House Republicans are passing around a “menu” of more than $5 trillion in cuts they could use to bankroll President-elect Donald Trump’s top priorities this year, including tax cuts and border security.
The early list of potential spending offsets obtained by POLITICO includes changes to Medicare and ending Biden administration climate programs, along with slashing welfare and “reimagining” the Affordable Care Act.
Five people familiar with the document said those provisions are options to finance Republicans’ massive party-line reconciliation bill or other spending reform efforts, including those being spearheaded by the so-called Department of Government Efficiency.
The people, granted anonymity to discuss closed-door negotiations, said that the list originated from the House Budget Committee, chaired by Rep. Jodey Arrington (R-Texas). Republicans involved in the reconciliation plans have been generally targeting the listed programs for several months, but internal GOP fights over trillions of dollars in potential cuts are just beginning.
The overall savings add up to as much as $5.7 trillion over 10 years, though the list is highly ambitious and unlikely to all become law given narrow margins for Republicans in the House and Senate.
Cuts to Medicaid, the Affordable Care Act and the country’s largest anti-hunger program would spark massive opposition from Democrats and would also face some GOP resistance. Johnson can’t afford any Republican defections if he wants to pass a package on party lines.
Even proposed cuts to green energy tax credits, worth as much as $500 billion, could be tricky — as the document notes, they depend “on political viability.” Already 18 House Republicans — 14 of whom won reelection in November — warned Johnson against prematurely repealing some of the IRA’s energy tax credits, which are funding multiple manufacturing projects in GOP districts.
A House GOP source said that the “document is not intended to serve as a proposal, but instead as a menu of potential spending reductions for members to consider.”
Johnson and GOP leaders are hunting for trillions of dollars in cuts, with lawmakers estimating Trump’s domestic policy agenda — including tax cuts and border security proposals — costing as much as $10 trillion over the coming decade.
Johnson with scores of House Republicans this week to chart the way forward, and groups of GOP members are set to meet with Trump in Florida this weekend.
In addition to Medicaid and ACA cuts, the document floats clawing back bipartisan infrastructure and Inflation Reduction Act funding.
One senior GOP lawmaker, asked if there were any particularly controversial spending offsets dividing Republicans, replied: “They all feel pretty controversial.”
Johnson agreed to make $2.5 trillion in spending cuts through the budget reconciliation process as part of last year’s government funding negotiations. Asked in a brief interview Wednesday evening if he was targeting $5 trillion in spending offsets, he replied, “Not sure yet.”
The policy menu suggests Republicans could capture major savings from Medicaid — up to an estimated $2.3 trillion. The list includes so-called per-capita caps on Medicaid for states, meaning the program would be paid for based on population instead of being an open-ended entitlement, and would institute work requirements in the program.
The list also includes a policy to equalize payments in Medicaid for able-bodied adults with those of traditional Medicaid enrollment — those with disabilities or low-income children, which would save up to $690 trillion.
It would “recapture” $46 billion in savings from Affordable Care Act health insurance plan subsidies, which are set to expire at the end of the year, setting up a major policy battle. It would also limit eligibility for plans based on citizenship status.
It also finds $146 billion in potential savings from so-called site-neutral payment policy in Medicare, a bipartisan target that has been discussed as a potential pay-for in reconciliation. They’re also eyeing repealing significant Biden administration health care rules, which could include ending a rule requiring minimum staffing levels at nursing homes.
Also on the chopping block are President Joe Biden’s climate policies, which are estimated to yield as much as $468 billion. That includes Trump’s repeated promise to repeal Biden’s “EV mandate,” as well as discontinuing “Green New Deal” provisions from the bipartisan infrastructure law and green energy grants from the IRA.
The green energy cuts could be particularly tricky from a political perspective. GOP lawmakers have long backed some technologies supported under the climate law, including supporting hydrogen, biofuels and carbon capture.