Illustration: Sarah Grillo/Axios
A wonky but important battle over which budget baseline Republicans use for their reconciliation bill is playing out between the Senate and House, with potentially major implications for health care spending cuts.
Why it matters: Changing the customary baseline — the starting point against which costs and savings are measured — could in theory reduce the pressure for spending cuts, though there would still be pressure from conservative lawmakers for savings.
Driving the news: Senate Republicans are considering using a "current policy baseline," which would assume that the policies now in effect continue.
- That is in contrast to the "current law baseline" that is the standard and which reflects expirations scheduled under the law.
- The key implication of a current policy baseline is that it would assume the 2017 Trump tax cuts set to expire at the end of this year would instead continue, meaning the cost of extending them would appear to become zero.
- Critics deride this as a budgetary gimmick to make tax cuts appear free, while defenders say it more accurately reflects the reality of what tax rates currently are.
- Under a current policy baseline, "you don't have to find any offsets if you want to continue those tax cuts," said William Hoagland, a longtime Senate budget expert now at the Bipartisan Policy Center.
Between the lines: The health care implications are that under the current law scenario, there's pressure for Medicaid cuts to help pay for extending the tax cuts.
- Using the current policy option could reduce the need for that. It would also help Senate Republicans achieve their goal of making the tax cut extensions permanent.
- "While it is true that this gimmick wouldn't prevent spending cuts, it would make spending cuts much less likely to occur because offsets would no longer be necessary to prevent increases in the debt," warned the Committee for a Responsible Federal Budget.
- But House conservatives, who demanded as much as $2 trillion in spending cuts in the House budget, are not going to back down without a fight.
What they're saying: House Ways and Means Chair Jason Smith warned at an event at the American Enterprise Institute on Wednesday that the spending cuts should not be jettisoned regardless of the baseline.
- "If the Senate can manage a [current] policy baseline, that's great, but you have to preserve spending cuts. That is essential to get the votes over on the House side," Smith said.
- Republicans' challenge under the current law baseline was highlighted Wednesday by a CBO letter showing that if Medicare is excluded, there is not enough spending under the jurisdiction of the Energy and Commerce Committee to get to $880 billion in cuts without getting major savings from Medicaid.
Yes, but: There is also serious doubt that the complicated Senate rules used to govern the reconciliation process and bypass a Democratic filibuster would allow the use of a current policy baseline.
- "The current law baseline is statutory," said Brendan Duke, a senior director at the Center on Budget and Policy Priorities. "It's in law. So that makes the whole thing pretty clear in my opinion. So I don't know what Senate Republicans are thinking about doing to get around that."
- "We believe that the chairman of the Budget Committee makes that call, but obviously it's something that we will be discussing and having conversations with the parliamentarian," Senate Majority Leader John Thune recently told Politico.
