CRFB Calls For Fiscal Responsibility From the Conference Committee
With Congress back in session this week, there is a renewed focus on several provisions that lawmakers extended for two-months in December and which are set to expire again at the end of February. As we commented on at the time, lawmakers extended the payroll tax cut, expanded unemployment insurance benefits, the doc fix, and various health care provisions for two months at a total cost of about $33 billion. But with a new conference committee meeting to discuss possible extensions to these policies, CRFB has renewed its call for dealing with expiring provisions in a fiscally responsible way in a new paper.
CRFB argues that, ideally, lawmakers would address any extensions of expiring provisions within the context of a comprehensive budget plan.
The fiscal impacts of these expiring measures are no small cookies. An extension for the remainder of 2012 would cost $155 billion and $475 billion for a full ten-year extension. When you throw in year-long extensions of other provisions that Congress hasn't touched yet but can enact retroactively -- like the AMT patch and the tax extenders-- the cost grows to about $385 billion. Extending all these provisions for ten years would cost nearly $2.3 trillion.
The following graph from the paper shows the debt impact of a few recent plans to extend some of these expiring provisions. Luckily, they all included offsets.
Note: Estimates of proposals adjusted to begin in March 2012. "President's Plan" refers to the American Jobs Act.
While we hope Congress address these issues within a large deficit reduction package, at the very least, though, the extenders should be fully paid for over ten years with permanent offsets so that any extensions help to reudce long-term debt. The offsets should be real and not rely on any budget gimmicks like using war savings or unspecified cuts.
We discuss these issues, and several other DOs and DON'TS in the paper. Click here to read the full paper.