Created in 1973, the Republican Study Committee (RSC) serves as the conservative caucus of House Republicans. Its purpose is “to bring like-minded House members together to promote a strong, principled legislative agenda that will limit government, strengthen our national defense, boost America’s economy, preserve traditional values and balance our budget.” The RSC “ensures that conservatives have a powerful voice on every issue coming before the House, whether it is the economy, health care, defense, social safety net reform, or Washington’s dangerous, out-of-control spending.” The RSC even has a libertarianesque view on the proper role of government: “We believe that the appropriate role of a limited government is to protect liberty, opportunity, and security, and that it is the responsibility of this generation to preserve them for the next. We believe that more government is the problem, not the solution, for the toughest issues facing our nation.”
Since 1995, the RSC has proposed an alternative federal budget, and this year is no different. On March 20, the RSC unveiled its fiscal year 2025 budget proposal, which is “made up of 285 individual bills and initiatives from 192 Members.” Titled “Fiscal Sanity to Save America,” the RSC budget “is a thorough plan to address our federal spending problem and start paying down our debts.” The budget “balances in just seven years, cuts spending by $17.1 trillion over ten years, and reduces taxes on Americans by $4.2 trillion over ten years.”
According to RSC Budget and Spending Task Force Chair Rep. Ben Cline: “Decades of Washington’s reckless spending habits have left the American People to foot the bill through high inflation and rising costs, and we cannot continue down this irresponsible path. The RSC budget proposes responsible, common-sense policy that bolsters the American economy, lowers inflation, slashes wasteful spending, and reverses the harmful, regressive, wasteful, and unnecessary policies that are crushing hardworking families.” The RSC budget defunds Biden’s “woke agenda,” addresses “high gas prices” and “the tumor-like growth of the federal bureaucracy,” “promotes American energy dominance and growth while defending American values and freedoms,” expands Health Savings Accounts, builds the border wall, “protects Social Security and Medicare,” unleashes American energy production, makes the Tax Cuts and Jobs Act permanent, and reins in “the administrative state that is growing increasingly more invasive and costly to citizens all across the country.”
Now, there is no doubt in anyone’s mind that the RSC budget will never be enacted. The Republicans have a slim majority in the House, and the Democrats control the Senate. And of course, President Biden would certainly veto any Republican budget proposals. But what about the budget itself? Is it a “good” budget? Is it a “conservative” budget? Is it a balanced budget? Is it a budget characterized by “fiscal sanity?”
The budget process
The Constitution does not mention a federal budget. It simply says in Article I, Section 8, that “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” Another relevant paragraph is found in Article I, Section 9: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”
According to the Budget and Accounting Act of 1921, federal agencies are required to submit their budget requests to the president for review and for him to then submit a consolidated budget request to Congress for the upcoming fiscal year (Oct. 1–Sept. 30) by the first Monday in February prior to the start of the new fiscal year. The president’s budget provides Congress with recommended spending levels for all government agencies.
According to the Congressional Budget and Impoundment Control Act of 1974, within six weeks after the president submits his budget, 12 congressional subcommittees are required to submit their “views and estimates” of federal spending and revenues to the House and Senate budget committees, who then hold hearings and then draft and report a concurrent resolution on the budget. Action on the concurrent resolution is supposed to be completed by April 15. It is only then that twelve regular appropriation bills for discretionary spending are able to be enacted and sent to the president for his signature. Although the Budget Act requires Congress to consider budget plans covering at least five years, the current practice is that budget plans cover 10 years. If Congress fails to pass the necessary appropriations bills by the start of the new fiscal year, which is usually what happens, a series of continuing resolutions or an omnibus bill is passed to fund the federal government for a certain period of time in order to avert a government shutdown.
Biden’s budget
Days after delivering his State of the Union address, President Biden released his $7.3 trillion fiscal year 2025 budget. The budget “details the President’s vision to protect and build on his Administration’s progress by continuing to lower costs for working families, protect and strengthen Social Security and Medicare, invest in America and the American people to make sure the middle class has a fair shot and we leave no one behind, and reduce the deficit by cracking down on fraud, cutting wasteful spending, and making the wealthy and corporations pay their fair share.”
According to the budget “Fact Sheets,” the president’s budget:
- Lowers costs for the American people.
- Cuts the deficit by $3 trillion over 10 years.
- Protects and strengthens Social Security and Medicare.
- Cuts wasteful spending on big pharma, big oil, and other special interests, cracks down on systemic fraud, and makes programs more cost effective.
- Cuts taxes for working families and makes big corporations and the wealthy pay their fair share.
- Advances President Biden’s unity agenda.
- Tackles crime, keeps Americans safe at home.
- Cuts housing costs, boosts supply, and expands access to affordable housing.
- Protects and increases access to quality, affordable healthcare.
- Creates opportunity, advances equity.
