Op-Ed: Avoid Budget Gimmicks

zpolitics | December 9, 2013

As the Congressional budget conference committee nears its December 13 deadline for producing a budget agreement, it is very unlikely that the conferees will come up with the “grand bargain” needed to slow the unsustainable upward trajectory of our national debt.

It is likely they will put forward a small deal that replaces some of the damaging sequester cuts with smarter, long-term deficit reduction.  As frustrating as this may be, in today’s divided Washington, even a small deal would reflect progress.

Beyond paving the way for larger compromises, the conference resolution should also satisfy some important criteria for credibly reducing the deficit. In a recent paper, we outlined several of these goals. Any budget deal should begin to account for the long-term fiscal outlook and set responsible spending limits even if it doesn’t fill in all the specifics. It should also put in place a process for the next step, to deal with the major budget challenges of health care, retirement and tax reform. It should also include a separate track to strengthen and reform Social Security. And the immediate deal should refrain from using any budget gimmicks.

What is a budget gimmick?  Simply put, it’s an accounting trick that allows lawmakers to artificially create or inflate budgetary savings.  Imagine if you make some tough choices one month and are able to put away $100. When planning your budget for the next month, you decide to use those savings to pay your $100 heating bill and buy a $100 cell phone.  It doesn’t take an economist to realize that budget isn’t going to work.

Congress has considered doing the same thing, but on a much larger scale. Lawmakers have proposed using every trick in the book in order to justify more spending or congratulate themselves on phantom deficit reduction.

For instance, the Congressional Budget Office only scores legislation based on its budget impact over 10 years, so Congress will often make sure that provisions that will increase the deficit don’t take effect until the second decade after a bill is passed.  Projected war and emergency spending, including Superstorm Sandy relief, grows with inflation.  If lawmakers rein that spending in by applying budgetary caps, they can claim bogus savings for unspent money. Lawmakers have also considered willfully disregarding the inevitable, like counting savings from expiring provisions — the Child Tax Credit or Pell Grants — that will almost certainly be renewed. Talk about counting your chickens before they hatch.

The scary thing is that Congress could get away with these tricks because so few people will call them on it. So encourage your Members of Congress to oppose any resolution that includes budget gimmicks. Tell them that you expect them to work with their colleagues on a budget compromise to put the debt on a downward trajectory as a share of the economy over the long term.

Our elected officials are smart enough to know that this issue is too important for tricks. The conference committee has an opportunity to stop the games and get serious about the debt before it is too late. We are counting on them to do just that.