Summary Of House Republicans’ Proposed Budget And Appropriations Rules For The 118th Congress

Summary: The rules package put forward by the leadership of the House Republican Conference this week contains numerous changes to the House’s budget and appropriations procedures.

It would restore many of the fiscal rules that were in place when Republicans last controlled the House from 2011 to 2018, including the Cut-As-You-Go (CUTGO) rule, “dynamic” scoring of major legislation, and the “Holman Rule” that allows the House to retrench previously appropriated funding.

It also includes new requirements for the Congressional Budget Office (CBO) to produce three types of supplementary analyses for major pieces of legislation, a limit on “unauthorized” appropriations, and several new budget enforcement procedures.

As of this writing, it appears that additional rules changes are in store, as members of the House Freedom Caucus are negotiating for additional budget and appropriations changes in exchange to for supporting Rep. Kevin McCarthy’s bid for Speaker of the House, including: a return to amending each appropriations bill under open special rules, a point of order against earmarks, guaranteed votes on balanced budget proposals, and assigning conservatives to key positions on the Appropriations and Rules Committees. This post will be updated once the text of these additional proposals become public.

 

Five Categories of Rules Changes

The incoming House Republican majority published its proposed rules changes for the 118^th Congress last weekend, along with a section-by-section summary. This post summarizes how these proposed changes would affect the House’s budget and appropriations processes.

The proposed changes fall into one of the following five categories:

1. new procedural barriers for mandatory spending and revenue increases;
2. new requirements for the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) to produce supplemental analyses of “major legislation;”
3. appropriations process changes, including restoration of the “Holman Rule” that would enable the retrenchment prior appropriations;
4. a repeal of the automatic engrossment of debt limit legislation (commonly referred to as the “Gephardt Rule”); and
5. several budget enforcement changes.

Restoring Limits on Mandatory Spending and Revenue Increases

 

The rules package contains multiple changes that will affect how the House will consider mandatory spending and revenue legislation. These changes restore rules from the 112-115^th Congress and will tilt the procedures of the House in favor measures that cut mandatory spending and taxes.

The first change in the rules package would restore the “Cut-As-You-Go” (CUTGO) rule that was first adopted by the House Republicans in 2011.¹ CUTGO is a Republican variant of the House’s PAYGO rule, which makes it more difficult for the House to pass deficit-increasing legislation. The PAYGO rule applied to both mandatory spending and revenue legislation, but the CUTGO rule only applies to legislation that increases mandatory spending. It would not prohibit the House from passing tax cut legislation that increases the deficit.

The rules package would also create new points of order against mandatory spending increases. It would prohibit the House from adopting a budget resolution with reconciliation instructions to increase net mandatory spending within the first 10 years covered by any budget resolution. And it also restores a point of order against any legislation that is estimated to increase net mandatory spending by more than $2.5 billion in any of the four decades between 2033 and 2073²

It also restores a three-fifths supermajority threshold to approve of any measure that would increase in the federal income tax, which was also in place during the 112-115 Congresses.

Supplemental CBO & JCT Analyses and Other Scorekeeping Changes

The rules package will require the CBO to produce the following three types of additional analyses for “major legislation”:

1)  an estimate of the macroeconomic effects of the legislation (so-called “dynamic scoring”),

2)  a qualitative assessment of how legislation would affect inflation, and

3)  long-term projections of the legislation’s effects on Medicare’s Hospital Insurance (HI) and Social Security’s Old-Age, Survivors, and Disability Insurance (OASDI) trust funds.

“Major legislation” is defined as any measure that has gross spending or revenue changes greater than 0.25 percent of Gross Domestic Product in a fiscal year.³ Under CBO’s May 2022 baseline, this threshold would be $65.6 billion in fiscal year 2023 and $91.7 billion in fiscal year 2032. The dynamic scoring rule is a restoration of a rule that was in place during the 114^th and 115^th Congresses, but the inflation and trust fund analyses are new requirements.