- Creates good-paying clean jobs, cuts energy costs, and delivers on the president’s ambitious climate agenda.
- Secures our border, combats fentanyl trafficking, and calls on congress to enact critical immigration reform.
- Confronts global challenges and defends democracy.
- Improves customer experience to better serve the American people.
- Delivers on his commitment to tribal nations and native communities.
What doesn’t the president’s budget promise that the federal government will do?
Just how does the president’s budget lower costs for the American people? The federal government doesn’t sell goods and services to the American people. It turns out that the budget lowers costs by increasing subsidies to the American people for healthcare, prescription drugs, child care, early childhood education, home ownership, rent, food, college tuition, energy, water, Internet access, and student loans. And just how will these increased subsidies be paid for? Specific proposals in the president’s budget include raising the corporate tax rate, denying deductions for all compensation over $1 million paid to any employee of a C-corporation, quadrupling the stock buybacks tax from 1 to 4 percent, imposing a 25 percent minimum tax on the wealthiest 0.01 percent, restoring the top marginal tax rate from 37 to 39.6 percent, raising the tax rate on capital gains and dividends on households making over $1 million, and “modestly” increasing the Medicare tax rate by raising tax rates on earned and unearned income from 3.8 to 5 percent for those with incomes over $400,000.
RSC fiscal sanity
As mentioned earlier, the RSC budget is titled “Fiscal Sanity to Save America.” There is no question that America is in dire financial straits. The federal government now spends over $7 trillion each fiscal year and regularly has budget deficits of over a trillion dollars each year. The national debt now exceeds $34 trillion. The interest on the national debt is approaching a staggering $700 billion each fiscal year. Within 10 years, the Social Security and Medicare trust funds will not be able to pay the full amount of scheduled benefits. According to the “Financial Report of the United States Government,” which was released by the Bureau of the Fiscal Service in February, over the next 75 years, the unfunded obligations of the federal government (the difference between the present value of projected noninterest spending and the present value of total receipts over the same period) total $79.5 trillion. So, as the report bluntly states: “The current fiscal path is unsustainable.”
The RSC budget contains 11 sections:
- Ensuring Liberty through Deregulation.
- Creating Opportunity Through Tax Reform.
- Opportunity through Empowerment and Self-Sufficiency.
- Providing for the Common Defense.
- Protecting Conservative Values.
- Personalized and Affordable Healthcare.
- Saving Medicare.
- Make Social Security Solvent Again.
- Budget Process Reform.
- Other Mandatory Spending.
- Discretionary Spending.
I have read all eleven sections so you don’t have to.
The first section rightly points out that the American people are overregulated, rails against new regulations adopted under the Biden administration, and puts forth many deregulation and regulatory reform proposals.
The second section points out the new taxes enacted by the Biden administration, recommends making the individual tax code provisions of President Trump’s Tax Cuts and Jobs Act (TCJA) permanent, and introduces many pro-growth tax reforms.
The third section extolls limiting access to welfare programs to U.S. citizens and removing marriage penalties; improving, consolidating, and reforming welfare programs; fighting fraud in welfare programs; and increasing welfare work requirements.
The fourth section criticizes North Korea, China, and Iran while calling for assistance to Ukraine, Israel, and Taiwan; and, of course, increased “defense” spending. The fifth section calls for federal legislation to restrict abortion, protect gun rights, fix U.S. immigration policy, and ensure that faith-based institutions can participate in government programs and the provision of government services.
The sixth section proposes reforms to Medicaid and the Children’s Health Insurance Program (CHIP). The seventh section puts forth proposals to reform and save Medicare to protect seniors from benefit cuts. The eighth section calls for reforms to the Social Security program, including changing the benefit formula, raising the retirement age, and gradually moving toward a flat benefit.
The ninth section promotes a balanced budget amendment to the Constitution and limiting federal spending to a percentage of potential GDP. The tenth section aims to reduce other mandatory spending (mandatory spending other than Social Security, Medicare, and Medicaid) by $2.6 trillion over the next 10 years by eliminating, or reducing the funding of, certain federal programs like the National Sheep Industry Improvement Center.
The eleventh section aims to cut $3.3 trillion in nondefense discretionary (NDD) spending over the next 10 years by eliminating, or reducing the funding of certain federal programs like the USDA Catfish Inspection Program.
Fiscal insanity
There is nothing fiscally sane about the RSC budget. The RSC budget, like Biden’s budget, can only be characterized as fiscal insanity. True, many of the recommendations would roll back or rescind some of the bad polices of the Biden administration, but rolling back the government to pre-Biden levels is hardly fiscal sanity to save America. The RSC budget is a budget for a vast welfare state — just as every federal budget for the last 50 years. It is a budget to reform the welfare state.
