Q: How do you balance in ten years?
A: We stop spending money we don’t have. We owe you a responsible, balanced budget. The President and Senate Democrats’ budgets never balance—ever.
Q: What changed from last year?
A: In House Republicans’ last two budgets, the deficit came down quickly, so it didn’t take much to get to balance in ten years.
In CBO’s new baseline, revenue goes up and spending goes down. By making some sensible reforms (e.g., extending the Budget Control Act’s discretionary spending caps for two years and extending federal-retirement reform to all federal employees), we balance the budget.
Q: Aren’t you in balance only because you changed the baseline?
A. No. Under this budget, revenue in 2023 will be $4,961 billion, and outlays will be $4,954 billion. So there will be a $7 billion surplus. The baseline is relevant only when determining how much our budget cuts the deficit. Our budget cuts the deficit by $811 billion relative to the current-policy baseline. Relative to the current-law baseline, however, it cuts the deficit by $985 billion.
We compare our budget to the current-policy baseline because we want to show real savings—that is, those that are the result of reforms in this budget, not the artifact of the CBO’s baseline-construction rules.
Q: Does this budget keep the sequester?
A: The Budget Control Act lowers discretionary spending in different ways in different years. In FY 2013, the discretionary-spending reductions are accomplished with a sequester. In FY 14–21, the discretionary-spending reductions are achieved through caps on discretionary spending. The difference matters, because a sequester is by design inflexible and arbitrary. A cap, however, allows Congress and the President to act through the appropriations process to set priorities within that spending level.
The problem with the sequester is not how much it cut, but how it cut. Sequesters are needed only when Washington can’t figure out how to live within a budget. Our budget set priorities and makes responsible reforms to get spending under control.
Q: Aren’t you in excess of the “pre-sequester” defense cap at $561.2 billion?
A: No. The $561.2 billion figure includes both the $552 billion of defense discretionary spending, which was subject to the discretionary caps, and the $8.2 billion of defense mandatory spending, which was not.
Q: If you’re at the “post-sequester” discretionary levels, how do you achieve $249 billion in discretionary savings?
A: The BCA was passed in 2011, and it expires after ten years (2021). This budget extends the caps in the Budget Control Act into FY2022 and FY2023. That is a large chunk of discretionary savings. Also, by proposing to balance the Highway Trust Fund, there are additional discretionary-outlay savings.
Q: Aren’t you gutting non-defense discretionary spending to fund defense at pre-sequester levels?
A: We’re providing the minimum level that the Joint Chiefs have testified is necessary to execute President Obama’s defense strategy. Under this plan, non-defense discretionary spending will be approximately 43 percent of total discretionary spending, which is the historical average since 1962, when we started keeping track.
Q: How much would the debt ceiling need to rise if your budget resolution was fully implemented?
A: This budget puts debt on a downward trajectory. As a share of the economy, total public debt is over 100 percent of the economy. Under this budget, it will decline to about 78 percent. There is a nominal increase of approximately $3.7 trillion. That’s better than the $8.2 trillion that would be added if we stay on the current path—or the more than $8.4 trillion that would be added under the President’s most recent budget, which ends a year earlier than ours.
Q: Why are your reconciliation instructions for only $1 billion?
A: This budget gives reconciliation instructions to eight committees to produce legislation each reducing the deficit by at least $1 billion. These instructions represent a starting point for negotiations with the Senate. As we saw last year, when the Senate disengages, the reconciliation process does not produce meaningful results. While reconciliation provides an expedited process to implement the budget resolution’s assumptions, it is not the only avenue. The budget proposes to implement all $4.6 trillion in deficit reduction through the regular legislative process if reconciliation is not used.
Q: Does the House Republican budget provide for over $966 billion of discretionary spending in FY2014?
A: In FY 2014, this budget resolution provides for base discretionary budget authority of $966 billion. This is the level mandated by the Budget Control Act. This is the number that is comparable to the $984 billion provided in the recently passed continuing resolution for FY 2013.
Budget authority is distinct from budget outlays. Budget authority is the ability to incur new obligations (e.g., to sign a contract) in a given year. Budget outlays, on the other hand, are the amount of obligations paid in a given year.
The Budget Control Act sets caps on total budget authority. Funding for the war and emergencies, however, is not subject to these caps. They are enforced separately.
For FY 2014, the budget resolution provides budget authority at the BCA’s lower cap level of an estimated $966 billion. The budget outlays, however, will be an estimated $1,114 billion, because of budget authority provided in previous years. Of the $1,114 billion in FY 2014 base discretionary outlays, $539 billion are from previous years’ budget authority, and $575 billion are new outlays from FY 2014 budget authority. This $1,114 billion is comparable to the $1,161 billion in outlays in the recently passed continuing resolution for FY 2013.
More information on the discretionary spending levels in the House Republican FY2014 budget is available here.