Budget Deal Shows G.O.P. Holds the Whip

As the full details of the two-year deal between Democrats and Republicans on taxes and spending emerged on Wednesday, liberal and centrist budget experts held their noses, and, with their other hands, gave it a reluctant thumbs-up. “The budget agreement between Senate Budget Committee Chair Patty Murray and House Budget Committee Chair Paul Ryan represents an improvement over current law, albeit a modest one,” Robert Greenstein, the president of the Center on Budget and Policy Priorities, said in a statement. “Some unhappy compromises had to be struck to make it happen,” commented Harry Stein and Michael Linden, of the Center for American Progress, “but the Murray-Ryan deal is certainly a better choice than further damaging our economy with another full year of sequestration.”

That’s true. By financing the federal government until September of 2015, the deal removes the threat of another government shutdown. By boosting federal spending in fiscal 2014 by about forty-five billion dollars compared to the cap imposed by the sequester, which went into effect on March 1st, it will give a modest lift to the economy. With the gross domestic product approaching seventeen trillion dollars, forty-five billion dollars isn’t a very big figure, but it could boost the economy’s growth rate next year by perhaps a quarter of a percentage point.

At the same time, the deal will ease some of the cuts to worthwhile programs, such as Head Start, which provides early-childhood education and nutrition to impoverished families, and grants for low-income housing. To prevent the spending that gets restored in these areas from boosting the budget deficit, the negotiators came up with a series of offsetting cuts and revenue increases over the next ten years, such as reduced cost-of-living adjustments for military retirees and security surcharges on air passengers. (The independent Committee for a Responsible Federal Budget has put together a good summary of what’s in the agreement.) But the deal didn’t impose any new cuts on Social Security or Medicare, which earned Senator Murray some applause in liberal quarters.

That’s one reason some hard-line Republicans are criticizing the agreement. They also object to the principle of going along with higher spending now, relative to the sequester cap, in return for future cuts that may or may not materialize. “There is a recurring theme in Washington budget negotiations,” Senator Rand Paul said. “It’s ‘I’ll gladly pay you Tuesday for a hamburger today.’ I think it’s a huge mistake to trade sequester cuts now for the promise of cuts later.” (Sensitive to charges of plagiarism, Paul attributed the hamburger quote to Wimpy from the “Popeye” cartoons.)

The critical statements from the likes of Paul, Marco Rubio, and Ted Cruz will help the Democratic leadership sell the agreement to its members; but they shouldn’t be taken at face value. With 2016 approaching, and the Tea Party vote up for grabs, nobody on the right is taking any chances of being outflanked. Setting aside internal G.O.P. politics, the fact is the Republicans are winning the spending battle. Since taking over the House of Representatives in the 2010 mid-terms, they have reshaped the political debate around cutting spending and reducing the deficit rather than stimulating growth and investment. This deal, although it contains a bit of short-term stimulus, doesn’t do much to change this.

In the name of fiscal rectitude, for example, Ryan and his colleagues refused to extend unemployment benefits for the long-term unemployed, who have been the biggest victims of the Great Recession and its aftermath. If the Democrats can’t persuade the Republicans to relent between now and the end of the year, about 1.3 million out-of-work Americans will lose their benefits—a nice holiday present.

Meanwhile, the over-all sequester, although its impact has been moderated for the rest of fiscal 2014—i.e., until October of next year—remains in place. In the words of Greenstein, the agreement “would replace less than half of the total sequestration cuts in 2014 and a much smaller share in 2015—and provide no relief after 2015—leaving non-defense discretionary funding at levels too low to meet national needs and leaving an especially brutal funding squeeze in 2015 and 2016.”

But perhaps the most stark reminder of how things have changed in Washington over the past few years is to look at the revised spending figure for discretionary spending in fiscal 2014—the one agreed upon by Ryan and Murray, which includes the give-backs from the sequester. It’s $1.012 trillion. (This number doesn’t include mandatory spending on Medicare, Social Security, or interest payments on the national debt.) That’s slightly more than the Republican negotiators wanted. But as Stein and Linden point out in a chart accompanying their analysis, it’s twenty-seven billion dollars less than Ryan proposed in his 2011 budget, which, at the time, was widely agreed to be so draconian it was unrealistic.

That’s right: in April of 2011, Ryan, as part of a plan to slash the deficit and pay off the national debt by 2050, set 2014 discretionary spending at $1.039 trillion. The White House dismissed Ryan’s plan, saying, “We strongly disagree with his approach.” And yet, now, Democrats in Congress are on the point of reaching an agreement that sets spending at a lower level than Ryan wanted.

Ryan had since demanded even more cuts—in his 2014 budget, he set the spending figure at nine hundred and sixty-seven billion dollars—but still. As Wonkblog’s Brad Plumer wrote in a post drawing attention to Stein and Linden’s chart, “Republicans appear to be winning this broader debate, at least when it comes to discretionary spending…. the United States will be spending much less overall on discretionary programs in 2014 than either side envisioned three years ago.”

Original Article
Source: newyorker.com/
Author: John Cassidy