Yesterday, the Senate failed to move forward with the Spending Cuts to Expired and Unnecessary Programs Act (H.R. 3), a package of $15.4 billion in rescissions from the Trump Administration. Not sure what that means? Take our quiz to learn what happened and why it matters.
What is a rescission?
When Congress passes an appropriations bill, they authorize budget authority in specific amounts for certain programs for a period of time (sometimes forever). Once the executive branch agency makes a binding commitment such as signing a contract or hiring a worker, that budget authority is considered obligated, though not yet spent. The term for money actually spent is an outlay. Unobligated balances are any budget authority that has been provided by Congress but has not been committed.
How much money in the federal government is unobligated?
The largest amount of unobligated balances is the Treasury’s $253 billion ownership stake in Fannie Mae and Freddie Mac. This stake and insurance reserves, such as the FDIC deposit insurance fund, total up to $583 billion. The other categories of unobligated balances are $47 billion for programs that require working capital, $53 billion for programs that have dedicated taxes for them, $27 billion for major appropriated entitlements, and $103 billion for projects with long-lead times such as procurement, research and development projects, and land acquisition. There are also $184 billion in unobligated balances that are basically unused funds sitting in federal accounts.
While the bill “rescinds” $15 billion, how much spending would the bill actually cut?
Since most of the budget authority being rescinded was not planning on being used or is already expired – they would not be spent anyways. The Congressional Budget Office projected that spending would be reduced by about $1 billion over the next 5 years.
How much is the federal government projected to spend over the next 5 years?
According to Congressional Budget Office projections, the federal government will spend $24.9 TRILLION over the next 5 years.
So the bill would have cut $1 billion out of $24.9 trillion. If we were traveling around the world along the equator, what would the equivalent distance be?
$1 billion out of $24.9 trillion is a .004017 percent reduction. That is the equivalent of a single mile out of the 24,900-mile equator.
Wow! That’s tiny. How much would that be out of the ENTIRE Harry Potter series?
It’s the equivalent of 44 words out of 1,084,170 words in series, or the first paragraph of the first book. Here it is, no need for a spoiler alert: “Mr. and Mrs. Dursley, of number four, Privet Drive, were proud to say that they were perfectly normal, thank you very much. They were the last people you’d expect to be involved in anything strange or mysterious, because they just didn’t hold with such nonsense.”
The rescissions package was clearly small. Why did it fail in the Senate?
The Senate Democrats, led by Sen. Schumer, cited the fact that the bill would rescind $7 billion from the Children’s Health Insurance Program (CHIP) would be “taking money away from kids who need health care.” Sen. Collins reportedly shared concerns about the rescissions from the CHIP program and Sen. Burr had concerns with a rescission from a land acquisition account associated with the Land and Water Conservation Fund – the main program used to purchase land for the federal government (LWCF).
True or False: rescinding CHIP funding is unprecedented.
In fact, rescinding money from the CHIP program is a regular bipartisan exercise. According to the Congressional Research Service (CRS), Congress has rescinded $46.4 billion from the CHIP program since FY2011, including $1.7 billion from the Child Enrollment Contingency Fund that received more pointed attention from Democrats.
How much would the CHIP rescission impact spending on CHIP?
According to CBO, the rescission would not change funding at all. They project that “rescinding the unobligated balances [from CHIP] would reduce budget authority by $7 billion, but would not affect outlays, or the number of individuals with insurance coverage.
How many Democratic Senators voted for CHIP rescissions in a funding bill in March and then cited them for the reason to vote against the rescissions package today?
Only 9 Democrats voted against the omnibus spending bill in March, which contained $2 billion in CHIP rescissions. Schumer explained the contradiction by saying that “the omnibus money was used for “good things.” But now Trump is “not putting the money into good things; he’s just cutting.” In other words, this is not about spending for children’s health insurance, this is about more spending. Period. As we analogized before: think of it like milk. Once its expired, you can’t use it. The Trump administration is proposing to pour it down the drain. Congress regularly trades in the soured milk for fresh milk. Which sounds great, if you don’t know there is only a limited number of cows to produce the milk (i.e. taxpayers and bond buyers).
BONUS QUESTION: The Senate Appropriations committee will release their FY2019 funding bill next week. That bill traditionally carried a $5 billion rescission to the CHIP program? Will Sen Murray and other Sen. Dems turn around a week later and vote to “take money away from children.”
We’ll see. But our money is that they will definitely include a rescission to CHIP in next week’s health appropriation bill.