Analysis: Republicans’ Budget Plans Require Creative Arithmetic To Add Up

Analysis: Republicans’ Budget Plans Require Creative Arithmetic To Add Up

By Richard Rubin, Erik Wasson and Heidi Przybyla, Bloomberg News (TNS)

WASHINGTON — Republicans in the U.S. House and Senate say their budget proposals add up. It takes some creative math and logic to make that true.

The plans unveiled this week call for the U.S. government to collect more than $1 trillion in taxes in the next decade that Republicans have little or no intention of collecting. Some of that revenue comes straight from taxes to pay for Obamacare — which they want to repeal.

Republicans also gloss over details of where they’d cut more than $5 trillion to balance the books. Senate Budget Chairman Mike Enzi’s plan cuts $430 billion from Medicare without saying how. House Budget Chairman Tom Price’s proposal includes $1 trillion in “other mandatory” reductions that aren’t laid out.

Budget analysts are criticizing the approach.

“While the goals put forward by the budget resolution are praiseworthy, the details are in some ways unrealistic and unspecified,” Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, based in Washington, said in a statement.

The House proposal includes about $94 billion for a special war-funding account that isn’t subject to spending limits set by Congress in 2011. The Senate plan includes $58 billion in war funding, the same amount requested by President Barack Obama.

Price of Georgia would boost defense spending through something called the Overseas Contingency Operations account, which funds military activities in Iraq and Afghanistan, and which critics call a slush fund.

Such spending is exempt from budget limits because it is supposed to be for activities related to overseas conflicts. Price initially set a spending level $36 billion above the president’s request.

Earlier this month, 70 House Republicans signed a letter saying they would block the budget if military spending wasn’t increased. Representative Mike Turner of Ohio, a member of the House Armed Services Committee who organized the letter, said he would vote against Price’s reserve-fund approach and called it “funny money.”

MacGuineas said the plans appear to include “several budget gimmicks that circumvent budget discipline and artificially reduce the size of the deficit on paper.”

The budgets also call for repealing the 2010 health care law known as Obamacare, which was funded by a capital gains tax increase, a tax increase on top earners’ wages and levies on medical devices, health insurers and pharmaceutical companies. The budgets assume the revenue will continue to flow in.

Republicans could replace the Obamacare revenue with a U.S. tax code revision they have been discussing for more than four years and haven’t brought to a committee vote.

“They’re committed to the policy of repealing the Affordable Care Act, but they need the revenue in order to make their budget balance,” said Rep. John Yarmuth, a Kentucky Democrat on the House Budget Committee. “So they’re just doing it and saying it makes sense. And it clearly doesn’t make sense.”

The same is true of taxes that are in effect now, even though many haven’t been collected for more than a decade. Congress grants tax breaks for items such as corporate research and school teachers’ out-of-pocket expenses, and then allows them to lapse every few years. Then it renews them without paying for them.

Because the tax breaks aren’t currently in effect, the revenue is included in the House and Senate budgets. The House plan also supports a changed process that wouldn’t require replacing the lost revenue from renewing the tax breaks again.

In essence, House Republicans are saying: We shouldn’t have to replace the revenue — except that we haven’t been doing so anyway.

“You can’t reconcile those,” Yarmuth said. “They just do it and they don’t even try to defend it. They just say, our budget balances and just keep hammering that home. Well, it doesn’t, without those tricks.”

Republicans say the policies aren’t gimmicks. Instead, they say the plans shouldn’t be taken as the ultimate prescription for spending.

“There are a number of things in there that are policy-dependent, but again that’s ultimately not what the budget statement is,” said Rep. Mark Sanford, a South Carolina Republican on the Budget Committee.

“It’s a statement of if we were king or queen for a day, this is what we would propose,” Sanford said. “And until those things become reality, some of the budget numbers are tight.”

Both Republican-led chambers’ budgets use a valuation method called dynamic scoring to help reach balance. That allows lawmakers to assume that a lower federal debt boosts the economy and therefore reduces the need for more revenue.

The House proposal counts $147 billion in deficit cuts, and the Senate budget includes $164 billion attributable to the economic growth benefits of having lower debt.

A House rule adopted this year allows Congress to assume dynamic scoring, breaking a constraint that had been in place before. The Senate budget proposal includes a similar rule.

Senator Sheldon Whitehouse, a Rhode Island Democrat, called the proposal by Enzi of Wyoming “an unreal document that ignores traditional accounting rules.”

Yet Democrats have used similar measures when they were in the majority.

In presenting her fiscal 2014 budget, then-Senate Budget Committee Chairwoman Patty Murray of Washington claimed $4 trillion in deficit reduction in part by counting the 2011 Budget Control Act cuts and reductions to future war spending that wasn’t expected to occur anyway.

Rep. Tom Cole, an Oklahoma Republican on the Budget Committee, said the House budget plan is just as realistic as Obama’s, which relies on spending money from tax increases that he knows a Republican Congress will never pass.

“A budget is not the law,” Cole said. “It’s a position statement. It’s an aspirational document, so you can overanalyze it.”
Roxana Tiron and Angela Greiling Keane in Washington contributed to this story.

Photo: Talk Radio News Service via Flickr


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