They should go smaller, and bigger, at the same time.
Uncle Sam is expected to hit the debt ceiling again soon, most likely November 3rd, and once again the bipartisan Beltway Cartel, led by the firm of McConnell Reid Boehner Pelosi & Obama, is trying to impose a “must pass” debt limit increase on Congress. [Bill links, section-by-section summary.]
Fiscal conservatives should resist the bill, which would increase spending by $126 billion and give President Obama unlimited borrowing power, without including sufficient spending reforms or reductions to justify such a massive departure from fiscal common sense.
Specifically, the bill would increase spending by $50 billion in 2016 and $30 billion in 2017, with an additional $32 billion in so-called Overseas Contingency Operations (OCO) funding that is not subject to Budget Control Act spending caps, for a combined $112 billion spending increase over two years.
These increases would be paid for by way of promised reductions in other spending, elsewhere, sometime in the coming decade. The odds of these reductions actually occurring are very low, due to the receding-horizon dynamic whereby, in Washington, tomorrow is always a day away. (The New York Times has a great set of charts displaying how Congress has brazenly played Lucy to the taxpayers’ gullible Charlie Brown in each year since 2011.)
This election-year splurge casts serious doubt on Congress’s commitment to follow through on its recently passed plan to balance the budget in ten years.
Sadly, the bill would effectively gut the BCA spending caps, the one policy of the past five years that has actually produced positive results for taxpayers.
The bill’s pay-fors, a grab-bag of things like spectrum auctions and minor Medicare trims, don’t do enough to reduce long-term spending growth to justify a big jump in near-term spending.
Finally, the bill would suspend the debt limit through March 15, 2017, in order to prevent another vote on increasing the national debt before the 2016 elections. During that time, the president would have essentially unlimited borrowing power.
In short, “Give us fiscal chastity, O Lord, but not yet.”
If Speaker-in-waiting Paul Ryan (R-Wisc.) is serious about changing Washington, he will put his foot down.
The BCA spending caps are a modest but important policy that conservatives achieved in 2011 by forcing a showdown over a debt hike. Ever since, the Beltway Cartel has sought a way to evade the caps. Conservatives should defend them. Congress has actually never adhered to the BCA’s original caps, lifting them each year since 2011 and promising to reduce spending by a similar amount sometime in the future. But the caps have had one positive effect: they’ve put a damper on new spending initiatives and have probably reduced spending overall, compared to what would have happened without them. The BCA caps-and-sequester scheme isn’t much, but it’s better than nothing—and it’s all we’ve got.
If enacted, this latest bipartisan budget bill will make it indisputable that the spending caps are never going to be honored. Taxpayers will have no choice but to start over in the quest for a way to control federal spending.
One good thing about the bill: there is no hint of a McConnell-style sham “vote of disapproval,” which was the Kentucky senator’s way, in 2011, of giving incumbents a cover vote for an unpopular debt hike.
Unfortunately, however, the bill does continue the recent custom, first adopted two years ago, of suspending the debt limit altogether for a period of time, rather than following the traditional approach of defining it in terms of a number of dollars. This “suspension” approach potentially gives the president the power to borrow without limit. An unscrupulous president could build up cash balances above normal operating balances and then use that money in whatever ways he thinks he can get away with.
The process that produced the bill was backward. Outgoing Speaker John Boehner (R-Ohio) should have negotiated with House fiscal conservatives first, then presented a united front to the Senate, and then to the president. Instead, he negotiated with a small handful of Democrats in secret. This is the kind of behavior that has cost him the confidence of conservatives, and his job.
Why do we have a statutory debt limit, anyway? To remind us to reduce spending. Debt limit crises are like alarm clocks, trying to rouse us from our slumber and get us to change our ways. When they go off, we shouldn’t procrastinate.
Washington likes to hit the snooze button by making each debt hike big—so big that the alarm won’t go off again until after the next election—and in the meantime to spend, spend, spend. Fiscal common sense dictates that each debt hike should be small and coupled with large savings—substantial reforms that improve long-term fiscal balance. The purpose of such reforms should be to make future debt hikes unnecessary.
