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Budget Deal Already Paid for the 2017 Sequestration Relief

House conservatives are demanding that lawmakers pay for the $30 billion in sequestration relief for discretionary programs in 2017 that the President and Congress provided last year.  Policymakers, however, already paid for the funding increase when they provided it, so House conservatives are effectively demanding that they pay for it twice (and, in fact, even more in later years).

The 2015 Bipartisan Budget Act provided partial sequestration relief for 2016 and 2017 by including an additional $80 billion ($50 billion in 2016, $30 billion in 2017), equally divided between defense and non-defense discretionary programs.  That doesn’t mean, however, that appropriations will grow by $30 billion between 2016 and 2017; indeed, even with these additional funds, discretionary funding will remain roughly flat between 2016 and 2017.

As we’ve discussed before, policymakers essentially offset the cost of the sequestration relief with $80 billion of savings, based on Congressional Budget Office estimates.  The savings accrue over ten years, and some of the offsets produce permanent savings further into the future.  That’s good.  Because the funding increases are limited to 2016 and 2017, the deal would increase deficits early on but reduce them in later years — focusing more deficit reduction over the long run, where our most stubborn fiscal challenges lie.  

The House conservatives, though, say they want to pay for the increase in 2017 appropriations again, with more cuts in entitlement programs.  While the specifics remain unclear, some conservatives say they want cuts that yield $30 billion of savings in 2017 and then even more in later years.

Rep. David Brat, a member of the House Budget Committee and the conservative House Freedom Caucus, wants to achieve “$30 billion in mandatory [entitlement] savings in year one, and $80 billion over a few years.”  The entitlement cuts required to achieve $30 billion in mandatory savings in 2017 would likely generate several hundred billions in savings over the decade.

House conservatives haven’t identified which programs to cut.  But Social Security, Medicare, Medicaid, and safety net programs comprise the bulk of entitlement funding.  Cuts of this magnitude almost certainly would adversely affect people who are least able to afford them.

Thus, House conservatives are seeking ways to make big cuts in entitlement programs, and they’re using the already-offset sequestration relief to justify them.  That’s not surprising, given their previous budget proposals.  But, policymakers have already offset the $30 billion in sequestration relief for 2017, and that relief shouldn’t be a rationale for the new cuts House conservatives want to make.

Joel Friedman
Vicepresidente Sénior de Política Fiscal Federal