Spending Reduction Act

The Spending Reduction Act (H.R. 6684)

 

 KEY POINTS 

  • Under current law, there will be across-the-board cuts, known as a “sequester,” imposed on January 2, 2013, resulting in a 10% reduction in Department of Defense programs and an 8% reduction in certain domestic programs, such as the National Institutes of Health (NIH) and education programs.
  • Intended as a mechanism to force action, the imposition of the sequester would undercut key responsibilities of the federal government. There is bipartisan agreement that deficit reduction should be achieved through other means – yet only House Republicans are advancing responsible solutions to achieve these shared goals.
  • The President and his party’s leaders insist on taking more from hardworking Americans to fuel more government spending. They refuse to responsibly address the looming fiscal train wreck at the end of this year or the larger debt-fueled economic crisis on the horizon. House Republicans are advancing reforms to replace the sequester and ensure that taxpayer dollars are responsibly prioritized.

 

 

Pursuant to the Path to Prosperity budget resolution, the House has advanced a series of reforms that replace across-the-board cuts scheduled in law with common-sense reforms that take steps to address government’s unsustainable autopilot spending.

Six House Committees have advanced legislation that will:

1. Stop Fraud, by Ensuring that Individuals are Actually Eligible for the Taxpayer Benefits They Receive;

2. Eliminate Government Slush Funds and Stop Bailouts;

3. Control Runaway, Unchecked Spending;

4. Restrain Spending on Government Bureaucracies; and

5. Reduce Waste and Duplicative Programs

 



1. Stop Fraud by Ensuring that Individuals are Actually Eligible for the Taxpayer Benefits They Receive

A troubling trend has emerged in recent years, in which eligibility restrictions intended to focus limited government resources on those who need them most have been systematically weakened or have broken down due to loopholes in the law. This Act protects aid for those who need it by making sure that taxpayer dollars are not going to those who don’t qualify for assistance.

  • It eliminates a loophole that has allowed individuals to qualify for food stamps on such flimsy pretexts as receiving a brochure from another government program.

  • It eliminates a loophole that allows individuals to increase their food-stamp benefits by as much as $130 a month for receiving as little as $1 in federal utility assistance.

  • It stops the practice of sending the refundable portion of the Child Tax Credit to individuals who are ineligible to work in the United States.

  • It requires anyone who receives an overpayment of health insurance subsidies under the Democrats’ health care law to repay the full amount of the overpayment.

2. Eliminate Government Slush Funds and Stop Bailouts

Recent legislation has all too often ceded too much power to unaccountable bureaucrats, and has just as often provided them with access to taxpayer money in ways that fuel wasteful spending and bailouts. This Act targets these indefensible slush funds and automatic subsidies for elimination.

  • It protects taxpayers by eliminating the Wall Street bailout fund included as part of the 2010 Dodd-Frank financial overhaul.

  • It terminates the Obama Administration’s ineffective housing bailouts, which have become the target of widespread and bipartisan criticism for actually making matters worse for homeowners.

  • It eliminates the unaccountable government health slush fund created by the Democrats’ health care law.

3. Control Runaway, Unchecked Spending

Federal programs across the board experienced an explosion of funding in recent years. Federal spending on food stamps has increased by 267 percent over the last decade – with part of that expansion coming from President Obama’s failed 2009 stimulus law. Medicaid spending is up 86 percent over the last ten years. And the Democrats’ health care law would increase spending by $1.6 trillion over the next ten years. This Act takes measures to stop the spending spree and restrain spending growth in the future.

  • It repeals automatic increases in food-stamp benefits enacted as part of the President’s failed stimulus law.

  • It repeals a provision of the Democrats’ health care law that allows the Secretary of Health and Human Services unprecedented authority to spend “such sums as necessary” for grants to states to comply with the law.

  • It defunds the health law’s “CO-OP” program, which disburses government subsidized loans – 50 percent of which, according to the Office of Management and Budget, will never be repaid.

  • It gives states more freedom and flexibility to tailor Medicaid to the needs of their unique populations.

  • It prevents provisions of the health law from exacerbating problems with Medicaid’s current matching formula, which gives states and territories a perverse incentive to grow the program and little incentive to save.

4. Restrain Spending on Government Bureaucracies

The federal government has added 149,000 new workers since the President took office. It is no coincidence that private-sector employment continues to grow only sluggishly while the government expands: To pay for the public-sector’s growth, Washington must immediately tax the private sector or else borrow and impose taxes later to pay down the debt. This Act aims to slow the federal government’s unsustainable growth, reduce the public-sector bureaucracy, and reflect the growing frustration of workers across the country at the privileged rules enjoyed by government employees.

  • It eliminates the ability of the newly created Consumer Financial Protection Bureau and Office of Financial Research to set their own budgets.

  • It requires Federal employees to more equitably share in the cost of their retirement benefits.

  • It eliminates the provision that pays Federal workers a special benefit if they retire early.

5. Reduce Waste and Duplicative Programs

Annual examinations of wasteful spending conducted by the federal government’s independent auditors routinely reach the same conclusion: Government agencies and departments are rife with examples of waste, duplication and overlap. This  Act protects taxpayers and reduces spending by eliminating wasteful and duplicative programs.

  • It repeals the outdated and duplicative Social Services Block Grant, whose missions have been supplanted by dozens of newer federal programs.

  • It begins the process of consolidating the dozens of overlapping and duplicative federal employment training programs by eliminating 50/50 cost-sharing for an employment training program tied to food stamps.

  • It reforms the medical liability system by reining in unlimited lawsuits and thereby making health care delivery more accessible and affordable for families.

  • It removes incentives that encourage states to add to their Medicaid rolls through careless processes that lead to billions in overpayments. 

The savings from these reforms will replace the arbitrary discretionary sequester cuts and lay the groundwork for further efforts to avert the spending-driven economic crisis before us.




Additional Resources:

-          Spending Reduction Act Myth vs. Fact 

-          Debt Reduction in the Spending Reduction Act

-          Roll Call Vote for Earlier Version of Legislation