House Unveils Budget That Balances, Achieves $9 Billion Surplus, Increases GDP to 2.6%

Budget's implementation of tax reform and repealing and replacing Obamacare aims to increase economic growth

U.S. Capitol
U.S. Capitol / Getty Images
July 18, 2017

The House Budget Committee unveiled its Building A Better America 2018 budget Tuesday, which is balanced and achieves a $9 billion surplus in 10 years and increases GDP growth to 2.6 percent.

"Our budget is one of sustainability, smaller government, stronger national security, and greater freedom for individuals," the committee states. "The status quo is unsustainable spending, higher deficits and debt, higher taxes, bigger government, and more federal control over the lives of Americans."

The budget not only balances within a decade, but aims to increase economic growth by implementing tax reform and reducing government regulations, as well as reforming several government programs to ensure taxpayer dollars are used efficiently and appropriately.

The committee notes that under the Obama administration, federal spending grew at a rate that increased the debt to unprecedented levels. They found that if spending continued along this path, in the next 10 years there would be $9.4 trillion more added to the debt. Instead, the House is introducing a budget that reins in this spending and puts the government on a path that will balance in the next decade in order to pay down debt.

"Overall, our budget achieves $6.5 trillion in deficit reduction, resulting in a $9 billion surplus in 2027," the committee said. "We do not do this simply by cutting spending and reducing the size of government. Rather, our budget also enables states to find solutions that work for them, and it empowers individuals and small businesses to increase economic output and unleash the power of the American free market."

Next, the budget aims to increase economic growth by increasing gross domestic product, or GDP. Under the Obama administration, GDP grew at a rate that averaged just 2 percent. According to the committee, this is below the historical average of 3 percent and a rate lower than one that occurred in previous economic recoveries. By reducing red tape on businesses and reforming various government agencies that burden entrepreneurs, the committee's budget aims to achieve 2.6 percent GDP growth over the next decade.

Tax reform and the repeal of Obamacare are also included in the budget as a way to increase economic growth. On tax reform, the budget aims to simplify the tax code to make it fairer, lower tax rates for businesses and individuals, and lower the corporate tax rate. It also repeals the Alternative Minimum Tax. The budget also plans to repeal Obamacare and replace it with the House's American Health Care Act, which they say will lower the deficit by $204.1 billion over the next decade.

"We estimate that the pro-growth policies of health care reform, tax reform, welfare reform, and deficit reduction assumed in our budget will yield economic growth of 2.6 percent on average over the 10-year budget window, resulting in $1.5 trillion in deficit reduction," the committee states.

The budget plans to reform many government programs by evaluating them by the number of people they help instead of throwing more dollars aimlessly at the problem. It also attempts to reduce waste and fraud by reducing the number of improper payments agencies have, which would save the economy $700 billion over the next decade.

"In areas such as health care, welfare, environmental regulation, education, workforce development, and transportation, we put federal spending on a budget and empower the states, which are best suited to address the individual needs of their citizens and communities," the committee said.

"The result is obvious: fewer federal tax dollars are needed as we reduce waste, duplication, and inefficiencies. Our budget improves outcomes, because it gives states, localities, and individuals more control over the decisions that affect them directly."

Rep. Diane Black (R., Tenn.) who chairs the budget committee said that the status quo is unsustainable and that the budget is the first step in having an optimistic vision for the future.

"In past years, our proposals had little chance of becoming a reality because we faced a Democratic White House," Black said. "But now with a Republican Congress and a Republican administration, now is the time to put forward a governing document with real solutions to address our biggest challenges."

"It will lay out a path to balance, promote job creation, give our military the resources they need to protect our nation, and hold Washington accountable," she said. "This budget also sets out reconciliation instructions to fix our broken tax code and make long-overdue reforms to mandatory spending.

Published under: Federal Budget