Republican Budgetary Fiction

The new Republican majority in the House of Representatives has put in place many new rules and procedures, including a gutting of the budgetary pay-go rules that reflect the right wing insanity on budgets and deficits. In plain language what the Republicans have implemented is a rule that replaces so called pay-go rules (where any new spending must be paid for with either tax hikes or other spending cuts, or where tax cuts that diminish revenue must be made up with spending cuts) with a rule that says any increase in spending can only be made up with other cuts in spending (no tax increases possible) and that tax cuts do not have to be paid for. From the Center on Budget and Policy Priorities:

The new rules announced December 22 would replace pay-as-you-go with a much weaker, one-sided “cut-as-you-go” rule, under which increases in mandatory spending would still have to be paid for but tax cuts would not.

In addition, increases in mandatory spending could be offset only by reductions in other mandatory spending, not by any measure to raise revenues such as by closing unproductive special-interest tax loopholes. For example, the House would be barred from paying for continuation of a provision enacted in 2009 (and extended in the just-enacted tax compromise) that enables many minimum-wage families to receive a full, rather than a partial, Child Tax Credit by closing wasteful tax breaks for multinational corporations that shelter profits overseas. Use of such an offset would violate the new House rules because the provision expanding the Child Tax Credit for working-poor families counts as spending and hence could not be paid for by closing a tax loophole. Yet the same new rules would enable the House to expand tax loopholes for multinational corporations and wealthy investors without paying for those tax breaks at all, because any tax cut, no matter how costly or ill-advised, could now be deficit financed.

The new rules would stand the reconciliation process on its head , by allowing the House to use reconciliation to push through bills that greatly increase deficits as long as the deficit increases result from tax cuts, while barring the use of reconciliation in the House for legislation that reduces the deficit if that legislation contains a net increase in spending (no matter how small) that is more than offset by revenue-raising provisions.

The so called Republican “deficit hawks” are now showing that a true “pay-go” system is unpalatable, and that the real goal is more deficit spending to finance more tax cuts. Pure and utter hypocrisy on the deficit.

On “pay-go” the hypocrisy is not limited to Republicans. Democrats are in a position where they nominally support “pay-go”, but simply exempt spending they consider important or worthwhile from the rule. That puts them in no position to be critical of the Republican budgetary insanity. The road to fiscal sanity is not as complex as Washington folks would have you believe. It is simply a road with choices that need to be made, and those choices will apparently be avoided until the fiscal disaster is upon us.

Read the Center on Budget and Policy piece here.

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4 Responses to Republican Budgetary Fiction

  1. Jules Gordon says:

    I’m sorry, Your Honor, I had to read and re-read your opening paragraphs and had to stifle a laugh.

    Could you please give an instance of the Democrats implementing the “Pay-Go” policy in one of their costly program. If you believe this is working why are we pushing for a $14 Trillion ceiling.

    Then we can begin a nice debate on this fictitious policy.

    Happy New Year to you and your family. So your going to be an talk show yakker? intern, eh?

    Jules

    Like

  2. Bill Manzi says:

    Jules,

    Maybe you missed my last paragraph, in which I point out that the Democrats simply exempted spending from pay-go by declaring it an “emergency”. But I did notice that you avoided commenting on the very insane Republican rule, which pulls the curtain back on the false Republican claims to be deficit hawks. I predict here today that you will be excusing House Republicans for adding to the deficit within the first quarter of this year. I look forward to your first “nobody cares about the deficit” posting.

    A very Happy New Year to you as well. I am going to have dedicated conservative Lou Blasi breaking me in as an intern at WCCM.

    Like

  3. jules gordon says:

    Your Honor,
    Since you can’t answer the question, as usual, without obfuscation let’s bring things to the present. So we can agree it’s all George Bushes fault and the American people sent your friends packing in dramatic fashions.

    So here we are at the present, January 7, 2011. The Deficit is approaching 14 trillion dollars and work is under way to reduce the cost of operations by the Republicans.(Okay, go ahead and laugh).

    Now it’s simple. In the next year or two, will the deficit be reduced by Republican efforts? It will still take cooperation from the Democrats and the president to make it work.

    I cannot guarantee these Republicans who form a majority in the House won’t screw up as they did before. Can you guarantee your Democratic friends will govern as Americans or candidates running to keep their gold plated offices?

    Good luck with your new job. Does Lou know what he is getting himself in for.

    What is your broadcast schedule?

    Jules

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  4. Bill Manzi says:

    Jules,

    I did answer. Pay-Go worked for a bit, but eventually BOTH parties discarded it on a de facto basis. The Dems violate it by spending without offsets, the Republicans violate it by cutting taxes without offsets. Pretty easy to figure out, and pretty easy to show that from a deficit perspective cutting revenue without cutting spending is the same thing as raising spending without raising revenue.

    God help Lou Blasi if he ever really had to put up with me on a regular basis.

    Bill

    Like

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