Keeping Offsets on the Table
As lawmakers work to put together a reconciliation package that could include up to $3.5 trillion of gross spending and tax breaks, resistance has reportedly emerged around some of the potential offsets. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
In order to meet the President’s goal of fully paying for his legislative priorities, it is important lawmakers not take reasonable pay-fors off the table. Rather, they should work to find more offsets and scale back the reconciliation package as necessary to avoid adding to the already high national debt.
There has been opposition voiced about ideas to increase corporate taxes, lower prescription drug costs, close the step-up basis loophole that allows people to avoid capital gains taxes, tax carbon emissions, and even improve tax compliance. And the political pledge not to increase taxes on any family making less than $400,000 per year stands squarely in the way of a number of sensible policies.
To make matters worse, some politicians are actually talking about cutting taxes for very high earners by repealing the cap on the state and local tax deduction.
Politically, it is much easier to say what things you won’t do when it comes to pay-fors than what things you will – but with a debt as large as ours, we just don’t have that luxury. If politicians can’t agree to $3.5 trillion in offsets, they certainly shouldn’t enact $3.5 trillion of spending and tax breaks.
A final consideration should be that every dollar we use to offset new spending won’t be available to address our mounting debt. Even under current law, debt is headed to record levels as a share of the economy and projected to rise unsustainably. The right approach would be to develop a plan to gradually improve our debt situation before enacting new spending or tax cuts.
The fact that this entire discussion is taking place without a real budget in place is a major abdication of responsibility, specifically of the budget committees but also of Congress as a whole.
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