New Budget Rules Are a Disaster


Fair warning: we’re about to wade into some murky budget-related territory here, but these are important issues, so let’s go. The House Budget Committee just approved a bill to give the president the line-item veto, which would allow Bush to strip out any piece of a spending bill he didn’t like.

I happen to think this is a truly terrible idea, and you can read all about it here and here. The measure is being hyped as a way to let the president control “pork-barrel” spending, but in all likelihood, it will end up being used as a weapon for political retaliation—the president will get the power to nix spending projects in districts of representatives he wants to screw over. A man who orders that mentally disturbed prisoners be tortured so that he can “save face” surely doesn’t deserve more power. We can all agree on that. Anyway, it gets worse…

Meanwhile, in the Senate, Judd Gregg of New Hampshire is unveiling a “budget overhaul plan” which would set “hard deficit targets and requiring off-the-board cuts if they are not met.” That sounds innocuous, and it’s being hyped as a way of controlling the out-of-control federal deficit and implementing “fiscal responsibility.” Congress needs to be “saved from itself” and all of that. (For the record, my proposal would begin by asking the administration not to piddle away $30 billion on Boeing tankers they don’t even need, but set that aside.)

Anyway, the Center on Budget and Policy Priorities examines the details of Gregg’s plan, and it’s awful. Truly, truly awful. So awful that it’s hard to know where to begin. The proposal would impose caps on discretionary funding that would lead to steep cuts in social services. It would rejigger definitions of “solvency” that would basically force Congress to slash federal funding for Medicaid, the health care program for the poor. Medicare premiums, meanwhile, would shoot up dramatically for seniors. Defense spending, on the other hand, would be shielded from all cuts, despite the fact that we waste billions each year on fancy weapons systems we don’t even need in order to fight enemies that don’t even exist.

Under the Gregg proposal, it would also be much, much easier for Congress to eliminate federal programs willy-nilly and screw with Social Security (currently the Senate needs 60 votes to do so; under the new changes it would need only 51). Needless to say, this would be seriously catastrophic. So catastrophic that I feel like using capital letters and exclamation marks to write this post. But I won’t.

The worst part about the whole thing is that tax cuts would be exempt from “fiscal discipline” rules. Under the old PAYGO rules during the 1990s, if Congress wanted to cut taxes it would have to pay for them with corresponding spending cuts, ensuring that it couldn’t do what has been done under the Bush administration—namely, pass frivolous tax cuts for the wealthy by borrowing money that will just have to be repaid in the future. Gregg’s proposal doesn’t have this requirement. So even under the new rules, Congress could still create a massive deficit by cutting taxes left and right. This stuff is arcane, true, but it’s hard to think of a more important priority for Democrats right now than to kill this proposal.

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