The Art of the Budget Deal

By Kurt Couchman

In the private sector, striking a deal means everyone comes out ahead. In Congress, however, a “deal” often means that special interest coalitions get what they want and the public gets left behind.

Each of the last three Congresses has passed a bad budget deal. The Budget Control Act of 2011 (House, Senate votes) was both a deal and the foundation for later deals, like the Ryan-Murray Bipartisan Budget Act of 2013 (House, Senate) and the Obama-Boehner Bipartisan Budget Act of 2015 (House, Senate).

The Budget Control Act’s (BCA) caps on annually appropriated, discretionary spending from fiscal years 2013 through 2021 set the stage for both Bipartisan Budget Acts and perhaps more to come. Many members of Congress hoped that the BCA-established “super committee” would reach a deficit reduction deal and that the 2013 sequestration and subsequently reduced budget caps would never happen. Some just wanted to get through that crisis and worry about the future later.

Both Bipartisan Budget Acts had some things in common. They each increased defense and non-defense spending caps for two fiscal years, and they lacked significant reforms to benefits programs. Democrats got more non-defense spending, defense hawks in both parties got more Pentagon spending, and moderate Republicans got both.

Fiscal conservatives—and the taxpayers and future generations for whom they speak—got little.

The federal government’s long-term slide to fiscal ruin didn’t change. Congressional leaders may have resolved the immediate crises, but leaving two-thirds of Republican members out in the cold inflamed a civil war within the party. Leadership became embattled and weakened.

It wasn’t entirely Republican leaders’ fault, of course. President Obama helped Senate Democrats obstruct better deals. Under President Trump, however, that obstacle is gone.

The fiscally prudent must use the remaining four years of spending caps to overhaul autopilot spending programs so they work better, reduce taxpayer burdens, and reduce debt-funded spending. In such a deal, the defense hawks, moderate Republicans, and Democrats can still get what they most value—increased discretionary spending—while bringing those who support responsible budgeting into the fold with major, deficit-reducing reforms of benefits programs.

That isn’t to suggest that every dollar of non-defense or even defense spending is used wisely. Indeed, tens of billions of low-priority spending on both sides should be reallocated to better uses. But those are separate discussions.

What would a good budget deal look like? It’s straightforward. Senate Democrats can and likely will block a boost to the defense budget alone. Despite a challenging 2018 Senate cycle for Democrats, it would be difficult to get eight to break with their party’s position (or more if Republicans aren’t united), let alone offset defense increases with non-defense discretionary cuts. They’ll demand “parity” or close to it between defense and non-defense spending.

Each set of caps would increase by roughly the same amount for the next fiscal year or two. Then the additional spending would be offset with real reforms to benefits programs, ideally well within a decade.

Social Security and federal health programs simply can’t continue in their current forms. Welfare benefits can discourage work and increase dependence. Federal employee retirement is far more generous than private sector workers enjoy. Last year, the House drafted and reported from committees the policies in the budget resolution “sidecar” for about $160 billion in savings over ten years. Bipartisan Medicare reforms are possible. Bipartisan Social Security reforms aren’t out of the question either, but saving the program for current beneficiaries and future generations will probably take more time to work out.

Put simply, if the caps cannot hold, they must be used to help pass needed reforms and put the government’s budget on a path to balance. Yes, more courage would be nice, but electoral calculations usually win out.

To make the deal possible, however, congressional committees need to craft and release discussion drafts of viable options soon. Language must be vetted for problems, not only internally, but also by the public at large. Between the budget sidecar proposals, CBO’s Options for Reducing the Deficit, A Better Way agenda, the House Republican Budget, the Republican Study Committee Budget—and proposals from groups like The Heritage Foundation, Taxpayers Protection Alliance, the Cato Institute, and more—ideas are hardly in short supply. But as the health care debate has shown, options need to be developed inclusively and vetted publicly.

Ultimately any increase in the caps would need to be offset with credible reforms that are politically sustainable and move the federal government toward a balanced budget.

President Trump makes it possible to replace bad budget deals with good deals. Congress must seize the opportunity, fix the laws, and put our government back on a solid fiscal foundation.

Kurt Couchman is the Vice President of Public Policy at Defense Priorities and previously served as a legislative director to a Member of Congress.

This piece was originally published by The Hill on April 14, 2017. Read more HERE