The Fiscal Year (FY) 2017 House budget resolution that advanced out of the House Budget Committee last week keeps up the recent tradition of targeting a balanced budget within ten years. To do so, the budget claims $6.5 trillion of policy savings, a number that is notably less than the $8 trillion we previously said would be needed to balance the budget by 2026. Upon closer inspection, though, the House budget ends up in about the same place that we did. Here's how.

Our $8 trillion number uses the Congressional Budget Office's (CBO) January budget projections as the baseline. The House budget, by contrast, makes a few adjustments to that baseline that it does not count in the savings. The first is that it assumes a drawdown of war spending after FY 2017 from $74 billion to $27 billion per year from 2018-2021 and zero after that. The second is that it assumes economic effects of $194 billion in reduced deficits from last December's tax deal, of which $150 billion comes from increased revenue and $44 billion comes from decreased outlays. The deal came after CBO had already prepared its economic forecast for the January baseline, and the agency said that when those effects were incorporated, it could add $100-$200 billion to revenue. These two adjustments (plus a minor adjustment to remove FY 2016 emergency spending from the baseline) reduce deficits by $900 billion over ten years.

The Fiscal Year (FY) 2017 House budget resolution released yesterday contains ambitious promises of deficit reduction to balance the budget within ten years. To take a step toward achieving those savings, the budget includes two different sets of instructions to committees to achieve deficit reduction. It also includes several budget enforcement or process reforms that attempt to keep lawmakers from worsening the fiscal situation. Here's a rundown of those proposals.

The first part involves instructions to five committees – Agriculture, Energy and Commerce, Financial Services, Judiciary, and Ways and Means – to save at least $30 billion over two years and $140 billion over ten years. This process already began last week with the Energy and Commerce and Ways and Means Committees releasing packages that would get most of the way there themselves. The budget resolution specifically mentions recovering exchange subsidy overpayments, eliminating enhanced Medicaid payments for prisoners, and ending Medicaid eligibility for lottery winners as policies that can be included – and all were already in the two packages.

The second part involves reconciliation instructions to 12 committees to achieve at least $1 billion of savings over ten years. The budget resolution describes these instructions as "a down payment on the deficit reduction necessary to achieve a balanced budget by fiscal year 2026," so this will likely be the biggest avenue to achieving some portion of the savings that the budget promises.

House Budget Committee Chairman Tom Price (R-GA) today released the FY 2017 House budget resolution to formally kick off the Congressional budget process. The budget proposes about $6.5 trillion of spending reductions, which along with a war draw down, economic effects, and interest would lead to $7.9 trillion of total savings -- enough to balance the budget by 2026.

Republican presidential candidate Donald Trump recently released a health care reform plan entitled “Healthcare Reform to Make America Great Again.” This plan has two major components. First, it would fully repeal the Affordable Care Act (“Obamacare”) and replace it with several new policies. Second, it would turn Medicaid into a “block grant” program.

As House Republicans continue to discuss the Fiscal Year (FY) 2017 budget resolution, Rep. Tom McClintock (R-CA) has recommended budget process reforms in exchange for supporting the budget with FY 2017 discretionary spending of $1.070 trillion, as agreed to in the Bipartisan Budget Act of 2015.

Progress on policies to slow the growth of health care spending is expected to be slow in an election year, but this week, the Center for Medicare and Medicaid Services (CMS) announced a proposed rule to test new ways to pay providers or charge beneficiaries for outpatient drugs in Medicare Part B, including testing a proposal we put forward in our PREP Plan last year. These payment model tests, which will be run by the Center for Medicare and Medicaid Innovation (CMMI) created in the Affordable Care Act, intend to encourage more efficient and effective use of outpatient drugs by correcting some of the flawed incentives in the current system. This announcement is a step forward in encouraging more efficient health care delivery, and hopefully at least some of these strategies will prove useful enough to be expanded on and produce significant budgetary savings in future years.

The tests will come in two steps. The first step involves changing the formula for reimbursing physicians to administer outpatient drugs, which is currently set at the average sales price (ASP) of the drug plus a 6 percent add-on payment. This formula may encourage physicians to use more expensive drugs since the add-on payment grows with the cost. The new model that would be tested starting late 2016 would change the add-on payment to 2.5 percent of the ASP plus a flat fee of $16.80 (which would be indexed for inflation in future years). This would reduce the incentive to use more expensive drugs; for example, the difference in the add-on payment for a $5 drug and a $1,000 drug is currently $59.70 but would be reduced to $24.87 under the new formula.

This policy is similar to one we proposed in our PREP Plan, though our policy would have converted the entire add-on payment to a flat fee and would have saved $10 billion over ten years. It is also similar to an option the Medicare Payment Advisory Commission (MedPAC) evaluated, with them saying that "A flat-fee add-on may help address concerns about reimbursement for very inexpensive drugs." The CMS policy is intended to be budget-neutral on a static basis assuming no change in physician behavior, but it would produce savings if physicians used less expensive drugs in response to the change in incentives. An analysis of a proposal to convert the entire add-on payment to a flat fee found savings of $4 billion over ten years as a result of the shift to lower-cost drugs.

As the 2016 Presidential primary season rolls on, CRFB continues to fact check the candidates on budget-related statements made during the campaign on our Fiscal FactCheck site. Within the past month, we have fact checked four statements, all related to federal spending. Below is a summary of each of them.

Reducing Fraud Would Make Social Security Solvent

At the February 13 Republican presidential debate in South Carolina, Donald Trump stated that he would make Social Security solvent by reducing waste, fraud, and abuse in the program, citing thousands of 106-year-olds on the program who likely do not exist. We noted that only a tiny fraction of Social Security beneficiaries were found to be deceased and only 13 Social Security beneficiaries were over age 112. Even eliminating all improper payments would save just a small fraction of what would be needed to ensure solvency. Thus, we found that Mr. Trump's statement was false.

Our Rating: False

House Members appear to be resolving a disagreement over what this year’s discretionary spending cap should be. Some House Republicans have been asking Congress to retroactively pay for the $30 billion increase in the FY 2017 discretionary caps that was authorized in last year’s Bipartisan Budget Act (BBA), which we have shown only truly offset half of its spending. According to press reports, mandatory savings are being identified to offset the $30 billion in sequester relief.

Regardless of the reason, we welcome the use of reconciliation instructions to reduce mandatory spending since the debt remains on an unsustainable course and 88 percent of non-interest spending growth over the next decade will come from the mandatory portion. Much of the discussion surrounding potential mandatory savings assumes that it even if it passes the House, it would have little chance of becoming law. But proposals with bipartisan appeal are available, and we need to look no further than the President’s budget for such mandatory savings ideas that could be enacted this year.

Senator Ted Cruz's campaign promises to date would cost more than $12 trillion over a decade, according to the central estimate calculated as a part of our Fiscal FactCheck project. As a share of the economy, debt under these policies would grow from roughly 75 percent of Gross Domestic Product (GDP) today to 131 percent of GDP in 2026 (compared to 86 percent of GDP under current law).