Senate Current Policy Gimmick Masks $4.2 Trillion of Borrowing
On Saturday, the Joint Committee on Taxation (JCT) released a score of the proposed Finance Committee title of the Senate reconciliation bill. Although JCT’s estimate shows the provisions would add $441 billion to the deficit over a decade, JCT was instructed to construct this estimate relative to a “current policy baseline” that already assumes $3.8 trillion of borrowing due to the extension of expiring parts of the 2017 Tax Cuts & Jobs Act.
In reality, the Senate tax title would add $4.2 trillion to the deficit over a decade. Use of the current policy baseline is a widely understood budget gimmick, and its use is especially hypocritical in light of the new temporary tax cuts in the Senate bill – which are inconsistently scored as temporary rather than permanent.
Importantly, this is not the full score of the bill since only the tax title of the Senate bill has been scored, and the full legislation includes spending cuts and increases as well as tax changes.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
It seems there is no limit to how far lawmakers will stretch and distort budget accounting to avoid acknowledging the effects of their policies. This reconciliation bill effectively uses multiple baselines at once, which is an affront to logic, consistency and sound principles of budgeting. Furthermore, it sets a terrible precedent that will likely be used and abused in the future.
Costs need to be accounted for either when a law is enacted or when it is extended. The Senate is trying to have it both ways – ignoring the cost of extending the TCJA now, while also having ignored them when the law was originally passed.
The current bait and switch doesn’t make the $3.8 trillion of borrowing that is associated with extending the expiring tax cuts disappear, it just attempts to hide the cost from the public.
In the end, we’ll still have to issue the debt, whether it was scored correctly or not. The additional borrowing will likely push up interest rates, slow down the economy, and further worsen our unsustainable fiscal trajectory.
For all the talk of cutting spending in Washington, this baseline maneuver removes the incentive for making that happen by making pay-fors seem meaningless. Why cut spending when you can change the baseline when needed? Why offset tax cuts when you can extend them for free?
And today’s precedent opens the door to tens of trillions of dollars in future write-offs, giving future Congresses an excuse to approve massive spending bills or more tax cuts.
Lawmakers should abandon these scoring charades, put down the magic wand, and pick up a calculator instead.
###
For more information, please contact Matt Klucher, Assistant Director for Media Relations, at klucher@crfb.org.
