The House Budget Committee recently reported out three budget reform bills advertised as exemplifying “the unwavering bipartisan, bicameral commitment to averting our nation’s imminent spending and fiscal crisis.” In reaction, most yawned. Many conservatives howled, exclaiming the main bill, the Fiscal Commission Act of 2024 (FCA), was a tax hike trojan horse. The conservatives need not worry…yet. The yawners were right.
Before raining on their parade, the Committee’s Chair, Jodey Arrington, deserves credit for reporting bipartisan legislation. Any acknowledgement we have a serious deficit problem under President Biden is welcome. The Congressional Budget Office (CBO) projects that under Biden’s policies federal debt will soar 81% over the next 10 years, to nearly $47 trillion. (RELATED: JD FOSTER: Donald Trump Should Make NATO A Deal It Can’t Refuse)
The Budget Committee also passed the Fiscal State of the Nation Act which requires the Comptroller General to present an overview of the nation’s fiscal health. The underlying premise of this bill is that voters, Congress, and the President lack sufficient or appropriate information necessary for a fiscal course correction.
Let’s see, we have the aforementioned CBO, and remember, the first word in that title is “congressional,” and we have the U.S. Treasury reporting monthly and annually. Then there’s the Office of Management and Budget, the General Accountability Office, a collection of politically diverse think tanks, private ratings agencies, and many more, all sifting and reporting on the trajectory of U.S. policy.
Scarcity of information is not the problem. The sole purpose of this bill is to provide political cover for Members who hope to convince constituents of the Members’ seriousness about reducing budget deficits.
The same indictment applies to bill number 3, the Debt to GDP Debt and Transparency Act, which doesn’t merit further description. This bill is pure political cover for its sponsors and anyone voting for it. Either Members are so naïve they don’t know this, or incredibly cynical that they do. Your pick.
As to the FCA, obviously much thought was given as to its membership, operations, and goal, which is to stabilize the U.S. public debt at no more than 100% of GDP, about where we are today. This appears a practical goal as it meets the definition of sustainability.
However, if that standard were in place today, public debt would be permitted to grow as rapidly as the economy, and so the permissible 2024 budget deficit would be about $1 trillion. Prudence, like beauty, is in the eye of the beholder. Judge for yourself whether a trillion-dollar deficit, and rising, is a prudent outcome.
The FCA’s supporters tout a Petersen Foundation poll showing more than 9 out of 10 voters would favor a candidate who supports a commission to reduce the national debt. That’s an impressive result, but how many would support a commission that promised trillion-dollar deficits indefinitely, and would almost certainly never make good on that promise?
The FCA’s great flaw is that the commission is to settle on policies to stabilize debt-to-GDP not next year, or even in 5 years, but in 15 years. Over that period, eight subsequent congresses would be sworn in. Are they all to be bound passively by the FCA’s requirements? Rubbish.
The original FCA had a 10-year timeline which was already preposterous, but then somebody apparently realized that even 10 years implied the commission, and maybe even Congress, would be forced to back up budgetary bravado with some brutal votes.
And now we come to the real rub. Congress doesn’t need a commission or new calculations. It doesn’t need new budget rules or greater transparency. It just needs guts and determination without which even a first-rate fiscal commission under an inviolable 5-year timeline would be an empty gesture.
JD Foster is the former chief economist at the Office of Management and Budget and former chief economist and senior vice president at the U.S. Chamber of Commerce. He now resides in relative freedom in the hills of Idaho.
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