There is an important difference between the macroeconomic dynamic scoring requirement and the other two supplemental analyses. The spending and revenue effects of the dynamic scoring analysis are “incorporated” into CBO and JCT’s final spending and revenue estimates, which are used to assess whether legislation violates the House’s CUTGO rule and other budget rules. In contrast, the inflationary and trust fund analyses are supplemental analyses that only CBO will produce, and they will not be incorporated into the agency’s spending estimates. Instead, the other two types of analyses will be included as either a “statement” or “display” in CBO’s cost estimates. This distinction indicates that these latter two types of analyses will not affect legislation’s compliance with the House’s spending or revenue rules, but will require CBO to go on the record with additional information that normally would not be provided in their typical cost estimates.

It is also worth noting that the rules package does not require that CBO and JCT produce these estimates for all pieces of major legislation. The agencies are required to produce these analyses “to the extent practicable.” This qualification gives the agencies breathing room when they face tight legislative deadlines and reflects the reality that these types of analyses require additional (and often substantial) time and effort to produce.⁴ That said, the chair of the Budget Committee can also request supplemental inflation analyses for any piece of legislation, and it will be interesting to see how frequently this type of analysis is requested.

In addition to these supplemental analyses, the package contains two other scorekeeping changes. It restores a rule from the 115^th Congress that requires any sale, transfer, or exchange of federal land to state, local, or tribal governments to be scored “providing new budget authority, decreasing revenues, increasing mandatory spending, or increasing outlays.”⁵ Additionally, the package would exempt the budgetary effects of legislation prohibiting the IRS from auditing individuals with less than $400,000 of taxable income from the House’s budget enforcement rules.

 

Changes to the Appropriations Process

The rules package contains five rules changes that would affect the House’s appropriations process:

• a new limitation on the amount of “unauthorized” funding provided by each appropriations act,
• restoring a requirement that appropriations bills contain a “spending reduction account,”
• a new limitation on “transfer” amendments,
• a point of order against amendments that increase spending, and
• a restoration of the “Holman Rule” that would allow the House to more easily retrench previously appropriated funding.

 

The first limitation will cap the amount of “unauthorized” funding that the House Appropriations Committee can include in each of the 12 regular appropriations bills. Under the new requirement, the Committee will not be able to report appropriations bill that contains funding for programs with expired legislative authorizations above the funding provided by the fiscal year 2023 appropriations acts. This requirement would potentially cap roughly one-third of the funding provided by the 12 regular appropriations acts.⁶ If the Appropriations Committee does report an appropriations bill that violates this requirement, an amendment will be automatically adopted by the House to reduce the unauthorized appropriations in the bill to their fiscal year 2023 funding level.

The second through fourth changes will affect how appropriations bills are amended on the floor. Most amendments to appropriations bills are “transfer” amendments that either propose to move funds from one program to another or symbolic “plus-minus” amendments that only affect a single program.⁷ In recent Congresses, it has been more common for these amendments to be grouped together and voted on “en bloc.” The rules package would limit en bloc voting to amendments that propose transfer funds from a program to a “spending reduction account” that would reduce the total amount of funding provided by the entire appropriations act.⁸ This change will allow Republicans to offer a large number of amendments cutting spending without bogging down the amendment process on the floor.

The fifth rule change is a restoration of the most recent iteration of the “Holman Rule,” which will make it easier for the House to consider appropriations bills and amendments that retrench previously appropriated funding. The Holman Rule was first adopted in 1876 and the House has repealed and reinstated the rule multiple times over the last 146 years. It was most recently in effect during the 115^th Congress.

The rule creates an exception to the House’s prohibition against regular appropriations bills containing legislative provisions under Rule XXI, clause 2 for any provision or amendment that would:

• reduce the amount of spending in the bill,
• reduce the number or salary of federal officers, or
• reduce the compensation of any person paid out of the U.S. Treasury.

Once the House elects a Speaker and adopts a rules package, it is likely that the Holman Rule will be put to immediate use, as the House is planning to immediately consider legislation to retrench the Inflation Reduction Act’s funding for modernizing the IRS and expanding its tax enforcement activities.

 

Will the Speaker Make Additional Appropriations Changes?

Beyond these five rules changes, the new Speaker of the House is going to be under political pressure to implement additional changes to make the appropriations process more “open” through their ability, via the Rules Committee, to control how and when legislation is considered on the floor.

The House Republican Conference has adopted a proposal from Rep. Chip Roy that encourages the Rules Committee to report legislation under “open” special rules – which allow Members to freely offer floor amendments – and to prioritize the consideration of amendments that are supported by 20 percent of the Republican Conference. Initially, Rep. Kevin McCarthy publicly opposed brining appropriations bills to the floor under open rules, but this decision is now a key point  negotiations between McCarthy and the Freedom Caucus.

