House panel plows ahead on controversial budget with tax reform in sight

A key House panel on Wednesday took a critical first step toward enabling Republicans to revise the tax code, kicking off a daylong debate over a GOP budget that slashes safety net programs for the poor while rewarding the military with a $70 billion boost.

Overhauling the nation's tax system is a top priority of President Trump and Republicans. But to push a Republican-only approach through Congress, the GOP first has to get a budget resolution through the Congress.

The budget plan faces opposition from both sides, with conservative complaining that the cuts are insufficient and moderates arguing they go too deep.

The GOP plan promises to cut more than $5 trillion from the budget over the coming decade, though Republicans only appear serious about actually enacting a relatively modest $203 billion deficit cut over the same period through filibuster-proof follow-up legislation.

"Both parties in Washington have failed to abide by a simple principle that all American families and small businesses do – that we must live within our means," said Budget Chairman Diane Black (R) of Tennessee. "Balancing the budget requires us to make tough choices, but the consequences of inaction far outweigh any political risks we may face."

But Democrats blasted the sweeping cuts in the plan. It reprises a provocative proposal – opposed by Mr. Trump – to turn Medicare into a voucher-like program for future retirees, which experts say is likely to increase costs for beneficiaries and deny them the coverage guarantees of Medicare.

"The list of upside-down priorities and irresponsible policies in this document is lengthy," said top panel Democrat John Yarmuth of Kentucky. "Democrats support investments in education, health care, national security, job training, innovation and infrastructure. We support programs that help individuals with nowhere left to turn, and a tax code that helps families get ahead."

The plan appears set to ease through the GOP-controlled panel, which is stocked with hard-core conservatives, some of whom said the measure is too loose on spending. Rep. Glenn Grothman (R) of Wisconsin faulted the measure for a $28 billion increase above Trump's budget for defense and for rejecting most of Trump's proposed $54 billion cut to domestic programs for next year.

The measure faces an uncertain future since it's caught between moderates unhappy that it would link a 10-year, $203 billion package of spending cuts to the upcoming tax reform effort. On the other side are conservatives pressing for a larger package of spending cuts to accompany this fall's tax bill.

While exempting Social Security, veterans and defense from cuts, the plan proposes cuts across the rest of the budget to turn this year's projected $700 billion-or-so deficit into a tiny $9 billion surplus by 2027. It would do so by slashing $5.4 trillion over the coming decade, including almost $500 billion from Medicare and $1.5 trillion from Medicaid and the Obama-era health law.

It also cuts far more sharply than prior GOP plans from nonhealth benefit programs such as federal employee pensions, food stamps, and tax credits for the working poor.

It also contains its share of gimmicks, including $1.8 trillion in deficit cuts over the coming decade from rosy projections of economic growth averaging 2.6 percent over 10 years. Another $700 billion in savings would come from a crackdown on "improper payments" such as tax credits and Social Security and Medicare benefit going to people to don't qualify for them.

But in the immediate future the GOP measure is a budget buster. It would add almost $30 billion to Trump's $668 billion request for national defense. The GOP budget plan would cut nondefense agencies by $5 billion. And of the more than $4 trillion in promised saving from mandatory programs like Medicare and Medicaid, the plan assumes just $203 billion would actually pass this year.