Rescissions Bill is a Smokescreen

Blog Post
Monday, May 14, 2018

With some fanfare, the Trump administration has sent Congress a rescission request that would cancel $15.3 billion of “budget authority” that was granted to executive branch agencies in past legislation.

The administration and some in Congress have touted this proposal as a needed step towards fiscal responsibility. In reality, however, it is a smokescreen to hide the fact that there are no plans to take substantive legislative action to address the nation’s large fiscal imbalances. The proposal is also an attempt to change the subject from recent tax and spending legislation that made these imbalances substantially worse.

Rescissions themselves are not a problem and can be a useful budget process tool. Budget authority enacted by Congress gets turned into cash outlays (which ultimately matter for the deficit) by executive agency action. Rescissions can help clean up the budgetary ledger, eliminating spending authority that never led to an actual agency outlay.

Eliminating such unused authority can perhaps keep Congress from utilizing it later as a gimmick to make new spending appear cheaper. That's because the size of spending in appropriations bills is often only denominated in amounts of budget authority.

Rescissions can also let the executive branch target what it considers to be particularly wasteful or duplicative spending. Congress still has the final say, with 45 days to approve or alter the request via filibuster-evading legislation. If lawmakers fail to act, nothing happens. The process was used regularly until 2000, after which there have been no rescissions.

The current rescissions package, however, is being touted by the White House as a historic-sized effort to “put our fiscal house in order.” This comes less than two months after Congress and the president agreed to an appropriations bill that spent around $300 billion more over two years than previously established caps, and less than five months after passage of deficit-financed tax cuts projected to add $1.9 trillion to the national debt over the next 10 years.

Savings of $15.3 billion would only be a drop in the bucket relative to those recent decisions, however. The Congressional Budget Office projects the real deficit savings from the proposal would amount to just $1 billion. (The administration puts the savings amount at $3 billion). That is the amount of reduced outlays, as opposed to the paper savings from cleaning up some budget authority.

Making this exercise even worse is that one of the larger targets for current budget authority reduction (as opposed to past, unused authority) would come from the Center for Medicare and Medicaid Innovation (CMMI), the government agency that tests and implements measures to reduce government health care spending. Cutting CMMI funding makes little sense given lawmakers’ inability or unwillingness to undertake efforts to lower health care costs. CMMI is really the only game in town if one hopes to tackle the largest contributor to our nation’s fiscal difficulties.

The rhetoric around the rescissions package has been disingenuous, in fitting with other rhetoric on the Hill like the touting of a budget process reform committee while at the same time skipping the passage of an actual budget for the year because lawmakers are scared of how bad the numbers would look. The truth with the rescission package is the same as the truth about budget process reform:  Without the political will to actually implement changes to taxing and spending, everything is designed to hide that weakness.