Follow the Budget Act and use budget reconciliation this year

OPINION:

President Trump last week suggested that a second reconciliation bill is not needed this year, but because the national debt is at $38 trillion and growing, policymakers need to act with a sense of urgency and use the budget reconciliation process to cut spending and enact important policy reforms.

A blueprint that the House Republican Study Committee (RSC) released last month for the next budget reconciliation bill offers an opportunity to do that. Reconciliation is available as part of Congress’s regular order work on the federal budget and permits legislation with direct budgetary effects to pass the Senate with a simple majority vote.

Former President Biden understood the strategic importance of using reconciliation when his party held both the House and Senate. When Democrats held complete control of Washington in 2021 and 2022, they enacted budget reconciliation each year.

In 2021, Democrats brought us the American Rescue Plan (PL 117-2); in 2022, they followed up with the Inflation Reduction Act (PL 117-169). In both cases, the Democrats used reconciliation to make the fiscal outlook worse.

Republicans last year used reconciliation to reduce deficits. Relative to the baseline used for Senate budget enforcement, which recognized that the 2017 tax cuts were not going to expire, the One Big Beautiful Bill Act (OBBB) reduced deficits by almost $400 billion.

The bill reduced spending by $1.2 trillion, but also cut taxes by $800 billion beyond those included in the 2017 tax act (such as increases in the standard deduction, state and local tax deduction and child tax credit).

Republicans this year should build on last year’s progress. The RSC blueprint provides many excellent ideas on further reductions in spending, including ideas on health care that are particularly timely.

The Democratic government shutdown last fall raised awareness of just how broken the American health-care system is. Think about it: the government was shut down for 43 days over the continuation of COVID-era subsidy payments necessary to make insurance from the Democrats’ Affordable Care Act affordable. President Obama’s health-care reform is not bending the cost curve as promised.

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Republicans would do well to use budget reconciliation to make lasting changes to the health care system to repair the damage of Obamacare. This can include the House-passed Lower Health Care Premiums for All Americans Act (HR 6703, included in the RSC blueprint) to drive innovation by allowing allied individuals to purchase health insurance as a group and increase transparency by requiring drug plans to provide more financial information to private payers.

The House passed HR 6703 in December with Republican votes; the use of the reconciliation tool would enable the Senate to pass these reforms with Republican votes as well. (And to those who argue that Republicans should not make such big changes without bipartisanship, let’s recall that Obamacare was foisted upon Americans by Democrats through reconciliation without a single Republican vote.) This bill would save $36 billion over 10 years.

Another common-sense reform in the RSC blueprint that should be enacted in budget reconciliation is counting every error in determining a state’s SNAP payment error rate. Tightening up state error detection thresholds that have been loosened in recent years would reduce deficits by $7.4 billion in that same decade.

Budget reconciliation could also be used to further limit the eligibility of illegal aliens for tax benefits such as the Earned Income Tax Credit, the Child Tax Credit, and the Low-Income Housing Tax Credit, saving billions while encouraging self-deportation.

As deficits and debts soar, it is even more important that Republicans take their budgetary responsibilities seriously. This includes using budget reconciliation every year when they control the levers of power in Washington, as is still the case in 2026.

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The opportunity may not be there in 2027.

Dan Kowalski is director of the Hermann Center for the Federal Budget at the Heritage Foundation.