Nickel Plan Act This bill modifies the federal budget process to establish and enforce new spending caps. The bill establishes an outlay cap (less net interest payments) for FY2024 of $5.953 trillion, less 5%. For each year from FY2025-FY2027, the outlay cap is 5% less than the previous year's outlay cap. For FY2028 and subsequent years, total outlays (including net interest payments) may not exceed 17.5% of the gross domestic product (GDP) for that year as estimated by the Office of Management and Budget (OMB). Beginning in FY2029, total projected outlays for any year may not be less than the total projected outlays for the preceding year. The OMB must enforce the spending caps using a sequester to eliminate any excess spending through automatic cuts. The bill eliminates the existing exemptions from sequestration. If the OMB projects a sequester, the congressional budget committees may report a resolution directing congressional committees to change existing law to achieve the spending reductions necessary to meet the outlay limits. The bill also establishes procedures for Congress to enforce the outlay caps established by this bill.
If enacted, HB 260 would have a significant impact on federal spending practices, requiring stringent compliance from governmental budgets moving forward. The bill amends the Balanced Budget and Emergency Deficit Control Act of 1985, enforcing new measures to restrain spending beyond established limits. As it allows for automatic cuts in the event of breaching the outlay caps, it would enforce a kind of fiscal discipline, potentially reducing spending in discretionary and mandatory programs, thereby impacting a range of federal services and funding allocations.
House Bill 260, known as the 'Nickel Plan Act', aims to address the federal budget by implementing strict spending caps in order to prevent a fiscal crisis. The bill establishes an outlay cap for fiscal year 2024 at approximately $5.953 trillion, which would be reduced by 5% annually through fiscal year 2027. Starting in fiscal year 2028, total outlays would be limited to 17.5% of the gross domestic product (GDP) for that year, as estimated by the Office of Management and Budget. Furthermore, the legislation introduces specific procedures for enforcing these caps and mandates the Office of Management and Budget to execute expenditure reductions as necessary to maintain compliance with the cap through a mechanism known as sequestration.
The Nickel Plan Act is expected to generate considerable debate among legislators and interest groups. Proponents argue that the bill is essential for ensuring fiscal responsibility and preventing unsustainable debt levels, while critics raise concerns over its potential to undermine crucial programs that serve American citizens, such as healthcare, education, and social safety nets. The bill's strict caps and sequestration process could lead to significant cuts in these areas, provoking backlash from various stakeholders who fear that the cuts would disproportionately affect low-income and vulnerable populations.