This would be a major change for the House, which hasn’t considered an appropriations bill under an open rule since 2015.⁹ Returning to open rules would allow any Member to spontaneously offer amendments from the floor and give rank-and-file Members who do not serve on the Appropriations Committee more opportunities to amend appropriations bills. But it would also allow individual Members to derail the process by offering partisan poison pill amendments, which led to the defeat of an appropriations bill on the floor in 2016. Returning to open rules would be a sort of natural experiment for the House – and would make for fascinating floor debates.

Freedom Caucus members are also advocating that the House return to its long-standing practice of individually considering each of the 12 annual appropriations bills on the floor. This would also be a change from the recent practice of grouping appropriations bills into “minibus” packages for their initial floor consideration.¹⁰ This change would likely require that the House devote more floor time to appropriations bills and may result in the House considering fewer appropriations bills on the floor.

Repeal of the “Gephardt Rule” for Debt Limit Legislation

The rules package repeals the latest iteration of “the Gephardt Rule” that allows the House to automatically pass a suspension of the debt limit when it adopts an annual budget resolution. This rule was adopted by House Democrats when they retook the House in 2019, and it was a modified version of a procedure first designed by Rep. Richard Gephardt that was in effect from 1980-2010.¹¹

The intent of this procedure is to make it easier for the House to pass debt limit increases by allowing Members to avoid taking a separate vote on the debt limit. In practice, however, the procedure was only used a handful of times while it was in effect. Between 1980 and 2010, Congress modified the debt limit 47 times and three toes between 2019 and 2021.¹² But the House only used the original Gephardt Rule 10 times between 1980 and 2010 and did not use the most recent iteration of the procedure during the 116^th or 117^th Congresses.

The Bipartisan Policy Center is forecasting that the current debt limit will be reached sometime in the second half of this year, and House Republicans have already signaled that they want to use the next debt limit vote to extract policy concessions from the Biden Administration. In the context of these political disagreements, the loss of these auto-passage procedures is not likely to be consequential because the House will have other procedures – like “self-executing” special rules – to pass debt limit legislation without requiring Members to vote directly on the underlying debt limit legislation.

 

Other Budget Enforcement Changes

The rules package also includes  several technical changes to the House’s budget enforcement procedures, which are used to ensure that legislation complies with the House’s budget rules and other applicable rulemaking statutes and procedures adopted through House or joint resolutions.

The first technical change is a new provision that states “allocations aggregates, and other appropriate levels” submitted by the Budget Chairman “shall be considered for all purposes in the House toe be the allocations, aggregates, and other appropriate levels under titles III and IV of the Congressional Budget Act.” What this means in plain English is that the chair of the Budget Committees can unilaterally submit the required levels of spending, debt, and revenues that are the basis for the House’s budget enforcement procedures. These levels and aggregates are normally specified in a budget resolution or “deeming resolution” that are voted on by the entire House.

While this provision is framed in the rules package as an “interim” procedure, it is an indication that the Republican leadership may be preparing for the possibility that the Republican caucus will be unable to pass a budget resolution or deeming resolution. The Freedom Caucus is currently asking for a commitment that the House vote on a budget resolution that would balance the budget in either seven or 10 years. Both of these proposals would require large cuts to Social Security, Medicare, and Medicaid, and would likely be a very difficult vote for the caucus’s more moderate members. If the entire caucus cannot agree to these proposals, this provision may end up being an off-ramp that allows the House to adopt functional budget enforcement procedures without the need for a floor vote.

Another change would allow the Majority Leader (or their designee) to take on the budget enforcement responsibilities of the chair of the Budget Committee. This provision is necessary because the selection of the Budget Committee chair has been delayed due to Speaker’s election. These procedures are necessary because the chair of the Budget Committee is responsible for enforcing titles III and IV of the Congressional Budget Act under section 312 of the Act, as well as clause 4 of House Rule XXIX.

Finally, the package would allow the Budget Committee chair to revise these allocations for any bill that does not increase direct spending and for new baselines published by the Congressional Budget Office. This provision indicates that the House is not planning to pass legislation increasing mandatory spending.