WASHINGTON DC – Legislation that would reform entitlement programs to save about $50 billion over five years passed the House today by a vote of 217-215. First District Congressman Paul Ryan voted in favor of this legislation – H.R. 4241, the Deficit Reduction Act – because it will slow the pace of growth in government spending on entitlements, improve fiscal responsibility, and help offset some of the cost of the hurricane recovery spending. The next step is for a conference committee to resolve differences between this House legislation and legislation already passed by the Senate.

“If we are serious about reducing the deficit and balancing the budget, we need to control government spending,” Ryan said. “This is especially important because of the unforeseen spending that has been necessary for hurricane recovery. We should find savings to pay for this spending, not raise taxes on Wisconsin families and small businesses. The last thing they need right now is a tax hike. With the federal government expected to spend nearly $14 trillion in taxpayer dollars over the next five years, $50 billion in savings through sensible reform is the least we can provide. Besides this, we must do more to cut wasteful pork-barrel spending and lower congressional spending across-the-board.” 

The legislation focuses on controlling the growth of mandatory spending, which is growing at an unsustainable rate, through savings in a range of entitlement programs. Unlike spending enacted through the annual appropriations process, “mandatory” spending on entitlements operates largely on auto-pilot and is not subject to regular annual review. 

The Deficit Reduction Act would slow the growth of spending on mandatory programs from an average of about 6.4 percent to 6.3 percent per year over the next five years. 

Among its specifics, H.R. 4241 would: 

• Enact reforms based on the cost-saving recommendations made by the bipartisan National Governors Association to enable Medicaid to grow at 7.5 percent each year over the next ten years, instead of the projected 7.7 percent. The amount spent on Medicaid would continue to rise under this plan. 
  

• Increase student loan limits to allow more students access to more higher education, and it would lower borrower origination fees. It would also enable students to continue to enjoy low market-based rate loans, at 4.7% today, set by the current variable rate structure, by repealing the scheduled conversion to a 6.8% fixed interest rate. It also ends practices that have allowed some lenders to collect a minimum 9.5% rate of return on some student loans.
  

• Free up vital spectrum for first responders by auctioning off spectrum used by analog broadcasters, as recommended by the 9-11 Commission last year.
  

• Reform food stamp eligibility requirements to target aid to where it is most needed, by limiting automatic enrollment so that only those who receive welfare (TANF) cash benefits or use other TANF programs on a substantial and ongoing basis are automatically enrolled in food stamps. Besides regular cash benefits, the TANF program also provides other services, such as assistance in preparing a resume, job referrals, or a one-time emergency payment to repair a person’s car so they can return to work. People who use these services on a non-regular basis may have incomes above the level that would make them eligible for food stamps. Under this bill, if those who receive this government assistance meet the existing federal financial threshold requirements for food stamps, they can apply and remain enrolled in the program. 

• Assume $1 billion (a 50% increase) in additional funding for the Low-Income Home Energy Assistance Program (LIHEAP) to help needy families heat their homes.
  

• Maintain federal participation in the child support program while gradually reducing the federal matching rate for child support administrative costs from 66 percent in 2006 to 50 percent in 2010 – bringing it in line with the current rate for food stamps, Medicaid, and foster care and adoption. Overall, child support administrative spending has continued to grow rapidly, even as child support cases have been dropping.