Updates: Health Bill, Social Security, Budget, Debt Ceiling, Appropriations
  • Senate GOP released a revised health care bill on Thursday which tentatively includes the controversial Cruz amendment that gives insurers the ability to circumvent consumer protections with low-cost, low-coverage plans. The revised bill drops tax cuts for high-income earners, but leaves in place deep cuts in Medicaid.  At the same time, GOP Senators Graham and Cassidy are working on a different alternative that would also keep ACA tax increases but send revenues to the States.
  • President’s Budget Runs $720 billion deficit:  The nonpartisan CBO released its annual re-estimate of the President’s Budget, concluding that the President’s Budget would generate a $720 billion deficit in 2027 rather than the balanced budget predicted by the President’s budget office.
    • Principal reason: CBO uses lower growth projections.
  • Social Security Insolvency in 2034:  The Social Security Trustees released their annual report projecting that the Social Security Trust Funds will have insufficient resources to fully cover retirement and disability benefits beginning in 2034.
  • Medicare HI Insolvency in 2029:  The Trustees also released their annual assessment of the Medicare Trust Funds, finding that the Hospital Insurance Trust Fund — which is funded by payroll taxes — will have insufficient revenues to cover expenses in 2029.
    • The sooner adjustments are made in HI revenues or payments to providers, the more slowly the reforms can be phased in. In addition, reforms that slow the general increase in healthcare costs—such as improving access to primary care and avoiding more expensive acute care—would help to stabilize the Trust Fund.
    • Link to FedWeb background on Medicare.
  • GOP House leaders are having trouble assembling 218 votes for a 2018 Budget Resolution because conservative Freedom Caucus members want more entitlement cuts than the $200 billion proposed by Budget Committee leaders, while moderates want fewer cuts.
  • House Appropriations Committee continues to move FY ’18 Appropriations bills through subcommittee and full committee even though bipartisan negotiations have not yet begun on new top-line (“statutory cap”) levels for defense and non-defense discretionary spending. When new cap levels are eventually agreed to, all committee bills will have to be significantly revised.
    • See FedWeb’s Appropriations Portal for details (summaries, report language, bill text) on each of the 12 appropriations bills.
    • There were fireworks at the Homeland Security Subcommittee markup on July 12 where Democrats opposed inclusion in the draft bill of $1.6 billion for a US-Mexico border wall.
    • There is also certain to be strong opposition from Democrats to steep cuts in the State-Foreign Operations (↓ $2.6 b) and Labor-HHS-Education (↓ $5.0 b) bills, including controversial riders to cut off funds for implementing the Affordable Care Act and to block aid to all foreign NGOs that provide or facilitate abortions (the “Mexico City” rider).
  • Debt Ceiling:  In announcing the Senate would shorten its traditional August recess by two weeks, Senate Majority Leader McConnell hinted he may try to address the debt ceiling in August.
    • CBO has estimated Treasury could run out of “extraordinary measures” to meet cash flow needs by early October – in which case the U.S. could default on legal and financial obligations without an increase in the ceiling.
  • FY 2019 Budget:  OMB has sent FY 2019 Budget preparation guidance to departments and agencies.  Link here to the OMB guidance.