Few things would dash the holiday spirits of deficit hawks more than a budget deal that abandons the sequester caps and funnels new revenue into federal coffers. Unfortunately, that’s exactly what budget negotiators in Congress have presented.
With their deadline to strike a deal looming this week, the select House-Senate committee charged with crafting a fiscal 2014 budget compromise offered up a lump of coal. While the details are still being analyzed, it’s clear a deal has been made to break the current bipartisan spending limits and raise federal discretionary spending back above $1 trillion. The new spending would be offset by small reforms and billions in new revenue — leaving taxpayers to foot some of the bill by paying increased fees on airline tickets.
This deal is both fiscally irresponsible and a burden on taxpayers. Swapping higher spending for new federal revenue is a Christmas present that nobody should want and Congress should reject.
Even without this agreement, Congress could still set the budget process on the right path before it adjourns for Christmas. Members should pass yearlong appropriations legislation that maintains the bipartisan spending levels that both sides agreed upon in 2011. This would allow Congress to avert a fiscal showdown in mid-January, protect Americans from any new tax hikes, and take the revolutionary step of keeping the spending promises they have already made.
Congress and the Obama administration set the 2014 spending levels in the Budget Control Act of 2011 and ensured the caps would occur when the so-called supercommittee failed to find agreement. The act raised the debt ceiling by more than $2 trillion while establishing modest spending caps on ballooning federal deficits. It was a compromise worth celebrating, even though the caps were barely a drop in the ocean.
Congress should remember the Budget Control Act represents one of their few bipartisan achievements in recent years. Its supporters include the leadership of both parties, including Sens. Harry Reid and Mitch McConnell, House Speaker John A. Boehner, Rep. Nancy Pelosi and even Barack Obama.
Besides being a rare symbol of bipartisanship, these caps have also helped government trim spending two years in a row — something not achieved since the 1950s.
Any member of Congress serious about the nation’s debt crisis would want to bank these savings and move forward to address bigger issues. Mandatory reforms agreed to in this budget conference — even small ones — should be used for deficit reduction, not to offset higher spending.
It’s also important to remember that the upcoming spending reduction — $20 billion in 2014 — is not a draconian cutback. The savings are less than 1 percent of federal spending and budgets go up every year thereafter. If Congress feels that these small limits are poorly designed, they have the power to adjust them and provide additional flexibility within the $967 billion overall cap.
Finessing funding for programs within the Budget Control Act’s overall spending limit is a far better option than breaking them. Eliminating the caps — or swapping them for tax hikes — would undermine the most successful budget-reduction strategy of the past decade. It would also send a message to the American people that federal budget agreements can be abandoned at a whim.
Keeping those promises should be enough for Congress. If it’s not, though, members should also consider that establishing a fiscally responsible 2014 budget will also allow them to better address the looming debt-ceiling crisis.
The debt ceiling will be reached this spring. If lawmakers can provide clarity on federal funding by Christmas, they will have plenty of time to work out a debt-ceiling deal before that date. It would even give them time to work out a detailed compromise that could address the $17.3 trillion debt by pairing the next debt-ceiling increase with renewed dollar-for-dollar spending caps.
Such a compromise on the debt ceiling will be harder to reach if Congress doesn’t first uphold its promise to pass a fiscally responsible 2014 budget. At the end of the day, neither breaking bipartisan spending limits nor increasing taxes on holiday travelers will spread Christmas cheer or help us get any closer to tackling the debt.
Andy Koenig leads budget and spending policy at Freedom Partners Chamber of Commerce.