similar or identical proposals, using The Heritage Foundation’s Social Security Model, we estimate that the Republican Study Committee’s proposed changes would make Social Security solvent over the long run without raising taxes on anyone. 

These reforms would actually pave the way for a future payroll tax cut.

Creating a more targeted Social Security system is crucial to America’s future because entitlements are the drivers of our country’s unsustainable spending and debt. 

A smaller Social Security system will also help workers and retirees have higher incomes throughout their lifetimes because it will limit the drag that Social Security’s pay-as-you-go structure imposes by stripping workers of the opportunity to invest some of their money that now goes to payroll taxes, and grow their savings over time.

4. Provides cost-effective health care alternatives. 

The Republican Study Committee budget rightly recognizes the need to address Americans’ health care concerns: Costs are too high, and choices are too few—a situation driven by flawed government policies that put too many barriers between doctors’ and patients’ ability to work directly together. 

The committee’s budget rightly takes important steps to address many of those government policies.  

Committee members also continue to work toward refining their health care reform policies. A good next step is to adopt more elements of the Health Care Choices Proposal, a proposal endorsed by dozens of policymakers across the country and Trump’s budget.  

It would build on the committee’s proposals in ways that would result in lowering premiums by up to one-third, expanding private options and protecting the vulnerable, including those with pre-existing conditions—all without spending a dime of new federal taxpayer money. 

The Health Care Choices Proposal would provide consumers more control over their existing subsidies and would stop, as is the case today, forcing millions of them on to government-run health plans with no recourse to choose private coverage.  

It also would build on the success of Trump’s regulatory relief in expanding choices and lowering costs.  

5. Makes tax cuts permanent and gives Americans more freedom over savings.

Building on the success of the Tax Cuts and Jobs Act, the budget illustrates how Congress can extend and expand tax cuts for American workers and further support our healthy economy. 

The budget highlights the importance of allowing businesses to continue to invest in America through permanent expensing and better treatment for new housing and manufacturing floor space.

Repeal of many special-interest tax subsidies and full elimination of the state and local tax deduction allow tax rates to decrease even further for all Americans. 

The Republican Study Committee budget highlights the important benefits to creating a Universal Savings Account for all-purpose savings. This reform has been gaining traction as a key component of the next round of tax reform. 

A Universal Savings Account reduces taxes on savings and helps families build financial security through a single, simple, and flexible savings account. They are like turbocharged retirement savings accounts—except without all the complicated, Washington-imposed rules. 

Every American could deposit after-tax income into such an account, and all subsequent earnings from the account would be tax-free. The committee’s budget improves on the most recent congressional Universal Savings Account proposal by raising the yearly deposit limit from $2,500 to $10,000.  

6. Reforms the budget process. 

The Republican Study Committee budget presents a number of budget process changes that would create a more responsible, accountable, and transparent spending process. 

Reforms include banning earmarks permanently, adopting a balanced budget constitutional amendment, reversing the Congressional Budget Office’s baseline bias toward higher spending, requiring a supermajority to adopt a continuing resolution, extending and expanding mandatory sequestration, and cracking down on zombie appropriations, among others. 

These are commonsense proposals that should garner bipartisan support and ensure that lawmakers are being good stewards of taxpayers’ money. 

Americans Need Bold Leadership From Congress

Last month, the Democrat-controlled House of Representatives failed to meet its statutory duty to pursue a budget resolution, shirking one of lawmakers’ fundamental duties. 

Rather than developing a comprehensive budget plan, the House Budget Committee chose to pursue a reckless spending deal that could increase the debt by over $2 trillion

Meanwhile, Democratic leaders in Congress and Trump are considering a $2 trillion infrastructure package that could further add to the debt.

Massive spending increases are an easy way out for lawmakers, in that Congress isn’t forced to prioritize competing resources. That approach is shortsighted and ignores the budget realities our country is facing and would burden future generations with more debt and higher taxes. 

Following the status quo has led America deeper into debt and closer to the brink of a budget disaster. The committee’s budget is a strong rebuke of the status quo and returns the federal government closer to the limited role envisioned by our nation’s Founding Fathers. 

In doing so, the Republican Study Committee presents a bold vision for a freer, more prosperous future with less government intervention and more opportunities for all Americans. 

Heritage Foundation experts Adam Michel (taxes), Marie Fishpaw (health care), Rachel Greszler (Social Security), and Drew Gonshorowski (Social Security modeling) contributed to this piece.

This piece originally appeared in The Daily Signal