Republicans Shrug Off Deficit Woes in Half-Trillion-Dollar BingeBilly House, Kathleen Hunter and Richard Rubin
Republicans in the U.S. Congress who came to power pledging tight-fisted budgeting are going on a tax-cut and spending binge that would boost federal deficits by a half-trillion dollars.
In part, they’re doing it by sidestepping their own warnings about the perils of ringing up even more national debt. Instead, they’re choosing tax cuts and the promise of long-term savings -- and some of the Tea Party members who came to Congress on the pay-as-you-go promise are going along.
So are some Democrats, but it’s the Republican majority that has pushed these bills forward for a mix of motives -- to show voters they can cut taxes and get things done, and to avoid looking like the Party of No. Even some Republicans say it’s wrong.
“How are you going to balance the budget when you are spending all of this money?” said Republican Walter Jones, a North Carolina Republican. “We were the party that advocated less government and less spending. We aren’t keeping our promise.”
Stan Collender, a budget expert and executive vice president of Qorvis MSLGroup, put it simply: “Hypocrisy, or worse.”
Republicans say they’ll balance their budget with $5 trillion in cuts over 10 years, yet budget experts say the damage is done.
“They clearly are a party in conflict with themselves,” says Joel Friedman, vice president for federal fiscal policy at the Center on Budget and Policy Priorities, a Washington group that advocates for the needs of low-income Americans.
The House last week voted to repeal the estate tax, paid by only 0.2 percent of U.S. estates, and to permanently extend tax deductions for state and local sales taxes -- without offsetting the cost of either measure. Those moves would combine to expand the deficit by $311 billion over 10 years.
Another $141 billion will be added over 10 years in a measure signed by President Barack Obama last week that leaders of both parties touted as a sign of getting something done in Congress. The law will permanently fix how physicians who treat Medicare patients are paid. The measure also included a two-year extension of the Children’s Health Insurance Program past its current Sept. 30 expiration.
Other deficit-expanding moves include House passage of a bill to revive a lapsed tax break for small businesses that encourages them to purchase equipment, which combined with other language would cost the government $79 billion over a decade in forgone revenue.
And there are congressional efforts to extend other tax breaks without offsets, to the tune of hundreds of billions of dollars. Republicans also have proposed increasing military spending beyond the caps agreed to in 2011, through a separate budget line called overseas contingency operations.
Senator Cory Gardner, a Colorado Republican who opposed the Medicare payment bill, said he wasn’t surprised that conservatives went along without much of a fuss, saying their desire to get something done won out.
“I think people recognized the significance of the entitlement reform that took place in the bill and recognized the need for a well-thought, long-term solution instead of a year-by-year, kick-the-can-down-the-road approach,” Gardner said in an interview at the Capitol.
House Minority Leader Nancy Pelosi of California complained at a news conference Thursday that in the first 100 days of this session, Republicans have considered or approved tax bills that give breaks to the “super wealthy and special interests up to about $600 billion.”
“This isn’t job creating. This is deficit increasing,” she said.
The Senate and House are negotiating a unified Republican budget plan for fiscal 2016. Both chambers’ versions aim to trim more than $5 trillion over 10 years and balance the federal budget by 2025 without raising taxes, largely through deep cuts to social safety net programs.
Republicans also are gearing up for a fight later this year in which they’re likely to demand more spending cuts in return for raising the nation’s ability to borrow more money.
Some of the budget moves are being made through more spending, and some through reduced revenue in the form of tax cuts to favored constituencies.
For instance, only 2 of every 1,000 people pay the federal estate tax, says the Tax Policy Center. Obama has said he’d veto it -- and it may not have enough votes in the Senate. Yet Republican backers say it would spur the economy and lift burdens on owners of small businesses and farms.
In the Senate, lawmakers struggled with offsets before they passed the fix to the physicians’ pay under Medicare. They first voted 42-58 to reject an amendment by Senator Mike Lee that would have required the measure to comply with pay-as-you-go budget rules.
Lee, in an opinion column this week in the Deseret News, complained that the new spending in the bill “comes right after the Senate just passed a 10-year balanced budget that specifically doesn’t account for these additional costs.”
“That’s how a feel-good, bipartisan compromise comes in -- with a $141 billion price tag,” he wrote.
Advocates for balanced budgets are troubled by the recent measures, saying the actions will exacerbate the expanding debt and deficit.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement that adding more debt atop a record-high level of $18 trillion is worrisome.
“This failure to pay for this legislation is completely at odds with rhetoric about fiscal responsibility and balanced budgets,” she said.
“It is impossible to take a budget resolution seriously if lawmakers pass a balanced budget and then bust that budget plan before it is even finalized,” she said.
In responding to such criticism, Republicans highlight the benefits of making tax cuts permanent rather than extending them every year or two, enabling businesses to plan better and spurring economic activity.
Some also point out that cutting taxes is one way to force a reduction in the size of government through lower revenue -- and that those are goals that many Republicans support.
Democrats complain about Republicans’ endorsement this year of so-called “dynamic scoring” in their budget plan -- a practice allowing estimates of spurred economic growth, and thus higher future tax revenue, to be used to offset the projected costs of their original tax cuts.
Representative Raul Grijalva of Arizona, co-chairman of the Congressional Progressive Caucus, said this budgetary “sleight of hand” has enabled Republicans to continue to place the cost-cutting burden more on domestic, non-military programs with cuts, even as they add to the deficit with tax cuts.
“It’s not only hypocritical, it’s cruel,” he said.