Larry Kudlow took viewers by surprise during an appearance on "Fox News Sunday" this week when - after offering the usual boilerplate about the White House's trade beef with China - he mentioned that the White House was considering a "rescission bill" to strip some spending from the $1.3 trillion omnibus spending bill that President Trump signed into law last month.
Congressional and West Wing sources have apparently confirmed as much with Bloomberg, which reported that the rescission bill - which could ultimately strip $120 billion from nondefense discretionary spending - was under serious consideration.
With the CBO now projecting a $1 trillion budget deficit by 2020 - two years sooner than previously estimated - the urgency for the government to roll back some of its deficit-fueled spending has intensified. And bear in mind, the CBO is now estimating that there won't be a recession within the next ten years, which would make this the longest economic cycle without a contraction in US history.
As we noted earlier, according to the latest estimates, spending will exceed revenue by $804 billion in the fiscal year ending Sept. 30, compared with a projected $563 billion shortfall from June, the non-partisan arm of Congress said in a report Monday. In fiscal 2019, the deficit will reach $981 billion, compared with an earlier projection of $689 billion.
Given the threat that swelling debts pose to the US financial system (not to mention the stock market), Bloomberg reported that the US is planning to ask Congress to pare back some of the domestic spending authorized by the bill.
Meanwhile, the White House is hoping to leave military funding, funding for the opioid crisis and border security untouched.
House Majority Leader Kevin McCarthy has been working with the administration on a rescission maneuver, though any attempts to roll back spending will likely be opposed by Democrats.
For those who are unfamiliar with the obscure provision, here's an explanation of "rescission" courtesy of Bloomberg.
The rescissions request makes use of an obscure provision in the 1974 Budget Act that allows the president to request the cancellation of some spending and gives Congress 45 days to approve the measure. Under a 1992 precedent in the Senate that limits debate, Republicans likely could pass the bill without any Democratic support.
"The administration is working to identify potential rescissions and at this point, there is no completed list or dollar amount," White House budget office spokeswoman Meghan Burris said.
The 2,232-page omnibus bill was roundly criticized by 25 House conservatives, including House Freedom Caucus member Mark Meadows, who almost sunk the bill by turning against it and threatening what would've been a third government shutdown this year.
Trump also flirted with opposing the bill after it passed the House, and it wasn't until Speaker Paul Ryan journeyed to the White House for a lunch meeting where he secured the president's support.
Still, the president made clear that he was signing the bill because of a national security imperative - and that he opposed the domestic spending concessions Congressional Republicans had permitted. It also, crucially, lacked funding for Trump's southern border wall. The White House had initially sought nearly $20 billion.
The bill increased military spending by $80 billion this year above previous spending limits and non-defense spending by $63 billion. Trump’s 2018 budget had sought a $54 billion cut to non-defense spending.
Despite having the ability to circumvent the Democrats, both Democratic and Republican aides told Bloomberg the package would face difficulty in the Senate as Republicans - particularly members of the appropriations committee - likely wouldn't support breaking a good-faith agreement and doing an end-run around their Democratic peers.
"Advancing a rescission package like the one described would lay waste to the notion that Republican leadership negotiated the omnibus in good faith and poison the well for future responsible, bipartisan legislating," said Matthew Dennis, a spokesman for House Appropriations Committee Democrats on Friday.
Steve Bell, a former Senate Republican budget aide of the Bipartisan Policy Center predicted that because of this, the package will face difficulties in the Senate and may not even be introduced.
Republicans could try to pare back domestic spending by $120 billion to put it in line with the Trump 2018 budget. But the larger the request, the more difficult it will be for moderate Republicans to swallow.
Steve Ellis of Taxpayers for Common Sense, a spending watchdog group, said the larger the request from Trump, the more difficult it will be.
"Unless its a really targeted package that just focuses on some egregious waste, it is going to get enough people ticked off that it won’t go through" he said.
Budget watchdogs say they would welcome the chance to reduce the roughly $150 billion spending increase in the omnibus bill.
"I don’t have a view yet on this particular process, but certainly we overspent for FY 2018 and if we can pare the funds backs a bit - both on the defense and non-defense side - that would be an improvement," Marc Goldwein of the Committee for a Responsible Federal Budget said.
While it's reasonable to assume that paring back domestic spending might be unpopular with both Democrats and moderate Republicans, the CBO report cited above is just the latest sign that the White House has dramatically overspent. And at the end of the day, stopping the US from transforming into Greece might be a higher political priority than preserving domestic programs.