Democrats deride the honesty of the House Republicans’ new budget while Republicans mock the integrity of the Senate Democratic blue print, but both documents are riddled with gimmicks and wishful thinking.
These definitive elements of each plan will make reconciliation close to impossible.
The House-passed Republican plan crafted by Rep. Paul Ryan of Wisconsin vows to wipe out the deficit in ten years, but it is premised on the assumption that Congress will eventually repeal President Obama’s health care reform law and impose unprecedented cuts in health care services for the poor.
Meanwhile, the Senate-approved budget drafted by Sen. Patty Murray of Washington State is counting on $1 trillion of additional taxes for deficit reduction that Republicans have taken the equivalent of a blood-oath to oppose. Also, their budget does not balance in the standard 10-year window, a big talking point for GOP critics.
The two chambers late last week approved their respective budget plans and finished up work on a temporary spending measure to keep the government operating through Sept. 30 before departing for a two-week holiday recess.
For more than a decade, congressional budgets have been little more than aspirational political and ideological declarations of the two parties. Indeed, the last time the two chambers agreed on a budget and passed all normal spending bills on time was in 1997, when the GOP controlled the House and the Senate and Democrat Bill Clinton was in the White House.
Stephen Bell of the Bipartisan Policy Center, a one-time senior Republican Senate budget policy staffer, says the budget process has “sadly” devolved into political messaging, and little more. “It’s just a bunch of numbers on a page, and you can put whatever assumptions behind them that you wish to put,” he told The Fiscal Times last week.
After repeated misfires, President Obama, GOP House Speaker John Boehner of Ohio and Democratic Senate Majority Leader Harry Reid of Nevada still believe it’s possible to strike a “Grand Bargain” of deficit reduction and entitlement and tax reform this year. But both sides acknowledge that a wide gulf exists between the two budget plans.
Because of the gimmicks, it becomes hard for Ryan to cut spending by $4.6 trillion through 2023 and balance the budget, since almost 40 percent of the figure comes from Obamacare. And Senate Budget Committee Chairwoman Patty Murray, D-Wash., claims that she can reduce deficits by $1.85 trillion over the same period, but Sen. Jeff Sessions, R-Ala., found that—after factoring in all the gimmicks—the total is a modest $279 billion.
Budget tricks are a time honored practice -- certainly dating back to the Reagan Administration of the early 1980s. That was when White House Budget Director David Stockman famously devised a footnote or “Magic Asterisk” to artificially mask the true size of the deficit by pledging large "future savings to be identified."
There are more than a few such tricks and flights of fancy in the two budgets approved last week. Here are some of the best:
- Repeal Obamacare – Wow! With one stroke of the pen, Ryan saves $1.84 trillion over the coming decade by repealing Obama’s signature health care reform legislation – the very program that was upheld last summer by the Supreme Court and that voters tacitly endorsed by reelecting Obama last November. Obama now has four years in which to implement and lock-in the program before Republicans have another crack at winning back the White House. Ask any Democrat with a pulse, and he or she will identify this as the most glaring of gimmicks in the Ryan budget.
- Retain Obamacare tax revenue – You heard that right. Ryan, if he could, would wipe out health care reform, yet claim credit in his budget for the $1 trillion in new revenues associated with Obamacare. One might assume that if the Republicans were serious about bringing down the new health care program they would man up at the same time and write off the new tax revenue that goes with the program. But that would have punched a glaring $1 trillion hole in their balanced budget scheme.
- Order fantasy cuts in spending -- The Ryan budget assumes future sequestration cuts out of the Pentagon and onto other domestic programs that pay for food safety, air traffic controllers, college student loans, and federal law enforcement. Those popular domestic programs other than most entitlements already are bearing half of the overall sequestration cuts, or roughly $43 billion this year alone, and would suffer a double whammy next year under the Ryan approach.
And what would that mean? The percent of non-defense discretionary spending would drop to roughly 2 percent of Gross Domestic Product from the current 3.2 percent, which is already the lowest level recorded since the government began measuring the figure in 1962. That’s not likely to happen. Republicans and a smattering of Democrats appear content to allow the across-the board spending cuts to play out for the remainder of the fiscal year. But if voters start squawking about reduced government services, employee furloughs and other inconveniences as the 2014 congressional election approaches, those cuts will be deemed a political liability by many nervous lawmakers.
- Use Sequester Sleight of Hand – The Murray budget assumes the sequester works like a spigot and that after this year can be turned off for the next nine years. Those automatic across the board spending cuts began to kick in earlier this year, and will take a $85 billion bite out of defense and domestic programs for the remainder of the current fiscal year. But the Senate budget is counting on the remainder of the $1.2 trillion of spending cuts to go away, to be replaced by an even split of targeted cuts in government programs and higher taxes.
As a result, there is not a net spending cut in the bill—even though any deal with Republicans will depend on further reductions in expenditures. Remember, the sequester was implemented because Democrats and Republicans could not reach any other agreement. And another round of tax increases doesn’t appear to be in the cards.
- Ignore “Doc” Fix – Each year, Congress postpones the roughly 25 percent reduction in Medicare reimbursements for physicians required by the Balanced Budget Act of 1997, because lawmakers refuse to find and implement a permanent solution to Medicare reimbursement rates. This is known as the “doc fix,” and is not offset in Murray’s budget for the coming year, heaping another $167 billion onto the deficit.
- Unilaterally Declare End to War on Terrorism – The Murray budget optimistically assumes the war on terrorism stops in 2015 and never costs taxpayers another dime. Break out the champagne and ticker tape! This saves $304 billion over the existing baseline—essentially a bet that after U.S. troops leave Afghanistan no other new expenses materialize with regard to the exceedingly fragile region.