How to Think About: Budget Gimmicks

Michael Kinsley breaks down deficit commissions, spending freezes, and "pay as you go" rules

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(These articles are intended to help you to think through issues in the news about which you may be undecided. We tell you how to think about it. We try to leave what to think about it up to you.)

According to the Constitution, the government budget process works like this: spending bills originate in the House of Representatives, are passed along to the Senate and then, if the Senate supports them, to the president. In practice, the president proposes an annual budget, the House and the Senate wrangle over it, and eventually something passes. (Or if not, a "continuing resolution" keeps the government open until one does.)

We now face annual deficits of more than a trillion dollars. Three procedural gimmicks have been proposed to help reduce these amounts: a bipartisan "deficit commission," a spending freeze, and a "pay-as-you-go" rule, which would require any legislation proposing new spending or tax cuts to include new revenue to pay for it.

The main purpose of a bipartisan commission is to get around the "After You, Alphonse" problem. Although they may disagree about the exact mix, politicians realize that any recipe for deficit reduction has only two ingredients: spending reduction and tax increases. Since these are both political poison, politicians will only drink it if they can drink it together with politicians from the other party. And there must be a way to assure that deals made by the commission aren't undone later--for example, restoring money for your favorite program while leaving mine brutalized. The solution is to require an up-or-down vote on the whole package, with no amendments allowed. A bill creating a deficit commission and requiring a vote on its recommendations in December (before the end of the year, but after the midterm election) couldn't get the 60 votes now needed to pass almost anything in the Senate. So President Obama created a commission by executive order. But the president cannot order Congress to vote on anything, so the commission's recommendations will be nothing more than that.

This commission device has been tried successfully before. It was used to decide which domestic military bases would be closed after the Cold War--a highly contentious issue among members of Congress--and it worked well. In 1983 a commission managed to achieve the politically unthinkable: cuts in Social Security benefits. Of course surplus military bases are a much smaller issue than the entire government budget. And Social Security's problems were merely forestalled, not eliminated.

Interest groups like AARP oppose a presidential deficit commission on the straightforward reasoning that it is likely to recommend cuts in programs for their people. Republicans resist on political grounds: Democrats control the Senate, House, and White House. Any plan to reduce the deficit will be unpopular. Why let Dems off the hook by agreeing to share the unpopularity? There is also a high-minded objection to the commission dodge: it usurps the power of democracy. We elect people to make these choices for us. Commissions are a way to cut citizens out of important decisions.

In his State of the Union speech, along with the deficit commission, Obama declared a government "spending freeze." For three years, every government agency would have to make do with no more money than it had last year. That seems reasonable. But critics point out two flaws: first, if (like Obama) you exempt national defense, Social Security, Medicare, and a few other things (according to calculations by The Hill), you only have one-eighth of the budget left to work with. The second flaw (exposed by Obama himself when opposing a George W. Bush freeze proposal during the campaign) is that freezing the budget of every program and department is a foolish way to hold down spending. Some programs should be outright eliminated. Others should even get an increase. (While calling for a freeze, Obama also called for about $70 billion in new spending.) Why should a Democratic president accept the spending priorities of the Republican administration that preceded him?

"Pay as you go" budget rules played a big role in producing actual government surpluses in the late 1990s. Now both the House and the Senate have passed a pay-go law.

As a matter of logic, there is no reason a "pay-go" rule should work. It is unenforceable: today's Congress cannot restrict the action of future Congresses, or even the same Congress tomorrow. The budget freeze similarly depends on a president's willingness to stick to it. You can't sue him if he doesn't. Nor can you force Congress to accept the recommendations of a deficit commission. These and other budget gimmicks are like trying to lose weight by locking the refrigerator and putting the key on a very high shelf where only you can find it. But you know what? Sometimes, that works.

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