I know, last month was all about budgets—we’re past that now, right?
Nuh-uh. Just a few random synapse-firings for your consideration.
–The next entry in the budget sweepstakes is of course the belated White House budget, out next Wed, I believe. I anxiously await answers to these questions:
–the universal pre K idea announced in the President’s State of the Union speech will be in there, but what will be the payfor? The President stressed that the program, which could cost $10 billion/yr, won’t “add a dime” to the deficit. There’s likely no conceivable payfor for this program with this Congress, but those of us who’ve been waiting for this idea to come along are in it for the long game, so it will be good to learn what we’re fighting for.
—Kill the sequester! It’s on the books now for the rest of this fiscal year—the recent continuing resolution made it so, in a bi-partisan agreement. But there’s an evil temptation in this town to let current law—the official “budget baseline” which now embeds this $1.2 trillion in cuts—become the center of gravity. That center must not hold.
Some very back-of-the-envelope math explains why: so far, we’ve got about $1.5 trillion of spending cuts on the books (Budget Control Act; all 10 year numbers); add another $1.2 trillion from the sequester; divide the sum by the $600 billion in tax increases from the cliff deal and you’ve got a highly imbalanced $4.50 of spending cuts for every dollar of revenue.
So here’s hoping the President’s budget will replace the sequester with a more balanced plan including revenues (which I’m certain will be the case).
—No chained CPI! No $100 billion more in NDD (non-discretionary spending) cuts! These were both Obama offers to Rep Boehner in a grand bargainy sort of deal during the fiscal cliff squabble in December. Neither should be on the table in the budget. To put them there would be to meet the R’s way too far on their side of the field for no good reason.
I think I understand the strategy that says “don’t worry, progressives…we won’t enact either of these measures unless we get significant revenues. And that’s unlikely.”
Tru dat. But my game theory says keep your offers off the table until you’ve got their offers. The problem doing it the other way is that you’re allowing the negotiations to start where you want them to end. There’s the risk that the bargaining starts with with the stuff you’ve put on the table and goes down from there. So the R’s say, “OK, we’re willing to nudge on revenues, but we’re going to need more cuts—beyond what you’ve already given us in the budget.”
And for the record, the NDD caps are already too tight and if we want a more accurate price gauge for Social Security, than get BLS to come up with a chain-weighted index for the elderly—in fact, put that request in your budget!
—Jobs ideas. It would be unrealistic to expect the CPC’s “back to work” budget ($2.5 trillion in job creation measures) from the White House. But the President has offered strong rhetoric in recent weeks on the need for fiscal policy to support infrastructure and clean energy investments:
“Deficit reduction alone is not an economic plan.”
“My goal is not to chase a balanced budget just for the sake of balance. My goal is how do we grow the economy, put people back to work, and if we do that we are going to be bringing in more revenue.”
I expect these ideas will be in his budget, but again, the payfor issue will be the catch.
—What happened to Ryan/Murray? Once the White House budget is out, I guess they’ll all have some sort of budget conference where they try to reconcile the House (Ryan), Senate (Murray), and WH budgets, but hard to see how that could be anything but a huge mash-up that fails to deliver a compromise the President would sign. In other words, we live with the continuing resolution until it expires and then kludge together the next temporary patch. And for even more fun with numbers, remember there’s another debt ceiling debate coming this summer.
A key takeaway from all this is something I referenced in passing above but deserves more emphasis: do not let the current baseline with the BCA caps, the sequester, and too little revenue become the new normal. To do so would be to needlessly enshrine austerity at the cost of economic growth, poverty reduction, and vital investments in our future.