Spending Mirage

Spending Mirage

Budget & Tax  | Quick Takes
Dec 13, 2013  | 4 min read

Volume XVIII No. 50

Stop me if you’ve heard this one. Congress is in budget gridlock. At the last minute they reach a compromise. In exchange for lifting the caps that prevent them from spending at levels they want this year, they create a process that promises to find a trillion dollars in savings…but in a couple years. And in case they fail, they set limits on the amount they can spend in the future and impose a process of automatic cuts if they try and exceed those limits. Everyone congratulates each other on bringing fiscal responsibility and bipartisanship back to Washington.

No, that scene wasn’t Thursday when the House adopted the Bipartisan Budget Act of 2013. It was August 2011 when the Budget Control Act of 2011 was passed. Excuse us if after a couple of years of cliffs, super committees, shutdowns, stalemates, and sequesters, we’re experiencing Déjà vu. But once again Congress is promising to get its fiscal house in order, only they just need a couple years. In the meantime they need to spend more than they promised and avoid those automatic cuts they set up in case they broke their promise.  

This is ridiculous. The budget deal is bad for taxpayers. In exchange for increasing spending levels in fiscal years 2014 and 2015, the deal promises to find savings over the next ten. Digging into the details reveals deficit reducers that range from increased Transportation Security Administration fees to increased pension contributions from new federal employees to extending BCA-mandated reductions in Medicare provider payments for two more years. All told, the ten-year deficit reduction totals $85 billion. But, $63 billion of this is used to increase the spending levels in fiscal year 2014 and 2015.

Yes, you read that correctly. In exchange for immediately increasing spending by $63 billion, Congress promises to spend the next ten years turning over the couch cushions to find $85 billion in savings. Of course they won’t look that hard, because under the bill the bulk (55%) of the deficit reduction won’t actually occur until 2022 and 2023. To put that in perspective, those cuts would not occur until we’ve had four Congressional and two Presidential elections.

4 Values for Tax Reform

Taxpayers for Common Sense doesn’t believe Congress should manage taxpayer dollars by relying on budget shenanigans or illusory savings that may never occur. So, TCS drafted Real Savings, Real Deficit Reduction: Relieving Budget Caps with Common Sense Savings in Fiscal Year 2014. The Real Savings report includes proposals totaling $100 billion worth of deficit reduction in one year. This includes discretionary spending cuts, changes in mandatory spending, and repeal or modification of some tax expenditures. This is not an exhaustive list of TCS proposals, but rather a sampling of some of the work the Budget Committees could do if they wanted to undo some or all of the BCA mandated budget caps in a fiscally responsible way. And in a way that would obtain savings immediately, not in some distant future.

It’s important to remember this package isn’t a done deal. The Senate will have to pass it next week before it gets to the President’s desk. That means they can fix it and replace mirages of deficit reduction with real deficit reduction.

After the tumultuous last couple years, taxpayers deserve a solid, fiscally responsible, and credible budget plan. The Bipartisan Budget Act of 2013 isn’t that plan. Congress needs to get back to the negotiating table.