Bill Clark/CQ Roll Call via AP Images
Senator Mike Enzi, the retiring Budget Committee chair, walks past reporters after a vote in the Capitol
The past couple weeks in Democratic politics have focused relentlessly—beyond all reason, I would say—on financing for universal programs and an expanded welfare state. Fiscal deficits have taken precedence over the deficits of health care and savings and equality.
You can see this period as a preview for how the political discussion will go if any Democrat with a modicum of ambition reaches the White House. Suddenly, the profligate spending on military weapons and tax breaks of the previous few years will be forgotten, the “debt we’re passing on to our children and grandchildren” will take center stage, and promising advances for society will run aground amid this deficit fearmongering. These are close to ironclad rules in a Washington that’s wired for the status quo and dismissive of the needs of the working class.
Last week, we also got a preview of how Republicans will pursue this maneuvering under a new president. Congress is too dysfunctional to actually pass laws for the next couple years, but the GOP clearly has a blueprint to create budgetary straitjackets and destroy hopes of progress on anything requiring money. Amazingly, they got some Democratic support for their aims.
The Senate Budget Committee last week passed a bipartisan set of budget reforms for the first time in nearly 30 years. The bill, known as the Bipartisan Congressional Budget Reform Act (S.2765), was co-authored by retiring Budget Committee chair Mike Enzi (R-WY) and the typically progressive Senator Sheldon Whitehouse (D-RI). Tim Kaine (D-VA) and Chris Coons (D-DE) are among the 17 co-sponsors.
S.2765 came out of the failed 2018 select committee on budget reform. It has some modest good-government provisions, like moving to a two-year budget cycle, and incorporating the so-called “Gephardt rule,” which would deem the debt limit raised any time a budget resolution passes, thereby disarming the recent practice of aiming a loaded gun at the full faith and credit of the U.S. government. But Title IV of the bill, the “special reconciliation instructions,” would create an automatic process to slash potentially trillions of dollars from programs like Medicare, Medicaid, food stamps, and Obamacare subsidies.
Under the bill, a budget resolution would pass in the first year of a new Congress. The next year, on February 15, the Congressional Budget Office would compare the debt/GDP ratio projected in the budget resolution to a new projection that incorporates the evidence of the past year. If the new projection exceeds the budget resolution’s, that would trigger a special, automatic “reconciliation” process to effectively wipe out that gap.
For the most part, cuts would have to come out of mandatory programs, like health spending and nutrition assistance for the poor. (Social Security is protected from reconciliation and could not be cut.) The Budget Committee could also recommend revenue hikes, but a tax increase disconnected to any new services, based on hitting a budget target, would be a difficult sell. The special majority-vote reconciliation process would be expedited, a quick strike from April 15 to July 30, with limited amendments, and no possibility of a filibuster.
“It sets up a presumption which will be portrayed by deficit hawks as saying you will need to reduce the deficit,” says Richard Kogan of the Center on Budget and Policy Priorities, who has written about the bill. In doing so, S.2765 grants enormous power to inherently uncertain budget forecasting, which gets elevated from a tool for policymakers to set priorities to an inflexible number that must be hit no matter the economic conditions.
For example, a recession in year one of a budget cycle would obviously increase the deficit, as unemployment reduces tax receipts. Under this bill, Congress would be required to cut spending in the midst of such a recession, the exact opposite of what economic theory would demand. This bakes austerity into the budget process at precisely the wrong time.
Even in a strong economy, the debt/GDP ratio could jump from year to year for idiosyncratic reasons, whether because of Federal Reserve interest rate hikes, changes in demographic assumptions, or purely technical causes. That this would be a basis for slashing spending on vulnerable populations beggars belief.
In fairness, the Budget Committee could judge the difference between the projections for debt/GDP as less urgent, and could ask for deficit reduction as low as one dollar. The automatic reconciliation bill would have to pass the full Senate, a change made in a manager’s amendment. “But you would have started a process with the presumption that an aspirational (budget) number is a real meaningful thing that you’re supposed to hit,” Kogan says. The process would make Democratic holdouts look bad, and set up a bias toward deficit-cutting.
The provision would also leash government spending to CBO forecasts. The budget analysts there do their best, but evidence shows demonstrably that they often get things wrong. CBO’s assessments of its own deficit projections going back to 1984 show wide variations. Just a few weeks ago, CBO changed a key assumption about long-term interest rates, altering their 10-year forecast by $2.2 trillion. If CBO is just a guide for Congress, such inaccuracy isn’t as big a problem. If the government was forced to cut spending by $2.2 trillion, only to have CBO fix their error down the road, it would have massive consequences for people who depend on government services.
As Kogan points out, the past three budget resolutions passed by Congress would have, under this bill, forced automatic reconciliation deficit cuts with a staggering total of $9.5 trillion.
So why on Earth would Senator Whitehouse participate in this exercise in budgetary sabotage? His office declined to comment to the Prospect about the bill. “We won’t have anything to add on this,” a spokesperson for the senator wrote in an email. But Whitehouse has been very loud elsewhere about the glories of this budget reform. He co-authored a Roll Call op-ed with Senator Enzi last week, praising the bill for putting the nation on “a more sustainable fiscal course” and “restoring our broken budget process.” After the Budget Committee approved the bill, Whitehouse pronounced himself “proud to have worked with Chairman Enzi on budget reform.”
This symbolizes the disproportionate party responses to the budget. Republicans only care about deficits should a Democrat threaten to darken the door of the White House. They just used reconciliation to cut trillions of dollars in taxes on the rich, and now they want to use it to slash spending. Meanwhile, Democrats pride themselves on responsibility and seriousness. They value process more than progress. There’s nothing serious, of course, about an automatic trigger to cut Medicare and food stamps based on a highly uncertain number conjured up by unelected budget scorers.
The ranking Democrat on the Budget Committee is Bernie Sanders, and given his presidential campaign, he did not play a role in the markup. However, Sanders released a statement on S.2765 after committee passage, opposing the bill and decrying the automatic reconciliation trigger. “At a time when Senate Republicans came within one vote of kicking 32 million Americans off their health care, the last thing we need is a new Senate procedure that could help speed through a repeat of that effort,” Sanders wrote.
This legislation is likely not going anywhere today; even if the Senate manages to pass it, there’s no House sponsor currently. But Sanders and other presidential candidates like him are the probable targets. If a Democrat wants to extend free public college to all Americans, or move toward a universal health care system, or amass resources to fight the climate crisis, they’re going to run into the deficit scolds, the “No, We Can’t” brigade. Republicans like Enzi want to build that “No, We Can’t” presumption into the budget process itself. It makes no sense for Democrats to help them.
