Trey Dellinger
- Columnist Trey Dellinger says the fiscal commission proposed by U.S. Senators Mitt Romney and Joe Manchin is simply a gimmick vehicle for tax increases.
Senators Mitt Romney and Joe Manchin are backing a so-called Bipartisan Fiscal Commission with the ostensible goal of reducing the federal deficit. Legislation to create the proposed commission was introduced in Congress as H.R. 5779.
Lowering the federal deficit is certainly a worthy, even an urgent, goal. The total public federal debt is about $33 trillion, which is 120% of GDP. There are about 336 million people in the US. That’s about $98,000 owed for every man, woman, and child in the country.
But it gets worse.
CBO projects the debt held by the public in ten years will be over $46 trillion, and if we wait another 30 years, when college-age kids are hitting 50, the debt will be about 200% of GDP.
So, yes, the federal deficit desperately needs to be reduced.
The conventional Washington wisdom is that no plan to reduce the deficit is economically viable without either cutting Social Security and Medicare or raising taxes. Since no one wants to cut either of those popular programs, tax increases are inevitable. Only hopeless right-wing hacks believe otherwise, right? You might be surprised that the numbers tell a different story.
Just ten years ago, in FY2014, the federal government spent about $3.5 trillion annually. After the Trump tax cuts, annual revenue collections grew briskly, rising to $4.9 trillion by FY2022. By FY2022 annual revenue collections were about $1.4 trillion higher than annual federal spending had been in FY2014. Annual spending on Social Security, Medicare and net interest on the debt grew by about $1 trillion in that same period. If we had kept the growth in other areas to less than $400 billion, we would have been in balance by FY2022 without tax increases or cuts in Social Security or Medicare. Looked at another way, if we had increased total federal spending by 4% per year after FY2014, we would have been in surplus by FY2022. Four percent per year annual growth is hardly austere.
The biggest driver of growth in entitlement spending has been Medicaid spending in the wake of Obamacare’s Medicaid expansion. From FY2014 to FY2022, annual Medicaid (including CHIP) spending grew by 264% or about $570 billion more per year. It’s true that the budget cannot be balanced without tax increases if the runaway growth of Medicaid spending continues. Medicaid spending will, indeed, bring tax increases or national default to a theater near you if it keeps growing at this pace.
But if we keep the Trump-era pro-growth tax rates in place and restrain Medicaid spending, we can put ourselves on a path to balance. Tax increases are not only unnecessary, they’re counterproductive. Draconian cuts to Social Security and Medicare aren’t necessary either. Budget balance is achievable by coupling pro-growth tax rates with commonsense spending discipline.
The Romney-Manchin fiscal commission promises a “grand bargain” between Republicans and Democrats. The Democrats expect the bargain to give them tax increases. Democrats on the House Budget Committee are adamant they won’t vote the fiscal commission legislation out of committee for a floor vote unless it includes tax increases. Senator Romney, ever eager to burnish his bipartisan bona fides, is more than willing to give them what they want. Romney said in testimony before the House Budget Committee that tax increases will “be on the table.”
Conservatives are asked to believe they will get spending cuts in exchange for tax increases to get us to federal budget balance. If history is any guide, conservatives will be left holding the bag. In such “grand bargains” the tax increases stick, but the spending cuts never do. That’s what happened in the 1982 budget deal when President Reagan was promised three dollars in spending cuts for every dollar in tax increases. Of course, the tax increases came and the spending cuts went.
The legislation to create the Romney-Manchin fiscal commission, H.R. 5779, has some sneaky provisions that show mischief is, again, afoot.
The majority and minority leaders of the House and Senate each appoint three members and one outside expert, for a total of 16 commission members. The votes of a majority (9) are enough to report the fiscal commission’s recommendations to Congress, so long as only three Republican and three Democrat appointees vote with the majority. Sen. Romney and the House Republican author Bill Huizenga will likely be two of those votes, so only one additional Republican appointee will need to be flipped to pass a Democrat-friendly package of tax increases.
The commission recommendation would be introduced in each chamber within two to three legislative days after the commission makes its recommendation. No more than five legislative days after committee referral, the commission recommendations must be reported out to the floor for an up or down vote without amendment. In other words, the bill will be crammed down the throats of rank-and-file members with no meaningful opportunity to consider, debate or amend the proposals.
The Romney-Manchin fiscal commission is simply a gimmick vehicle for tax increases. There is little reason to believe it will deliver the spending discipline required for real deficit reduction.
