Nobody Winning Partisan Budget Battle in Congress

Updated: November 17, 2020|Bill Fay|Government

Before the ink dries, there will be at least six budget resolutions offered and voted on in the House of Representatives: The Paul Ryan budget, a budget crafted by moderate House Democrats, another from Senate Democrats, a fourth from the House’s Congressional Progressive Caucus (CPC), a fifth from its Congressional Black Caucus (CBC) and a sixth from the House’s ultra-conservative Republican Study Committee (RSC).

And yet none of these budgets will go anywhere. They are all dead on arrival.

Whatever passes in the House will not make it through the Senate and vice versa, meaning that not one of these fiscal blueprints will ever become law.

They are valuable only in that they represent different wish lists emanating from Congress’s disparate political ideologies. As such, they offer the citizenry six contrasting visions of the country’s future.

So let’s look and see what each has to offer.

The Ryan Budget

The Ryan budget has gotten the most attention, by far. It passed through the House on a 221-207 party-line vote last week. Congressman Ryan’s (R-WI.) 2014 proposal is similar to budgets he authored over the past few years, and his latest iteration doubles down on the economic ideas he introduced in the 2012 presidential race.

He proposes, among other things, to repeal Obamacare, turn Medicare into a voucher program for those born after 1959, cut funds for food stamps and Medicaid and lower taxes for the wealthy and corporations by $7 trillion while upping outlays for the Pentagon.

His plan also aims to create only two tax rates – 10 and 25 percent – making up lost for revenue by closing tax loopholes and eliminating tax expenditures. Just as he did when he was the vice-presidential candidate, Ryan declines to specify which of those money sieves he would target for repair.

Yet he insists his budget will balance in 10 years, and he makes that budget balancing the preeminent objective of his proposal. It is a major tenet of modern Republican orthodoxy to eliminate deficit spending at all costs: a curious retrenchment considering that for many years, and particularly during recent Republican administrations, the party’s rank and file did not consider deficits an overly important issue.

Apart from the fact that many liberal economists believe that balancing the budget shouldn’t be Congress’s overriding aim, especially during a time when government spending is seen as the best last resort to stimulate a struggling economy, Ryan’s critics maintain that his budget won’t achieve its stated goal.

In fact, a recent analysis by the Center of Budget and Policy Priorities suggests it will not result in any major deficit reduction at all.

Another analysis by the Economic Policy Institute had a darker prediction. It estimated that the Ryan plan would cost some 2 million jobs, shrink the U.S. economy by 1.7 percent and perhaps push the country back into recession.

Shortly after it passed the House, Ryan’s budget was rejected in the Senate, 59-40. Two moderate Republicans voted against it because of its safety net cuts and three Tea Party Republicans joined every Democrat to kill the measure because it included $620 billion in tax increases enacted in January.

The Republican Study Committee Budget

Intending to wield an even sharper austerity scalpel, the RSC’s “Back to the Basics” budget had plans for deeper cuts in entitlement programs to balance the budget in just four years. Medicare would become a voucher program by 2019. Meanwhile, Social Security benefits would decrease by changing the method by which they are calculated, and its eligibility age would increase to 70.

The RSC plan hoped to cut discretionary spending to 2008 levels and then freeze them until 2017 — the date the budget should balance. While the Ryan budget had 49 backers in the House, the RSC budget had considerably fewer. It existed mainly as a way to shore up the Party’s far right flank.

The House rejected it, 132-104, with 171 Democrats voting “present” — not voting for or against. The Democrat’s plan was to force the House into passing it as a way to highlight the extremism of the Republican conference. When the G.O.P. didn’t rise to the bait, the RSC budget died.

Three House Democratic Budget Plans

Before disposing of the RSC budget, the House also voted down three Democratic plans. The mainstream Democratic budget proposed closing tax loopholes on corporations and wealthy Americans, adding $200 billion into infrastructure and education projects in 2014 and turning off the $1.2 trillion worth of sequestration cuts. It was defeated 253-165.

The party’s left wing offered two proposals. The CPC’s “Back to Work” budget started with the assumption that the unemployment crisis is far more important than balancing the budget and hoped to generate nearly seven million jobs in the coming year with massive spending on the country’s decrepit infrastructure plus the rehiring of teachers, police, and firefighters laid off during the Great Recession.

The CPC plan embraces just about every major program the GOP disdains and whacks the ones the Republicans love. It protects Medicare, Medicaid and Social Security and aims to strengthen Obamacare by adopting a public option to compete with private insurance companies, among other health care reforms.

It slashes Pentagon spending, revokes subsidies for oil, gas and coal companies, closes down corporate tax havens, repeals the Bush tax cuts for families earning more than $250,000, levies a financial transaction tax for Wall Street traders, promotes a tax on carbon pollution and raises the income tax rate on millionaires (to 45 percent) and on billionaires (to 49 percent).

Because of the proposed tax hikes, the CPC budget planned to bring in $4.2 trillion in new revenue while increasing spending by nearly $3 trillion. The proposal failed big: 327 to 84.

The Congressional Black Caucus budget put the blame for the current deficit squarely on the Bush tax cuts and the recent fiscal cliff deal. It aimed to raise revenues by:

Cancelling the sequester
Limiting the deductions of corporate debt interest
Closing tax loopholes and incentives that move American jobs overseas
Taxing capital gains and dividends as ordinary income
Levying a financial speculation tax of .25 percent
Imposing a 5.4 percent surcharge on incomes over $1 million
Repealing the Bush tax cuts for incomes over $250,000, and
Ending the mortgage interest deduction for vacation homes and yachts.

It proposed to spend billions on infrastructure, education and jobs and to increase funding for almost every social service program of the federal government. It failed 305 to 105.

The Senate Budget

Most recently, the Senate on Friday debated the plan put forward by its Democratic majority. Budget committee chair Patty Murray (D-WA.) said: “The highest priority of the Senate budget is to create the conditions of job creation, economic growth, and prosperity from the middle out, not the top down.”

Thus, it aims to spend $100 billion on an infrastructure repair package to create jobs.

It also hopes to bring down the deficit slowly while protecting safety net programs for the poor and popular domestic programs that fund education, health research and law enforcement agencies. Tax revenues would increase by $975 billion over the coming decade, while spending will be cut by a similar amount. It promises a $693 budget deficit in 2014, dropping to the $400 billion range by mid-decade.

While the $3.7 Senate plan passed early Saturday morning on a 50-49 vote after long hours of voting on various amendments, its fate in the House is a fait accompli. It will die there soon – the sixth budget to go down to defeat.

What’s Next?

Regardless of all the time, money, work and energy expended on these competing budget proposals, Congress is essentially back to square one.

And over the next few months, we’re likely to witness Washington’s continuing inability to govern as intelligent compromise eludes the various factions wedded to their parochial points of view.

Also likely is the probability that the White House will have to offer its own budget proposal, the seventh in the series. Even if it does, it too is fated to go down to defeat in the House.

The box score then will show 0-for-7 — and the year is only three months old.

If 0-7 was your favorite team’s spring training record, what would you expect during the regular season?

We do know one thing, however. At some point, there will be a “1” at the start of that Congressional record. The question is how many more partisan-crafted plans does Congress have to go through to get there?

Bill Fay

Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet.