A good first step that is already working

A good first step that is already working

Tomorrow the House will vote on a short-term debt limit extension tied to a requirement that the House and Senate each pass a budget resolution. Donald Marron has written an excellent and succinct substantive analysis of the bill.

The House bill fits well with the strategy I advocated last week on this blog and in a Wall Street Journal op-ed. I hope the House passes it tomorrow.

My preferred policy is to “pay past bills and cut future spending.” This bill does the first part of that, for a short timeframe. In doing so, House Republicans demonstrate that they can govern as a responsible majority, and that they don’t want a default or even a cash crunch. No Member wants to have to vote to raise the debt limit, but it has to be done if the U.S. government is to avoid a further credit downgrade.

Simply by demonstrating that they are a governing majority that can pass a bill supporting a coherent strategy, House Republicans, with a strong assist from a few key Senate counterparts, have already won two small but important tactical victories.

  1. According to Senator Schumer, the Senate Democratic majority now plans to pass a budget resolution this year, their first in several years.
  2. The President has backed down from his demand for a long-term debt limit increase, as demonstrated by today’s Statement of Administration Policy.

These are not earth-shattering victories. They will not fundamentally change the course of our unsustainable fiscal policy. If we compare them to what needs to be done, they are trivial. But if we compare them to the Senate Democrats’ inaction for the past few years, and to the New Year’s tax increase rout of three weeks ago, these are important tactical victories, and the bill hasn’t even come to a vote yet.

Senate Budget Committee Ranking Member Jeff Sessions has for several weeks been urging that a debt limit extension be linked to a requirement that the Senate pass a budget, and he has been relentless in drawing attention to the Senate majority’s repeated failure to do the basic legislative work of fiscal policy.

While the short-term policy benefit of the Senate Democrats passing a budget is minimal, it should have an important clarifying effect on the broader fiscal policy debate. Senate Budget Committee Chair Patty Murray and Leader Reid will have their hands full because Democrats are far from united on these big questions that they must now answer.

    • Do you support the President’s proposed level of taxes on top of the recently enacted tax increases?
    • What is your policy on the appropriations sequester?
    • Do you support any slowing of the growth of the major old-age entitlement programs?
    • What deficits and debt do you propose for the next 5-10 years?

By forcing/encouraging/persuading Senate Democrats to do a budget resolution, this debt limit bill levels the playing field for future fiscal policy debates. House Republicans who have had to defend their proposed spending cuts will now be able to contrast those at-times painful policy choices with whatever alternatives Senate Democrats propose. This will clarify the fiscal policy choices and make the debate one that is simultaneously both more honest and less unfair to spending cutters.

President Obama endorsed this bill today because he had no other option. He knows that he cannot veto a short-term debt limit increase because he wants a longer one. Senate Democrats already agreed to do a budget resolution, and I’d bet Leader Reid told the President he didn’t want to stand in the way of the House bill if they passed it, as it now appears likely they will.

Even more important is the beginning of the return to regular order. For two years the President and Leader Reid allied to bypass the standard legislative process and instead force fiscal policy to be negotiated in ad hoc private talks between the President and Speaker Boehner. This bill looks likely to produce a regular order two-fer: the President is largely on the sidelines on the details of this bill, and the Senate Democratic majority appears headed toward reestablishing the normal budget process.

By setting the next debt limit deadline in mid-May, well after the sequester is triggered, the continuing resolution expires, and the budget resolution deadlines, this bill reorders the 2013 fiscal debates in a way that is advantageous to spending cutters. You want to have your strongest legislative levers up front, and if this bill becomes law they will be in the right order: sequester, then CR, with the weakest lever of debt limit last. That doesn’t mean that spending cutters will be able to force the President to fix everything, but at least they’re maximizing their leverage.

And if it works this time, as it appears likely it will, House Republicans can then repeat this tactic a few months from now. The challenge at that point will be coming up with and uniting around a similarly beneficial but modest fiscal policy change to attach to the next short-term increase. If conservatives want to pick a knockdown spending fight with the President, they’re better off doing that on the sequester and/or CR.

With four more years of a now-avowed liberal in the White House, I have extremely low expectations that America will soon shift to a responsible fiscal path. Spending restraint will be at best a piecemeal effort built over the course of countless small legislative struggles like this one. This bill is only the first step in a strategy to pay the bills and cut spending, but it’s a good first step.

(photo credit: Sean Dreilinger)

10 responses

  1. I don’t understand how this ends well. Now the democrats in the Senate will insist on a “balanced approach” to the budget, combining spending cuts with revenue increases by cutting loopholes for millionaires and billionaires. Exactly how does the current approach result in significant spending cuts? What is the end game?

    • Yes, we will. Just like Simpson Bowles gop pretends to love. It has $2.6T in Revenue so more Revenue is perfectly normal.

  2. I’m curious as to just what programs you want cut? Is the mass unemployment issue in this country a concern? Where will the growth come from in this austerity driven agenda??

    • Sandra, I am curious also. If you are in debt for multiple years of your personal income, whatever that may be, do you have a choice about cutting your spending? Spending has to be cut; the sooner we begin, the less harsh the austerity program will be.
      I hope this makes sense to you and best wishes. Also, since you ask, I would begin with the National Endowment of the Arts. A true artist will create because they must – they don’t need public money to do so.

    • When you run out of other people’s money to spend (thank you Maggie Thatcher), you must begin austerity measures. Austerity measures are what you call the liberal spending plans when the only path forwards is to go backwards and try to undo all the spending.

  3. Government spending, unlike the private sector, is a zero-sum game (an example of what is known as the broken-window fallacy): it spends money that it first takes from the private sector in some fashion (taxes, borrowing, inflation). Spending cuts aren’t harmful, unless the specific items are necessary. Corporate welfare would be a good start, but there’s plenty more that could be cut without harm.

    • Not only that but numerous studies show that Companies stash the cash when Government spends. One of the mos widely known is from Harvard Business School http://hbswk.hbs.edu/item/6420.html
      Stimulus Surprise: Companies Retrench When Government Spends

      So Government austerity is the path to growth

    • Gov’t spending is actually worse than a zero sum game; nearly all gov’t wastes a fraction of what it spends, the ‘multiplier’ is actually less than one, and a fair bit of what gov’t does actually *impedes* economic growth!

  4. Pingback: Boehner: I can only conclude from that inaugural speech that Obama wants to annihilate the GOP « Hot Air

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