The food-stamp program is not eliminated but instead is just converted “into a discretionary block grant to the states based on rates of unemployment, poverty, and the length of time beneficiaries receive aid.” Funding for Supplemental Security Income (SSI), Medicaid, and child-nutrition programs would likewise be changed to block grants to the states. The RSC budget saves and strengthens Medicare and Social Security — the two largest and most expensive items in the federal budget. Instead of eliminating the refundable Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), the RSC budget seeks to lower the improper payment rates.
The RSC budget does not call for eliminating a single notable federal department or agency. Instead, agencies should “include a 100-word, plain-language summary of a proposed rule in a notice of rulemaking,” agencies should issue “monthly disclosures” about “the rules they expect to finalize or propose in a given year,” and agencies should “choose the least costly method of regulation available to them.” The RSC budget does not contain any proposals to get the federal government out of education or healthcare. It is a fiscally insane $5.686 trillion budget with a $768 billion deficit.
Real fiscal sanity
It wasn’t that long ago (1987) that the entire budget of the federal government was “only” $1 trillion. It didn’t reach the $2 trillion mark until 2002. The national debt didn’t exceed $1 trillion dollars until 1982 and $2 trillion until 1986. For several years now, the yearly budget deficits alone have been between $1 and $2 trillion. Truly, as the “Financial Report of the United States Government” states: “The current fiscal path is unsustainable.”
What should the federal budget look like? What should the budget actually do? How large should the budget be? What should be included in the budget? Should the budget be balanced? Should the budget be binding on future Congresses? What kind of a budget would provide real fiscal sanity to save America? From a constitutional, limited government, fiscal-sanity perspective, there are a number of things that should characterize the federal budget.
The federal budget should be balanced. It should be balanced for the fiscal year it covers, not balanced in seven or 10 years. Proposing a future balanced budget based on uncertain projections is just kicking the can down the road. No future Congress is obligated to follow the budget enacted by the current Congress. Balancing the budget does not take a balanced-budget amendment, it just takes congressional willpower. The federal government currently violates the Constitution in thousands of ways. Why should anyone think that the federal government would suddenly follow the Constitution if it contained a balanced-budget amendment. And it should be remembered that a balanced budget does not in and of itself rein in the profligate spending of Congress. Biden’s $7.3 trillion budget is an abomination, whether it is balanced or not.
The federal budget should not increase taxes. Americans are burdened with income taxes, estate and gift taxes, excise taxes, capital gains taxes, Medicare taxes, and Social Security taxes. And this is in addition to what they pay on the state and local level. According to the Treasury Department, Americans paid a whopping $4.44 trillion in taxes to the federal government in fiscal year 2023. The federal budget should actually cut taxes instead of just avoiding tax hikes. It should actually lower taxes instead of just closing loopholes and shifting the tax burden. And it should actually eliminate taxes instead of just reforming the tax code.
The federal budget should not empower the government to transfer income from one American to another. The main thing that the federal government spends money on is income-transfer programs. As explained by the late Walter Williams, economist at George Mason University:
Tragically, two-thirds to three-quarters of the federal budget can be described as Congress taking the rightful earnings of one American to give to another American — using one American to serve another. Such acts include farm subsidies, business bailouts, Social Security, Medicare, Medicaid, food stamps, welfare, and many other programs.
We don’t need entitlement reform; we need entitlement elimination.
The federal budget should be small. In Federalist No. 45, James Madison, the “father of the Constitution,” explained about the Constitution: “The powers delegated by the proposed Constitution to the Federal Government, are few and defined. Those which are to remain in the State Governments are numerous and indefinite.” Yet, the federal budget is greater than the combined budgets of all 50 states. This is even worse than it seems since federal funding makes up about a third of state budgets.
Most of all, the federal budget should be constitutional. The case can easily be made that over 90 percent of spending authorized by the federal budget is not authorized by the Constitution. This includes things like foreign aid, art and culture subsidies, the drug war, job-training programs, education, Amtrak, welfare, public broadcasting, airline security, unemployment compensation, space exploration, science and research grants, farm subsidies, housing, and welfare. This means that whole departments and agencies of the federal government should be eliminated lock, stock, and barrel. This would include the Departments of Agriculture, Education, Energy, Health and Human Services, Housing and Urban Development, Transportation, and Labor as well as independent agencies of the federal government like the FTC, the FCC, the EPA, OSHA, the Export-Import Bank, the SBA, the CPSC, the EEOC, the TVA, the CFTC, the NEA, the NEH, the SEC, the NSF, and USAID — just to name a few.
These characteristics of the federal budget are the antidote to the fiscal insanity of the RSC budget. Ideally, there would be no income taxation at all and a very minimal federal budget. If all the illegitimate agencies and programs of the federal government were eliminated, there would be no need for income taxation and a federal budget in its current form. Americans lived without income taxation for more than 100 years, and the constitutional functions of the federal government were still adequately funded without all of the budget chicanery that now takes place every year.
This article was originally published in the July 2024 issue of Future of Freedom.
