House announces Murray-Ryan budget deal
Last night, a budget deal between Senate Budget Committee chair Patty Murray (D-WA) and House Budget Committee chair Paul Ryan (R-WI) was announced, to decidedly mixed reviews. You’d never know the Democrats are on the ropes, with ObamaCare dragging them toward an epic bloodbath in the midterm elections, to look at this deal. They get just about everything they wanted, including tax hikes and relief from sequestration, the only effective deficit-reduction measure of the past decade. (I’m tempted to say “of our lifetimes,” but perhaps some older readers would quibble with that characterization.) The relentless march to $20 trillion in national debt by the time Barack Obama leaves office continues, its pace reduced so slightly in the deal that it might not actually be reduced at all in practice.
If this deal goes through, Democrats will have something they can campaign on in 2014, which is awfully nice of the Republicans. Maybe one day they’ll show their gratitude with a little “bipartisan” cooperation that runs the other way. I wouldn’t advise the GOP leadership to hold their breath waiting for that. It’s possible the deal will not get past the House, where most analysts this morning are giving it roughly 50-50 odds of survival.
The strategy behind this deal is clear enough: Republicans do see themselves doing quite well as the public sours on ObamaCare, and don’t want to rock the boat with anything resembling another shutdown drama. They’re probably worried that the Democrats can get away with provoking a shutdown and pinning the blame on them, unless they provide a budget deal so favorable that not even media loyalists would feel comfortable covering for Barack Obama and Harry Reid throwing it away and declaring budget war.
Given how the last shutdown turned out, that’s not an entirely unreasonable concern, but unfortunately it might prove to be a tough sell to conservative voters who have grown tired of the “next time we’ll fight!” mantra. In fact, we heard some Republicans say they didn’t want to get into a big fight over ObamaCare funding because they were keeping their powder dry for this very budget battle. Now they’ll tell us to simmer down while they capitulate on the budget and forestall any more shutdown dramas until they’ve hopefully acquired more Senate muscle in 2014. That’s not an unreasonable strategy… if you think it’s truly part of a plan that will end with a Republican Senate and White House, which would resist the kind of thunderous demands for bipartisan compromise with the minority from media Olympus that no Democrat will ever hear.
Also, the more we allow the government’s fiscal condition to deteriorate, the more restricted a Republican Congress and White House will find their options for reform, when their moment in the sun finally arrives. This narrowing of options can already been seen in the system’s hysterical resistance to the modest spending restraint of sequestration, which the Murray-Ryan deal partially replaces with… tax increases, disguised as “user fees,” which means they’re tightly targeted taxes aimed at such groups as airline passengers.
On the bright side, there’s a dash of pension reform included in this deal, which can be viewed as a tentative step in the direction of entitlement reform, which has long been one of Rep. Ryan’s chief concerns. The question is whether Republicans have the political skill to nourish these pension trims into a more robust discussion of the big apocalyptic entitlement programs – Social Security, Medicare, and thanks to ObamaCare, Medicaid – the way Democrats will surely use their relief from sequestration as an argument for more tax increases. Somehow I think the Democrats are likely to run further with pass they have intercepted.
From a political standpoint, Republican leaders must understand that their base requires motivation, and the base is concerned with both deficit reduction and spending restraint – two separate but related issues. Increased spending with a bit less borrowed money is not what they had in mind. And while the leadership doesn’t want to create a budget crisis that would distract from the failure of ObamaCare, they’re also tossing Democrats a 2014 lifeline by cutting a deal that will make their base wonder what the point of voting for Republicans is. If they can’t drive a harder bargain that this, at a moment of extreme weakness for their opponents, why rally around their flag with the kind of enthusiasm necessary to make 2014 historic, instead of just “expected losses for the party in power during an off-year election?”
Perhaps this isn’t the worst deal in the world, but it’s hard to escape the sense that it could have been better… especially given that no one is more aware of the ticking doomsday clock on federal insolvency than Paul Ryan. If he really believes everything he’s said for years about the impending debt crisis, why is he making a status-quo bargain that will run another two years off the clock? The federal government doesn’t really do “budgeting” in any sense that an accountant would recognize any more, so if these “budget crises” are not the time to hold important and difficult discussions about our fiscal future, then when is the right time?
The House Budget Committee’s official announcement of the budget deal says:
“I’m proud of this agreement,” said Chairman Ryan. “It reduces the deficit—without raising taxes. And it cuts spending in a smarter way. It’s a firm step in the right direction, and I ask all my colleagues in the House to support it.”
“This agreement breaks through the recent dysfunction to prevent another government shutdown and roll back sequestration’s cuts to defense and domestic investments in a balanced way,” said Chairman Murray. “It’s a good step in the right direction that can hopefully rebuild some trust and serve as a foundation for continued bipartisan work.”