The only way to silence the alarm clock forever is to steadfastly resist the urge to splurge. Instead, we should pay as we go, balance the budget, run routine surpluses, and pay down debt. Discipline! That, plus low taxes and sound money, is the golden path.
The Beltway Cartel Budget is yet another step down the path to bankruptcy. It contains a few meager reforms that alter neither the direction nor the speed of decline. It’s really just a bipartisan power play to deny fiscal conservatives any hope of enforcing fiscal discipline in an election year—the opposite of what the country needs.
What should fiscal conservatives do? They should:
- Oppose the bill.
- Go smaller. Call for a small (dollar-cap-based) debt limit increase in order to provide time to hammer out a serious “cut, cap, and balance” spending-reform agenda.
- Go bigger. Demand that negotiations on the next debt bill be based on a template like the Republican Study Committee’s proposed “Terms of Credit Act.” While not a perfect bill, it’s a good starting point for discussions. It attempts to touch each of the three prongs: cut, cap, balance.
- Go around ’em. Outflank the Cartel by adding an effective, enforceable Balanced Budget Amendment to the U.S. Constitution. As part of the “balance” prong, conservatives should demand floor votes in both chambers on multiple Balanced Budget Amendment proposals. Since proposing a constitutional amendment requires a two-thirds supermajority in each chamber, no BBA is likely to pass this Congress. But we should force votes on proposed BBAs, anyway, to help educate voters.
One BBA proposal that requires only a simple majority to pass, and doesn’t require the president’s signature, is H.Con.Res.26, Rep. Paul Gosar’s (R-Ariz.) bill to green-light the Balanced Budget Compact, a state-initiated, state-led effort to generate a state-drafted federal BBA. It’s a great back-up plan, in the event Congress fails to propose a BBA itself—an eventuality that is, alas, likely. Conservatives should demand a vote on Gosar’s bill. Ideally Congress would also make the next debt hike dependent on that bill’s passage in both House and Senate, so that, no matter what happens in Washington, the states can move forward to rein in federal spending.
Since House leaders will likely try to pass the current package with Democratic votes, House conservatives should vote down the “rule” on the bill, which is the vote that enables the bill to come up for a vote. Defeating the rule will force the leaders back to the drawing board. The “rule” vote is the vote that counts.
Meanwhile, if the current bill comes up in the Senate, fiscal conservatives should filibuster it long enough to extract the necessary concessions and defeat the motion to end debate, known as “cloture.” The “cloture” vote is the vote that counts.
The proponents of the bill will raise a lot of scare talk about a “default,” but there is absolutely no risk of a true bond default, which is the only kind that matters to financial markets. Instead, there could be a delay in some government payments to contractors or pensioners, basically a form of partial government shutdown. A brief one of those would be no fun, but it wouldn’t be the end of the world. And it would be worth it, if it led to fundamental reforms that make such disruptions avoidable down the road.
Once again it’s time for all good men to come to the aid of the American taxpayer—and resist the Beltway Cartel.
October 28: The House passed the Beltway Cartel Budget. Two hundred sixteen House Republicans voted the wrong way on the critical vote. To see how your representative voted, go here (“aye” = vote to increase spending by $126 billion and give President Obama unlimited borrowing power).
October 30: The Senate passed the Beltway Cartel Budget. Eighteen Senate Republicans voted the wrong way on the critical vote: Alexander, Ayotte, Barrasso, Capito, Cochran, Collins, Cornyn, Graham, Hatch, Kirk, McCain, McConnell, Murkowski, Roberts, Rounds, Thune, Tillis, Wicker. To see how your senator voted, go here (“yea” = vote to increase spending by $126 billion and give President Obama unlimited borrowing power).
November 2. President Obama signed the Beltway Cartel Budget into law. [Full legislative information at congress.gov.]