There was growing concern in Washington Tuesday that President Obama’s tax cut deal would add roughly $900 billion to the federal budget deficit and national debt.
“This feels more than a bit surreal,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “On the heels of the work of the White House Fiscal Commission last week on how to get control of the national debt, the White House and Members of Congress choose to engage in a negotiation that involves adding increasingly larger amounts to the debt? It’s utterly exasperating.”
The Club for Growth, a group that promotes fiscal conservatism, said the deal would “grow government, blow a hole in the deficit with unpaid-for spending, and do so without providing the permanent relief and security our economy needs to finally start hiring and growing again.”
“A month ago, the American people repudiated Washington big government. It’s time for both parties to finally hear that message and act on it,” CFG said in a statement.
Brian Riedl, a budget analyst at the conservative Heritage Foundation, said that the more than $50 billion cost of extending unemployment insurance benefits for 13 months “without any offsets is certainly problematic.”
“The long-term budget deficit is driven by rising spending, not declining revenues, and its unfortunate that merely maintaining today’s income tax rates may require agreeing to a significant expansion of government,” Reidl said.
But in Congress, while there was some hand wringing in private among Republican aides about the cost of the proposal, and some caution that the cost could be closer to $600 billion, there had been no public condemnation of the deficit and debt impact from lawmakers as of late Tuesday afternoon.
Rep. Paul Ryan, Wisconsin Republican, did echo CRFB’s call for a spending reduction plan to accompany the tax cut deal.
“Policymakers cannot continue to chase ever-higher levels of government spending with ever-higher tax rates. To address the Federal Government’s fiscal imbalance, we need both economic growth and serious spending discipline,” Ryan said. “It is critical that we match opposition to tax increases with a commitment to restrain the explosive growth of government spending.”
But while Ryan said he has “concerns with some specific aspects of the plan,” he also said he supported “the proposed framework” agreed to by Obama and Senate Republicans.
Many Republicans shrugged off the deficit impact, saying tax cuts are not spending.
“It depends on whether you think it’s the government’s money or the American people’s money. In other words, I view it as the American people being able to keep their money by not having to pay more taxes,” said Sen. John McCain, Arizona Republican.
McCain said he would “would like to try to find ways to pay” for the unemployment insurance extension.
For Sen. John Thune, South Dakota Republican, the bar for success was a budget bill that still needs to be passed this month continuing to fund the government that maintains current spending levels.
“I hope that before this Congress adjourns that we can come to an agreement on a spending bill that doesn’t increase spending, that recognizes that we have to get our fiscal house in order here in Washington,” Thune said.