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 Why it matters now.

A 2010 law aimed at preventing  increases to the national debt says that the total impact of all  legislation passed in a calendar year cannot increase the national debt. If they do, cuts to mandatory spending automatically go into effect.  (Conversely if Congress increases funding for entitlement programs there need to be corresponding tax increases.) 

Medicare, the Social Services Block Grant, student loans, and mandatory spending in the Affordable Care Act (other than exchange subsidies) are some of the programs where spending would be automatically cut. Spending on Medicaid, Social Security, food stamps, and all social safety net programs would not be automatically cut. 

However, Congress can avoid these mandatory cuts by passing another law. Unlike the tax bill this law can’t be passed through budget reconciliation so at least 60 votes are required in the Senate.

While Republicans are currently stating that they won’t allow these mandatory cuts to take affect, given the need for 60 votes, this will be politically difficult.  Even if mandatory cuts are avoided lawmakers will still be faced with the problem of a growing deficit, leaving Medicaid and Medicare vulnerable to cuts. 

If passed, the current tax bill would lead to $25 billion in mandatory cuts to Medicare alone. 

Resources

Republicans’ tax bill could trigger a $25 billion cut to Medicare
Vox: 11/14/17

Congressional Budget Office Letter
11/13/17

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