The House Budget Committee on June 21, 2018, approved by a 21-13 vote a fiscal year 2019 budget resolution that reaffirms Republican intentions to cut spending — through savings of $5.4 trillion in mandatory programs over 10 years, including $302 billion through budget reconciliation — and make permanent the temporary provisions of the Tax Cuts and Jobs Act (TCJA).

The FY2019 budget is not guaranteed a vote in the full House, and Senate Republicans have signaled they are unlikely to pursue a budget resolution this year. Congress set spending levels for FY 2019 in the February Bipartisan Budget Act of 2018 and have already begun writing appropriations bills to those numbers, meaning the House budget resolution may amount only to a messaging document. It is conceivable that the reconciliation instructions in the resolution could be tapped for tax legislation, but Republican leaders have announced no plans to strive for a bicameral budget agreement that is required to unlock the reconciliation process. The resolution also leaves an opening for repealing and replacing the Affordable Care Act (ACA) through the reconciliation process.

The Ways and Means Committee is charged under the resolution with recommending $150 billion in deficit reduction over 10 years from various safety net programs, including Medicare and Medicaid, along with other assistance programs such as the Temporary Assistance for Needy Families program and Supplemental Security Income. The budget also notes a responsibility to preserve resources in Medicaid and Medicare, encourages Medicaid work requirements, and stresses the need to address Medicare's impending insolvency.

The summary document accompanying the FY 2019 resolution notes that the fiscal challenge posed by unsustainable mandatory spending extends beyond retirement, health care, and low-income programs into all functions of the government, including federal employee retirement, agriculture and higher education subsidies, and other programs. Ten other House committees are also required to achieve certain amounts of savings.

Last year, the FY 2018 budget resolution approved in the House Budget Committee in July 2017 similarly called on 11 committees to recommended changes to achieve at least $203 billion in mandatory savings over 10 years. However, that process was dropped as the House ultimately voted to approve the Senate budget resolution with reconciliation instructions to the tax-writing and energy committees to write legislation resulting in a net tax cut of $1.5 trillion over a 10-year period and allowing energy exploration in ANWR. That resolution allowed the TCJA to be approved in the Senate by a simple majority, rather than requiring 60 votes.

Overall, the FY 2019 resolution aims to achieve $8.1 trillion in deficit reduction over 10 years and a balanced budget within nine years, with surpluses of $26 billion in FY 2027 and $142 billion in FY 2028. Under budget assumptions, debt held by the public will decline from 78% of GDP currently to approximately 64% of GDP in FY 2028. It assumes adoption of the spending rescissions package approved by the House on June 7, but blocked in the Senate this week.

The resolution includes a reserve fund for extending the "pro-growth tax policies" of the TCJA, without identifying specific provisions. Individual tax cuts under the TCJA expire in 2025 and full expensing is phased down after 2022. The debate between Republicans and Democrats around tax assumptions in the budget could be a precursor for debate on future legislation Republicans are contemplating to make additional tax provisions in the TCJA permanent.

The Ways and Means, and Energy and Commerce committees, who oversee most ACA programs, both receive reconciliation instructions in the budget resolution, however there are no additional policy specifics. The conservative budget proposal also notes that the ACA should be repealed and replaced with "a patient centered, free-market health care system."

The Committee defeated Democratic amendments, including several that would restore funding for other priorities under the budget resolution by rolling back portions of the TCJA, and Ranking Member John Yarmuth's (D-KY) amendment "to close the carried interest tax loophole, which unfairly allows wealthy asset managers to disguise their compensation and pay lower taxes."

The resolution and a summary document are attached.

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ATTACHMENTS

Budget Addendum

Budget Resolution