And here’s a graphical presentation of year-by-year deficit reduction in the CB (budget is eventually balanced) vs. the PB (current deficit doubles over a decade).
Seems like a step in the right direction, for sure, but there are many questions about these projected results. And remember in the ensuing discussion that while the budget resolution is not subject to presidential approval, nor can it be filibustered, spending bills based on the CB will not be similarly exempt.
Having pushed the CB over the goal line singlehandedly (not a single Democrat supported it in the final House vote), Republicans should not expect much help from Democrats in preparing spending bills and moving them through the legislative gauntlet. Consider, for example, this statement from Senate Minority Leader Harry Reid.
They met with themselves in secret. There was no public debate at all on this terrible budget that they have given to the American public.
Many Republicans harbor reservations about the CB too, which may hamper GOP efforts to maintain a united front. Thus, Senator Bob Corker held up the CB announcement for several days by questioning a “gimmick” used in putting the numbers together. [Senator] Bob Corker stalling GOP budget deal, Tom Howell, Washington Times, 4/28/15.
Mr. Corker said one reason he has not signed the deal is because it uses “Changes in Mandatory Programs,” or CHIMPS, which delay mandatory spending to free up money for other priorities. Critics say it is a phony maneuver that simply delays budgetary pain and results in no actual savings. Mr. Corker said employing the budgetary sleight of hand would lead to $190 billion in extra spending over a 10-year period.
As an aside, Senator Corker may have been seeking leverage re an unrelated matter (resolution to give Congress a vote on a nuclear deal with Iran, which if toughened by floor amendments would likely lose Democratic votes and be vetoed). He eventually “relented” and declared his support for the budget deal.
III. Major issues – An overhaul of the federal budget, with substantial spending cuts, could hardly be accomplished without controversy. Here’s a preview of some discussions that can be expected.
GOVCARE - The CB assumes some $2T in spending cuts over the next decade as a result of repealing this unpopular healthcare legislation, but there is no practical way of doing this while the current president is in office.
Republicans plan to avert a Senate filibuster by using the reconciliation process, which should make it possible to move a GovCare repeal bill through Congress. The president would surely veto such a bill, however, and there would be no chance of overriding his veto. Passage of the bill would be a symbolic gesture, and it’s hard to know whether a majority of Americans would be favorably impressed.
For one thing, the reconciliation process is rather involved, which makes it hard to explain. To the extent that Americans are aware of this exception to the Senate’s filibuster rules, they probably perceive it as a rather sneaky tactic – although it’s actually just a way to let the majority decide the issue in question instead of permitting a substantial minority to prevail.
In any case, the GOP has dropped the idea of advancing other controversial bills via reconciliation. Republicans agree on budget deal, Joseph Lawler, Washington Examiner, 4/29/15.
If passed, the joint resolution would also include a pathway for the GOP to repeal Obamacare with only 51 votes in the Senate, bypassing the filibuster. Republicans had debated use of the procedural tool for several legislative priorities, but the conference agreement affirms it for the sole purpose of placing a bill to repeal the healthcare law on President Obama's desk.
Second, repeal of GovCare would terminate the taxes embedded in the legislation – wiping out a big portion of the claimed deficit reduction. It’s conveniently assumed that the revenue loss would be made up through unspecified tax “reforms” (increases), which arguably conflicts with claims that the CB would balance the budget without raising taxes. Democrats take aim at GOP repeal Obamacare “gimmick,” Joseph Lawler, Washington Examiner, 3/25/15.
"Our budget repeals every bit of Obamacare including the job-destroying tax hikes. At the same time we call for fundamental tax reform that would raise the same level of revenue as the current tax code but in a fairer, simpler fashion," said William Allison, a spokesman for House Budget Committee Chairman Tom Price of Georgia.
Finally, the onus would be on Republicans to propose a substitute for GovCare if it was actually to be repealed, and whatever replacement they came up with would probably cost a substantial amount – thereby reducing the claimed savings.
SEQUESTRATION – Without lifting sequestration budget caps for non-defense discretionary spending, Republicans would provide more money for the military by increasing the reserve for Overseas Contingency Operations (military actions) in 2016 et seq. The extra OCO funding vs. the president’s proposal would be $187B spread over fiscal years 2016-2021 ($38B in 2016). FY 2016 Conference Agreement, summary table 3.
