Senate Republicans Issue Five-Year Plan to Rein In Budget Deficit

WASHINGTON—Senate Republicans issued a five-year budget plan Friday that calls for reducing the federal deficit and diverges from the White House over how much to stash in an emergency war fund.

The budget resolution aims to cut mandatory spending, the part of federal funding extended on auto-pilot, by $551 billion by 2024. Republicans have long targeted this chunk of the federal budget, which pays for programs including Medicare and Medicaid, as the best opportunity for reining in spending. Mandatory spending makes up more than 60% of the federal government’s spending.

Budget resolutions, which more commonly are issued over a 10-year horizon, never become law and largely serve to telegraph a party’s priorities. The plan Friday from Senate Budget Committee Chairman Mike Enzi (R., Wyo.) doesn’t try to fully eliminate the annual budget deficit, instead proposing a gradual reduction.

“This budget is a responsible first step toward achieving that goal by reducing overspending and setting real, achievable deficit reduction targets,” Mr. Enzi said in a statement Friday.

The federal budget deficit has swelled over the past year, as the tax cuts enacted in 2017 restrained revenues and a two-year budget deal boosted government spending.

For the 12 months ended February, the deficit totaled $932.2 billion, a 32% increase from the same period a year earlier, according to data released by the Treasury Department Friday. As a share of gross domestic product, the 12-month deficit totaled, the highest since May 2013.

Republicans said their budget would reduce the deficit by more than $538 billion over five years, a product of lower spending on safety-net programs and $176 billion in increased revenue, with roughly half of that revenue projected to come from user fees connected to the highway trust fund.

The Senate GOP budget provides relatively little detail as to how it would curb spending on federal safety-net programs, although it notes it wouldn’t touch Social Security.

When it comes to the portion of federal spending that Congress must approve each year, the Senate GOP budget proposes sticking to spending caps that were set after a 2011 fight over raising the debt limit. But their budget also provides a mechanism for adjustment if lawmakers reach a deal to lift those spending limits, as they have three times since 2011.

The latest two-year deal expires at the end of September and lawmakers from both parties have discussed the need to boost spending for both the military and domestic programs.

Diverging from President Trump’s budget, which was released earlier this month, Senate Republicans proposed a smaller increase in a special fund called the Overseas Contingency Operations, or OCO, which is reserved for emergency war-fighting operations. Because the fund isn’t subject to spending limits, various administrations have used it as a way to increase military spending outside of the spending caps.

Mr. Trump’s fiscal year 2020 budget included $165 billion for overseas military operations, up from about $69 billion in the 2019 budget.

The Senate GOP proposal included $67 billion for fiscal year 2020 and $63 billion in fiscal year 2021, before zeroing out the emergency-war fund for the subsequent three years. An overview of the Senate GOP budget said its funding levels were “consistent with the ‘traditional’ amounts of OCO requested in the President’s budget.”

Democrats raised concerns that while the Senate GOP budget expressed support for raising military spending above the caps to $750 billion in the next fiscal year, it didn’t back doing the same for nondefense programs.

“While Senator Enzi’s budget signals support for an increase in military spending to a total of $750 billion in 2020, it ignores the harsh cuts to nondefense programs that are at risk this year,” said Sam Lau, spokesman for House Budget Committee Chairman John Yarmuth (D., Ky.) Mr. Yarmuth has said he supports raising the caps a comparable amount for both defense and nondefense spending.

The Senate Budget Committee is scheduled to debate the budget next week. It isn’t clear if it would come to the Senate floor for a vote.

Budget resolutions only need a simple majority to clear the Senate, where most bills need 60 votes to clear procedural hurdles. But to protect the rights of the party in the minority, the budget process allows any senator to require a vote to be held on any amendment the lawmaker chooses to offer. That means Democrats could force votes on measures aimed at making the Republicans up for re-election next year squirm, one reason Senate Majority Leader Mitch McConnell (R., Ky.) could choose to skip a floor vote.

The biggest incentive to hold a budget vote comes when one party controls both chambers of Congress and can use passage of a budget resolution to tap a special process called reconciliation. If both chambers pass an identical budget resolution, lawmakers can deploy reconciliation to pass certain measures tied to the budget with a simple majority in the Senate, as Republicans did in late 2017 to pass the tax overhaul.

But because Democrats now control the House, the two chambers won’t pass identical budgets. Mr. Yarmuth has said he was working on a Democratic budget and hopes to roll it out next month. House Democrats have divided over several policy questions, including what kind of health-care proposal to back, and it isn’t clear if there would be enough support to pass their own budget, should it come to the House floor.

By:  Kristina Peterson