House Budget Committee Releases 2017 Budget Proposal

By on March 15, 2016 in Agency News, Retirement with 138 Comments
Image of House Budget Committee Chairman Tom Price

House Budget Committee Chairman Tom Price (R-GA)

The House Budget Committee has released its 2017 budget blueprint in response to the White House’s budget proposal put forth earlier this year. The committee plans to hold a markup on the budget proposal document on Wednesday.

Unlike past House budgets, this one doesn’t have any direct cuts aimed at the federal workforce (see, for example, House Budget Blueprint Proposes Attrition Cuts for Federal Workforce and Ryan Budget Calls for Hike in Federal Employee Retirement Contributions).

However, it does contain some items that will be of interest to federal employees and federal retirees.

The overarching theme of the 2017 budget proposal is balancing the budget, getting spending under control, and putting a plan in place to begin paying down the rapidly growing federal deficit. Dubbed A Balanced Budget for a Stronger America, it promises to eliminate overlapping programs in the government, cut down on waste and fraud, scrutinize spending in every federal agency, and put procedures in place to return America to the Federalist system. It also promises a full repeal of ObamaCare which it claims would save American taxpayers nearly $2 trillion.

The items listed below are a summary of proposals in the House budget likely to be of most interest to federal workers.

VA

The budget made some specific proposals for the VA which was probably the most directly relevant piece for federal employees.

It calls for reforms to allow veterans to deposit disability compensation into the Thrift Savings Plan (TSP). Once separated from military service, veterans are unable to continue contributions into their TSP accounts unless employed by the federal government. The budget proposal says that many non-retired veterans face obstacles that may delay – or prevent – financial success. This proposal would allow non-retired veterans the opportunity to invest their disability compensation into a TSP account, providing them an opportunity to plan for their future retirement. The House Budget Committee believes that all veterans, not just retirees, should have access to the TSP benefit.

The budget stressed accountability at the VA in general and highlighted the failures at the agency that have been in the media of late. This quote from the budget sums up the Budget Committee’s thoughts about the agency:

“As with any government agency – but particularly one charged with serving those who have served our nation in uniform – the VA needs to do a better job of monitoring the efficiencies of its operation to ensure spending of taxpayer dollars is done more effectively. As this budget points out, despite efforts to overhaul the VA’s claims system and address a backlog, the department is still plagued with program issues – including inadequate cost control, unplanned changes in system and business requirements, inefficient contracting practices, and the lack of a concrete plan to decommission redundant legacy systems.

“Reforms in the area of awards and bonuses at the VA ought to play an important part of our efforts to restore accountability. In 2014 – the same year that the VA’s health scandal was denying veterans access to critical care – the department awarded more than $142 million in cash bonuses to staff.”

State Department and CFPB

The budget proposes cuts to the State Department and also a full repeal of the Consumer Financial Protection Bureau (CFPB). According to the budget, “The Department of State has exponentially increased its number of ‘special envoys,’ ‘ambassadors-at-large,’ ‘special advisers,’ and ‘coordinators’. These positions often overlap but have little coordination. Their offices and bureaus could either be eliminated or consolidated.”

It says that the CFPB was created under Dodd-Frank and that the agency operates off budget with little oversight from Congress. Consequently, the budget says that agencies operating in this manner are prone to abuse their authority should therefore be eliminated. “It [CFPB] has an irresponsible level of authority to write far-reaching rules that have the potential to negatively affect access to credit for millions of Americans,” according to the budget.

Social Security

The budget notes that Social Security will go insolvent in 2035 and the Disability Insurance component will go insolvent in 2022. Consequently, it requires the President and Congress to begin the process of reforming Social Security by altering a current-law trigger that, in the event the Social Security program is not sustainable, requires the President, in conjunction with the Social Security Board of Trustees, to submit a plan for restoring balance to the fund. This provision would then require congressional leaders to put forward positive solutions to ensure the long-term solvency of the Social Security program.

The budget also proposes to strengthen Disability Insurance by eliminating the “double dipping” loophole that allows individuals to receive both unemployment insurance and disability insurance simultaneously. If a person is receiving unemployment benefits, then it has been determined that he or she is capable of holding a job, and therefore should not also receive disability funding.

Medicare

The budget proposal outlines a competition program to improve Medicare. This excerpt from the budget describes these proposals as follows:

  • This budget advances an improved Medicare program for America’s seniors in which participating plans will compete to provide coverage for seniors. They will be required to match the same benefits and services of traditional Medicare. Seniors will be free to choose the plan that best fits their needs, and no one will be denied coverage. Coverage is guaranteed. This will give seniors greater control of their health care and increased competition will provide better services and lower prices.
  • New plans will compete with traditional Medicare to provide the best coverage options for seniors. Traditional Medicare will always be available for seniors currently in the program and for future generations of retirees.
  • These improvements would benefit both patients and the financial health of the Medicare program. A September 2013 study from the Congressional Budget Office (CBO) showed that the type of system this budget envisions – where plans are required to compete against each other to provide access to the highest level of quality care – would result in decreased costs for both beneficiaries and the federal government.
  • Unlike the current system that is scheduled to go insolvent within the next couple of decades, the solutions in this budget will save the program and make it fully solvent for generations to come. Like previous House Republican budgets, this new and improved Medicare program would begin in 2024. This budget also supports medical liability insurance reforms to curb abuses and frivolous lawsuits. This would end the practice of defensive medicine and lower costs for patients. Prior to the implementation of broader Medicare improvements, this budget combines Medicare’s Part A and Part B and reforms the supplemental insurance policies in the current program. With this reform, Medicare will have a single, annual deductible for medical costs and include a catastrophic cap on annual out-of-pocket expenses – an important aspect of the private health insurance market currently absent from Medicare that would safeguard the sickest and poorest beneficiaries.
  • To inject some additional common sense into the financing of the Medicare program, this budget means-tests Medicare for high income seniors. Any senior with an annual income above $1 million would be required to fully cover the cost of Part B and Part D premiums.

House Budget Committee FY 2017 Budget Proposal

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Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

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