House Republicans put final touches on budget deal

House Speaker Paul Ryan discusses senate bill and its tack with the house bill.

Story highlights

  • The fiscal blueprint is expected to propose more than $1.1 trillion for the next fiscal year
  • This emerging budget deal lays out the GOP wish list

(CNN)House Republicans are putting the final touches on a bold budget proposal they will roll out later this week that would boost military spending beyond what President Donald Trump wants and slash billions from welfare and other entitlement programs.

Threading the needle of getting defense hawks, fiscal conservatives and those steering tax reform within his own party has been a difficult task, but House Speaker Paul Ryan has reminded House GOP members that this year's budget is critical for getting top priorities like tax reform through both chambers.
It's unlikely any Democrats will back the fiscal blueprint, so Republican leaders are locking down support from the various factions of their conference. They plan to hold up the proposal as evidence they are following through on the promise of GOP control of the White House and the Capitol intent on reshaping the federal government.
    The fiscal blueprint is expected to propose more than $1.1 trillion for the next fiscal year and would provide more money for the military and domestic spending than President Donald Trump requested in his budget, which he sent to the Hill in May, according to several congressional aides familiar with the proposal.
    Republicans reached an agreement on the discretionary funding levels for the Pentagon and domestic agencies, and the last sticking point Republican leaders had to overcome was over how much deficit-reduction should be taken out of mandatory programs like Social Security, Medicare and Medicaid.

    Defense vs. Non-Defense

    The budget plan would provide $621.5 billion in base defense spending, as well as $75 billion in war funding, known as Overseas Contingency Operations, sources told CNN. That's $28.5 billion more than the President requested — $18.5 in the base budget and $10 billion extra in war dollars.
    The House budget blueprint would set domestic discretionary spending at $511 billion, an increase compared to the Trump administration's $462 billion budget request, which proposed deep cuts to agencies like the State Department and EPA.
    When President Barack Obama was in the White House, final spending deals in recent years included equal increases for defense and domestic spending, but Republicans are trying to move away from that construct now that they control the legislative and executive branches.
    While the budget agreement will likely will have enough votes to get those spending bills through the House, Senate Democrats are likely to filibuster them, making a final deal uncertain ahead of a September deadline to keep the government from shutting down.
    This emerging budget deal lays out the GOP wish list, but an agreement that funds federal agencies will be tougher to hammer out. Republicans have had to rely on Democrats to pass those in recent years, so they may need to give in on the split between defense and other domestic programs.
    Another problem the House faces with the emerging budget agreement is that the defense funding violates spending caps established by the 2011 Budget Control Act. The defense cap for 2018 is $549 billion, and if the cap is not changed, the Pentagon would be subject to across-the-board cuts known as sequestration.
    Republican defense hawks want to repeal the budget caps for defense, as Trump has requested, but Democrats won't go along unless the cap is also removed for domestic spending.
    For defense hawks, the $621.5 billion topline for defense is a compromise, as House Armed Services Chairman Mac Thornberry and Senate Armed Services Chairman John McCain have been pressing for at least $640 billion for the military.
    The difficulties in creating a budget deal in the House have also made for a topsy-turvy process crafting individual authorization and appropriation bills. Both Thornberry and Rep. Kay Granger, the chairwoman of the House defense appropriations subcommittee, were preparing their defense bills at different levels — Thornberry's at $37 billion more than the Trump request and Granger's at the same level as Trump's.
    But with a budget deal near, the House's defense authorization and appropriations bills were finalized at the same level as the emerging budget agreement.
    Thornberry told reporters last week that he was willing to come down from $640 billion, but he would need assurances there would be future growth for military spending in future years.

    Mandatory savings required

    The final sticking point to getting House Republicans on the same page was negotiating how much money the plan would cut from the mandatory side of the ledger. Programs like Social Security and Medicare that are funded through mandatory spending account for about two-thirds of the total budget, but they are difficult to reduce because any change requires Congress to pass a new law.
    With divided government in recent years, Republicans in Congress have been unable to make a dent in this area. But House GOP members are looking to get some significant savings from changes to some programs that fall under the Agriculture Department, like food stamps, or other welfare programs.
    The House GOP budget is expected to direct several committees to come up with roughly $200 billion in deficit savings. Some in the House Freedom Caucus were hoping they could get a significantly higher number, and House Budget Chair Diane Black also appealed to top GOP leaders to make those savings a major component of the final deal, according to several House Republican sources.
    Rep. Mark Meadows, the leader of the Freedom Caucus, said there was not a budget deal he could agree to yet.
    Meadows said he wasn't concerned with the numbers in the agreement, but rather the details when it came to how the deficit reduction was achieved.
    The budget proposal does not provide details on how each committee could achieve these savings targets, but including the provision in the budget resolution gives Republicans in Congress the ability to say they are following through on their pledge to reduce the size of the federal government.
    Ryan, a former budget chair, has been sympathetic to those pressing for major deficit reduction, but he is also balancing the challenge of shepherding a major overhaul of the tax code through the House. Leaders wanted to reach agreement on a savings number they felt was manageable for the House Ways and Means Committee to meet as it evaluates what various changes to the tax rates and exemptions will mean for the overall budget.
    Republicans don't need to pass a budget — the various spending bills that detail how much each agency will get for federal programs are the measures that keep the government operating. But as they did with health care, GOP leaders are using this vehicle so they can use a tool known as "budget reconciliation" to pass a tax reform package through the Senate with a simple majority, avoiding a Democratic filibuster.
    Democrats are expected to be united against the package.
    Kentucky Rep. John Yarmuth, the top Democrat on the Budget Committee, hasn't seen the details, but is already arguing that it's the same as the Trump administration's version sent to the Hill in May.
    "The reports on the Republican budget proposal indicate that they are embracing much of the Trump budget," Yarmuth said in a written statement to CNN. "Instead of investing in American families and the future of our nation, it appears they are prepared to undermine our country's economic progress, health security, and safety just so they can give massive tax breaks for millionaires and corporations. We will fight this irresponsible proposal every step of the way."