I was just reading about the bill’s elimination of all Obamacare spending in 2026, and it occurred to me – is this bit intended to play games with deficit neutrality for their forthcoming tax cut bill? It’s the only thing I’ve heard about in the bill that has that time frame. It makes me think about how under reconciliation tax cuts that aren’t deficit neutral can’t be permanent (renewal vote after ten years), so maybe having that spending end right at that mark will allow them to make tax cuts permanent, without taking the political hit for cutting spending now. Can someone more knowledgeable confirm/debunk?
Almost but not quite. This is not a move for reconciliation. Reconciliation requires a bill bring down the deficit by the target amount in the ten year budget window AND not add to the deficit after the target window. If CG spending was a mandatory, infinite appropriation the combination of keeping most of the taxes and ratcheting down Medicaid spending via block grants would satisfy the deficit neutrality provision.
So it is not for reconciliation that the spending on the block grants get shut off in 2026 but the taxes continue.
It is a landmine that is waiting to be triggered in 2026.
Presumably, Congress would not want to throw millions of more people off their insurance (yes, that is a significant assumption) so they would want to re-appropriate the block grants. However under Congressional procedures, discretionary spending increases above the baseline should be off-set with “pay-fors” which are either higher taxes or reductions in other spending. If the spending and the taxes both sunset in 2026, Congress could pass a bill saying “Keep on doing what we’ve been doing on taxes and spending” and have the new block grant for another 10 years be off-set by business as usual.
However that is not how the bill is set up. The taxes continue into the future so they are already incorporated into the baseline. The individual insurance block grants are not in the baseline so they need to be offset. And that produces conservative leverage points for massive cuts to either the block grant or other discretionary spending. The trade-off that Cassidy-Graham is trying to set up is “Health Insurance OR (CHIP and SNAP and Education and FBI and IRS and LIHEAP) ”
If Democrats control both chambers, the work-around is to build their budgets on “current policy” instead of the more typical “current law” baseline. If there is at least one chamber controlled by Republicans, things get ugly.