WASHINGTON
—
With critical decisions now pending
on the fiscal year 2006 spending and tax cut “reconciliation” bills, The Concord
Coalition said today that Congress should make deficit reduction the clear
fiscal policy goal of the two bills. In keeping with its established criteria
for evaluating budget plans, Concord said that everything should be on the
WASHINGTON
—
With critical decisions now pending
on the fiscal year 2006 spending and tax cut “reconciliation” bills, The Concord
Coalition said today that Congress should make deficit reduction the clear
fiscal policy goal of the two bills. In keeping with its established criteria
for evaluating budget plans, Concord said that everything should be on the
table, sacrifices should be distributed fairly, scorekeeping gimmicks should be
avoided and tax cuts should be postponed or, at minimum, offset. To ensure
enforcement, Concord also reiterated that pay-as-you-go rules should be
reinstated for entitlement increases and tax cuts, a position recently supported
by a bipartisan majority in the Senate.
“Leaders of both parties
say they are concerned about the budget deficit but they are locking themselves
into positions that threaten to make the situation even worse. Most Republicans
want spending cuts but they insist on cutting taxes by an even greater amount.
Most Democrats oppose the size of the tax cuts urged by Republicans but oppose
the spending cut proposals as well. The best way to end this standoff is to
agree on the common goal of deficit reduction, put everything on the table and
negotiate the necessary trade-offs, ” said Robert L. Bixby, Executive Director
of The Concord Coalition.
“This year’s budget
resolution calls for two reconciliation bills
—
a spending cut bill of $35 billion and a tax cut bill of $70 billion. Simple
arithmetic dispels the notion that this combination is aimed at deficit
reduction. It is hard to rally support for a spending cut labeled the ‘Deficit
Reduction Act of 2005′ when it will be followed by a tax cut that, by the same
logic, should be labeled the ‘Deficit Increase Act of 2005,’” Bixby said.
Reconciliation bills enjoy
special procedural protections, such as exemption from a Senate filibuster, and
should be used to facilitate the hard choices needed for deficit reduction. The
Senate has already passed a $35 billion spending cut bill. The House is
considering a spending cut bill of $50 billion, exceeding the budget resolution
target. Both the House and Senate are expected to take up tax cut bills of
roughly $70 billion before the Thanksgiving recess.
While some have argued that
the spending reconciliation bill should not go forward because it might threaten
low-income programs such as food stamps and Medicaid, Concord noted that
Congress could look at other parts of the budget for savings. For example, the
spending bill passed by the Senate spread the sacrifices by identifying savings
from Medicare payments to insurance companies and finding additional savings in
farm programs.
“Given the large recent
budget deficits and the even larger deficits projected for the near future when
the baby boomers’ begin to retire, a spending cut bill is a step in the right
direction. Congress should be debating the appropriate mix of spending cuts to
include in a balanced package, not whether or not to cut spending at all. It
makes no sense, however, to follow this up with a tax cut that will more than
wipe out the hard fought gains,” said Bixby.
The Concord Coalition has
established a list of 10 criteria for evaluating budget plans. Five of those
criteria are particularly relevant to the reconciliation process at hand:
Are major tax cuts
postponed until a balanced budget has been achieved?
If large tax cuts are
included in a budget plan, deeper spending cuts than otherwise would be required
are needed in order to achieve a balanced budget. This invites political
opposition; each spending cut can be challenged as being necessary to pay for a
tax cut.
Does the plan distribute
short-term sacrifice fairly and equitably among Americans of all ages and income
groups, expecting the wealthy to do their fair share, and exempting only the
very poor?
The fruits of a balanced
budget will be enjoyed by all. Thus, no economic group, except for the very
needy, should be exempt from contributing to eliminating the federal budget
deficit, and those who can more readily shoulder the burden should be asked to
do so. This is true of both spending reductions and tax increases.
Do the numbers add up
without resort to score-keeping gimmicks?
Budget tricks should
be avoided. Clever accounting does not fool the economy. One deceptive technique
in a budget plan is to include attractive tax or spending initiatives that have
a modest impact during the years before the budget is supposed to be balanced
and then entail large costs as they become fully effective thereafter.
Can the plan attract
substantial bipartisan support?
Starkly partisan
budget proposals may appeal to true believers and party loyalists, but they are
not likely to be enacted and even less likely to be enforced. The best way to
ensure that a plan can stand up over time is to infuse it with broad bipartisan
support from the beginning. This, in turn, requires that priorities be set and
compromises be made. Everything must be on the table.
Does the plan contain
credible enforcement mechanisms?
At some point, Congress and
the President will need to either cut spending or raise revenues by more than is
implied in the current budget resolution. It will help to have budget process
measures in place that stiffen political spines. The pay-as-you-go (PAYGO) rule
makes good sense in this regard. It promotes fiscal responsibility by requiring
anyone who proposes a tax cut or entitlement expansion to answer the question:
‘Can we afford it?’
The full list of Concord’s
criteria can be found at:
http://www.concordcoalition.org/issues/fedbudget/doc/balanced-budget-ten-criteria.html
The Concord Coalition is a nonpartisan, grass
roots organization dedicated to balanced federal budgets and generationally
responsible fiscal policy. Former U.S. Senators Warren Rudman (R-N.H.) and Bob
Kerrey (D-Neb.) serve as Concord’s co-chairs and former Secretary of Commerce
Peter Peterson serves as president.
###
CONTACT:
Tristan Cohen
(703) 894-6222
[email protected]
