The Tax Bill’s Automatic Spending Cuts

NOTE:  The New York Time’s article has a great interactive graphic at it’s top that we aren’t able to import.

The following article by Margot Sanger-Katz was posted on the New York Times website November 29, 2017:

If Congress passes its tax bill and then takes no other action, the funding for dozens of federal spending programs could be cut — in many cases to nothing — beginning next year.

The cuts would be automatic, the consequence of a 2010 law that Congress passed to keep itself from increasing the deficit too much.

The biggest program affected would be Medicare, the health insurance program for older people and the disabled. But the law allows Medicare to take only a relatively small cut: 4 percent. Other programs have no such protection. According to the Congressional Budget Office, the deficit increase from the tax bill would be large enough — $1.5 trillion over 10 years — that spending for the unprotected programs would be reduced to zero next year and nearly zero over the next nine years.

Each bubble above represents the size of an automatic budget cut that could take place next year.

The Statutory Pay-as-You-Go Act of 2010, or Paygo, is an Obama-era update of a rule first enacted under President George H.W. Bush. It requires that legislation that adds to the federal deficit be paid for with spending cuts, increases in revenue or other offsets

With the exception of Social Security, the post office and many income-based programs like unemployment benefits and food stamps, most mandatory spending programs — those automatically funded on a continuing basis, rather than appropriated year by year — are subject to Paygo. In 2018, for example, the law would claim $14 billion in various farm aid programs; $1.7 billion for Social Services block grants, which states use to help fund foster care, Meals on Wheels and other programs; and $69 million for the Black Lung Disability Trust Fund.

Congress has found a way to slip around the rule in the past by including an exception in legislation from the Paygo cuts. But because of the special budget process Republicans are using for tax overhaul this year, the tax bill itself can’t include such an exception. Congress could prevent the cuts by passing separate legislation by the end of the year, but that measure would need 60 votes in the Senate, requiring several Democrats to support it. The cuts also require action from the White House, though the law does not give it much discretion to avoid them.

Certain government programs receive a mixture of mandatory and appropriated funds, so the mandatory cuts won’t eliminate them entirely. The Women, Infants and Children program, which provides food assistance, gets most of its $6.2 billion from a fund that is not subject to Paygo cuts. So even though it might be subject to a $1 million cut, that would only be a tiny fraction of its entire funding. Some programs have special rules. One fund, for military retiree benefits, will still get paid even if it gets zeroed out under the automatic cuts.

Given the popularity of many of the programs subject to the Paygo cuts, it’s possible lawmakers may find a way to avert them. But if they do not, here is a list of programs that, by law, would lose their funding.