EDITORIAL: GOP gang must show it can shoot straight on budget

The Republican Congress is starting to debate its budget outline for fiscal 2016, and it’s not too soon to call it a test of whether this gang can shoot straight. The budget sets a broad policy direction that ought to unify Republicans, if they can overcome their parochial passions.

On March 17, new House Budget Chairman Tom Price rolled out his fiscal blueprint for the coming year, and in the tradition of previous chairman Paul Ryan (now heading Ways and Means) the document continues to develop the most important reform plan in a generation.

Price would cut spending by $5.5 trillion relative to the status quo over the next decade, reducing federal spending to 18.2 percent of the economy by 2024. The share today is 20.3 percent and is headed toward 22.3 percent in a decade on present trend.

The main obstacles to getting 218 votes are tea party free agents who want government to shrink faster, and defense hawks and some appropriators who want to break the spending caps that are enforced by the sequester passed in 2011. Both groups should understand that without the budget passing they have no chance of getting anything close to what they want.

The irony of tea party opposition is that the outline includes far-reaching reform that would balance the federal budget within eight years. Price’s budget would slow the annual growth of federal spending to a manageable 3.3 percent on average from the current 5.1 percent. That’s no small achievement given the accumulating obligations for ObamaCare and baby boom retirees.

Price does this with targeted policy changes to the real drivers of the federal debt — the open-ended entitlement state. Price retains Ryan’s “premium support” reform, which would gradually modernize Medicare by introducing more competition among insurers and more individual choice of health plans.

The budget also calls for repealing ObamaCare, and it makes a valuable contribution on Medicaid, which as a share of GDP has increased 240 percent since 1980 and is due to rise another 75 percent over the next 10 years. Republicans have long supported changes that would devolve the program to states with federal block grants, but this budget emphasizes deregulating Medicaid to give Governors more flexibility to innovate.

The document ranges across the federal government (consolidating the 92 antipoverty programs, for example), and the Congressional Budget Office estimates the plan would increase real GDP per capita by 1.5 percent in 2025. The best method to reduce the deficit is faster economic growth.

Normally this would be a layup despite back-bench grousing, but dissent is also coming from members of the GOP’s national-security wing. Their alarm is sincere, and the sequester’s indiscriminate, ever-tighter reductions have harmed national defense. But the damage to date is also overstated: Congress uses an annual “overseas contingency operations fund” to circumvent the caps and give the military more resources to prosecute the likes of Islamic State.

Price’s plan adheres to the defense cap of $523 billion, but he adds another $90 billion in the contingency fund to bring overall defense spending for 2016 to $613 billion, higher than President Obama’s budget request. Over 10 years the House plan would exceed Obama’s budget by $151 billion and the current fiscal path by $387 billion.

We agree that defense spending should increase to meet the world’s growing disorder, but Obama will also insist on at least $1 in additional domestic discretionary spending (education, roads and the like) for every $1 of defense above the caps. Lifting the caps (and most of the rest in the budget) requires separate legislation that must be negotiated with the White House, and the caps are the best leverage Republicans have to extract reform concessions.

It makes no sense to unilaterally abandon the GOP’s single largest fiscal achievement since 2010 before negotiations. Especially since Obama isn’t going to use the military for much in his last two years no matter how much Congress spends. Better to pass the budget, giving instructions to the spending committees, and use those bills and others to give the Pentagon more flexibility to allocate priorities under the cap. Then see what Obama might trade for more spending.

As important, failing to pass a budget would also deprive Republicans of the procedural tool known as reconciliation. This allows the GOP to pass a final budget with a simple majority in the House and Senate, and thus it will be crucial to putting larger reforms of ObamaCare or taxes on Obama’s desk. A vote against the budget is in that sense a vote for the ObamaCare status quo.

The House and Senate will have to reconcile their separate outlines into a single bill that does not require Obama’s signature. The budget is thus a chance to offer the public a serious reform agenda that is an alternative to the high-tax, slow-growth entitlement state of Obama and Hillary Clinton. It is also a particular test of whether Republicans can operate as a functioning majority.

03/25/2015 - 12:31pm