The Bipartisan Budget Act of 2013 would set overall discretionary spending for the current fiscal year at $1.012 trillion—about halfway between the Senate budget level of $1.058 trillion and the House budget level of $967 billion. The agreement would provide $63 billion in sequester relief over two years, split evenly between defense and non-defense programs. In fiscal year 2014, defense discretionary spending would be set at $520.5 billion, and non-defense discretionary spending would be set at $491.8 billion.
The sequester relief is fully offset by savings elsewhere in the budget. The agreement includes dozens of specific deficit-reduction provisions, with mandatory savings and non-tax revenue totaling approximately $85 billion. The agreement would reduce the deficit by between $20 and $23 billion.
Taxpayers just lost $15 billion – actually a lot more than that, when opportunity costs are factored in – on the auto industry bailouts, and were told that sum was irrelevant, a mere rounding error. President Obama literally thought it wasn’t worth mentioning the loss. But now we’re supposed to get excited about $20 billion in savings on a deficit measured in the hundreds of billions? As mentioned above, it’s always a mistake for fiscal conservatives to be focused too strongly on “deficit” reduction at the expense of spending reduction, not to mention the big-picture national debt. The annual deficit gets a shave, but the national debt still grows an $8 trillion “Duck Dynasty” beard over the coming decade. Huzzah!
A preview of the rough sledding this deal faces on the chilly slopes of the House, courtesy of Rep. Tim Huelskamp (R-KS):
This budget agreement is more of the same that we’ve seen out of Washington for years. Instead of providing solutions, it continues the insider game of playing ‘Let’s make a Deal.’ The deal provides for a $63 Billion spending increase, raises taxes, and adds to the deficit now – all in exchange for another mirage of spending reductions sometime in the future, most of them 5 years after Obama leaves the Oval Office.
In so doing it blows up the only real significant spending restraint passed since the Republicans assumed the majority in the 2010 election, it violates the Republican House Conference agreement hammered out in January of this year in Williamsburg, and it does next to nothing to implement the House budget passed earlier this year.
It does seem rather odd that Rep. Ryan, or anyone else, would fall for the old “tax increases now, spending cuts later” dodge. Recent history offers us no examples of that actually working out. It’s not just a partisan critique of spendthrift Democrats, either. It’s a structural flaw with the notion of future Congresses gamely accepting the burden of spending cuts or caps agreed to by their predecessors. Close your eyes and try to imagine any Congress, even one heavy with fiscally conservative Republicans, telling people it’s time to impose the fiscal restraint that other representatives agreed to several years ago. The day will never come that our massive central government cannot find a “crisis” or “emergency” urgent enough to “justify” breaking such a commitment, with the utmost “regret.”
Some Senate Republicans are less than enthusiastic about the Murray-Ryan deal as well, such as Senator Tom Coburn (R-OK), as quoted by the Washington Times:
Mr. Coburn said he is “real disappointed in the deal.”
“It is not anything I could support,” he said on MSNBC’s “Morning Joe.” “We are going to raise spending back up because the political powers that be want to spend more money rather than be responsible with what we know needs to be done up here, which is hard work eliminating all the stupidity, fraud and duplication that is going on.”
The Washington Times lays out the numbers that Senator Coburn finds so dismaying:
The agreement sets aside $1.012 trillion for the rest of fiscal year 2014, which is more than the $967 billion that was included in the 2011 Budget Control Act and championed by Republicans. Democrats had sought $1.058 trillion.
Under the deal, non-mandatory spending would then climb to $1.014 trillion in fiscal 2015, bringing the total amount of sequester relief to $63 billion.
Mr. Ryan and Mrs. Murray said the agreement provides $23 billion in long-term deficit reduction, which is considered a modest amount considering the nation’s soaring $17 trillion national debt.
I notice there’s still no serious effort to cut down on waste, fraud, and abuse, which are particular concerns of Senator Coburn’s. It’s beyond ridiculous that we would pop champagne corks over a deal that lets the government spend more, while it’s still riddled with agencies and programs that waste over a billion dollars apiece – something even the biggest-spending Democrat should, in theory, find unacceptable. But they never do anything more than pay lip service to plugging the leaks in our ship of state, while making deals to buy another trillion gallons of fuel for the engines, and set flank speed for the waterfall of insolvency we can now glimpse on the horizon.
Update: A word in favor of the deal from Rep. Tom Price (R-GA) of the budget conference committee:
It is increasingly obvious that success – particularly in divided government – has to be measured in positive steps, not leaps and bounds. But in doing so, the American people expect their elected officials to find common ground without sacrificing the principles we hold dear.
This agreement – more than $20 billion in deficit reduction compared to current law with zero tax increases – reflects both that common ground and our conservative principles. Just as important, we are jump-starting the appropriations process so that future spending decisions reflect our priorities.
Moving forward, the manner in which spending reductions occur will not be based on arbitrary cuts that usurp the proper role of Congress in determining the nation’s budget priorities. Instead, this package relies on smarter cuts and common sense reforms, which make incremental progress toward the ultimate goal – a smaller, more efficient and accountable Washington.
But there are tax increases in the deal. They’re called “user fees,” but that doesn’t make them any less of a tax. It just determines who pays them.