The administration’s position is that sequestration should be lifted for both defense and non-defense spending, and GOP plans to provide selective relief for the military will be a bone of contention as spending bills are developed. Obama rips Republicans’ spending bills over spending limits, Ben Wolfgang, Washington Times, 4/27/15.
Although the president has yet to formally threaten to veto any specific pieces of legislation, Office of Management and Budget Director Shaun Donovan has detailed the administration’s objections to Republican-backed spending bills in lengthy letters to leading House members. The letters also lay out the White House alternatives to Republican proposals — major spending increases paid for in part with tax hikes.
See also earlier threats to veto spending bills if Republicans lifted sequestration for the military only. Showdown coming over non-defense spending, Joseph Lawler, Washington Examiner, 4/1/15.
White House advisers have said, Obama will insist on a deal that raises the defense and non-defense spending caps by equal amounts, paying for the spending increases by cutting the deficit in later years.
Such an argument seems rather artificial. The CB essentially does away with sequestration by providing updated budget caps for all major areas of spending through fiscal year 2025. The real argument should be about whether each of the new budget caps is appropriate - not the mechanics of their development.
Look for determined opposition as the various congressional committees work on spending bills in coming weeks, and remember that Republicans cannot push spending bills through on a majority vote basis as they did with the CB.
OVERALL SPENDING – The pace of deficit reduction that is being projected seems far too leisurely. It should be possible to balance the budget within about three years, we think, without gutting the military or raising taxes. Postelection update: Deficits & debt, 11/24/14.
To speed things up, Congress could take a more aggressive approach. For example, why not abolish government organizations that cost more than they produce (for the country as opposed to employees or special interests) and actually start restructuring entitlement programs instead of just talking about it? A fair – but ultimately misleading – critique of GOP budgets, Daniel Mitchell, Townhall.com, 3/26/15.
In reality, there’s far too much spending in both [the House and Senate budget] plans, and neither Chairman proposes to get rid of a single Department. Not HUD, not Education, not Transportation, and not Agriculture. [Also, what about Commerce, Energy, and Interior?] Heck, the budgets don’t even go after low-hanging fruit such as the Small Business Administration, National Endowment for the Arts, Corporation of Public Broadcasting, or Legal Services Corporation.
If budget cutters move too slowly, this increases the political risks. Better to get the cuts made, or try to, before Side A has time to regroup and launch a counteroffensive.
Delay also increases the economic risks. SAFE and others have been warning of a fiscal meltdown for years, and there will be one eventually unless corrective action is taken in time. If the roof caves in, it may prove very difficult to fix the damage! Don’t forget the fiscal problem, 7/28/14.
So instead of faulting the Republicans for offering a shortsighted and stingy budget, or whatever, a different question should be asked. Why can’t we get this done faster?
IV. Assessment – As discussed, the CB does not guarantee that the budget will be balanced in the future, but simply sets that goal and outlines a plan to achieve it.
How disheartening that many Americans would just as soon not bother, either not realizing there is a problem or preferring to let things slide. Consider the corollary of no House Democrats voting for the CB: 197 Democrats (not to mention 14 Republicans) voted against a balanced budget.
People need to walk before they can run, and the adoption of a congressional budget for the first time in six years is a real achievement – provided Side B doesn’t say “mission accomplished” and let up. A lot of hard work remains to be done, consisting of not only living within the budget this year but also laying the groundwork for structural changes in the future.
The government succeeded in balancing the budget in the late 1990s thanks to a confluence of favorable circumstances and the efforts of some very dedicated and talented people (a mix of Democrats and Republicans). Victory was sweet, but, as one of the key players would later recall, “the flush times” didn’t last long. Comeback America, David Walker (served as the Comptroller General, starting in 1998), 2010 (preface).
After all the work it took to bring the deficit to zero, Washington seemed directionless. What do you do with a budget surplus? The answer is that you use it to build a new culture of fiscal responsibility. Once a balanced budget becomes the norm, you can begin to come to grips with the out-of-control social spending that leads to rising deficits and increasing debt levels. But that’s not how the new crowd in Washington looked at it.
There is no reason the budget can’t be balanced again, but this time let’s hope the victory will not be thrown away after it is won.
Thanks. All the best! David Walker