Massive deficit-busting spending deal leaves fiscal hawks in the cold – By Sarah Ferris (politico.com) / Feb 2 2018
Congressional leaders are nearing agreement on the costliest spending accord in years, and much of it could wind up on the credit card.
For fiscal hawks, it’s salt in the wound. Capitol Hill sources say there is scant evidence that negotiators are attempting to cover the costs of this year’s deal, unlike those in the recent past.
GOP leaders recently floated a proposal to Democrats that would raise Congress’ stiff budget caps by roughly $300 billion over two years — more than the three previous budget deals combined.
“It’s a lot of money,” Sen. Bob Corker (R-Tenn.) told POLITICO this week. “I’m obviously concerned about what I’m seeing preliminarily.”
Deficit hawks like Corker say they’re spooked by the ever-growing price tag of the agreement that’s being shaped. But across Capitol Hill, there’s been hardly any public pressure within the GOP to pay for the whole thing, with much more interest in the boost it will bring to the Pentagon.
The outlines of this year’s tentative caps deal are in stark contrast to the last bipartisan agreements in 2013 and 2015, when Republicans were forced to deal with President Barack Obama.
Both times, negotiators produced two-year deals that they could claim were fully offset, even if critics would later point out a few technical maneuvers used to make them deficit-neutral.
“There was much more of an effort to it. They were less gimmicky than this one is sounding like to me,” said Justin Bogie, a former staff member on the House Budget Committee during the previous budget deals.
“At least they were trying to offset things on paper, which could be out the window this time,” added Bogie, who is now a senior policy analyst at The Heritage Foundation.
The rumored two-year deal started at about $180 billion for both defense and domestic increases. As talks progressed, the figure ballooned — an arms race between Democrats’ domestic budget wishes and the GOP’s pot of defense cash.
Within inches of a handshake agreement, the GOP’s most recent proposal is said to be more than $300 billion, raising defense caps by $80 billion and domestic caps by $63 billion over each of the next two years.
The size of the offset package has not kept pace with those increases, however. The GOP’s most recent deal is rumored to include roughly $100 billion in offsets on paper, though budget hawks say only half would amount to actual savings.
Instead of revenue raisers like airline fees and savings like Medicare provider cuts, critics say the pay-fors currently under negotiation are mostly gimmicks.
That includes selling off oil from the Department of Energy’s emergency reserve and auctioning off the government-managed broadcast spectrum to wireless carriers — two of Congress’ biggest go-to offsets in recent years.
Negotiators are also weighing a plan to “save” as much as $20 billion using an accounting maneuver called Changes in Mandatory Programs. Those plans could include moving popular discretionary programs — like the private health care program for veterans, VA Choice — over to the mandatory side of the federal budget to free up more dollars under Congress’ stiff spending caps.
Even more defense cash could be added through emergency spending, known as Overseas Contingency Operations funding.
Asked if he were troubled by the lack of offsets, House Budget Chairman Steve Womack (R-Ark.) retorted: “You think?”
“There’s a lot of us that will always try to make that argument [for offsets], but let’s see what leadership has to say,” Womack said. “This is above my pay grade, but look, it does complicate things for us.”
In 2013, then-House Budget Chairman Paul Ryan and his Senate counterpart, Patty Murray (D-Wash.), spent weeks hammering out details of the pay-fors for the $63 billion package. They finally settled on higher airline fees, higher contributions from federal workers to pensions and a slower cost-of-living increase for military pensions.
Those limits on military pensions were eventually scrapped, but Ryan at the time defended the $6 billion proposal. Ryan and Murray both made an effort to avoid gimmicks: They refused to use any OCO spending for defense.
Two years later, then-Speaker John Boehner negotiated an even bigger deal: $80 billion over two years. It was paid for by cuts in spending on Medicare and Social Security disability benefits, as well as a controversial reduction in agricultural subsidies that was ultimately rescinded.
Both agreements did include some unsavory budget tactics, critics say, pointing to oil and petroleum sales. But in 2013 and 2015, Republican leaders like Ryan proudly declared their spending proposals wouldn’t add to the deficit.
Longtime budget observers say it’s become tougher to find politically feasible spending offsets, particularly after 2013 and 2015 used up the “lower-hanging fruit,” as one person familiar with the talks described it.
“But there also seems to be much less of a demand to at least appear to offset spending. … Republicans seem more interested in increasing defense spending than in offsetting costs,” the person said, noting a stark reversal from the GOP’s demands under the Obama administration.
A $300 billion caps deal would be only the latest blow to fiscal hawks in the era of President Donald Trump.
In December, nearly every Republican voted for a massive tax bill that will cost $1.5 trillion over a decade — a GOP victory that perhaps drowned out some of the talk on offsets.
Bill Hoagland, senior vice president of the Bipartisan Policy Center, said any attempt by Republicans to prioritize the deficit this year will be “ringing a little bit hollow” after the passage of their deficit-exploding tax bill.
“I do think it is a tightrope that Ryan’s going to walk now,” Hoagland said, predicting a potential revolt among fiscal hawks.
“Right now, in this environment, it looks to me like defense is the golden boy and it will get whatever they can get.”
By the time the fiscal year is over, GOP leaders may have negotiated upward of $2 trillion in new spending, most adding directly to the deficit.
Besides the tax cut and the spending deal, lawmakers are also on the cusp of approving $130 billion in disaster relief. There are also separate talks of a pensions relief package, worth as much as $60 billion, as well as funding for community health centers. And a Trump-backed $200 billion infrastructure package may be around the corner.
To further aggravate fiscal hawks, Congress will have to raise the nation’s debt ceiling by March, likely another trillion-dollar-plus vote.
White House budget director Mick Mulvaney, once a vocal critic of all new spending, is now making little attempt to force Congress’ hand on paying off its work.
The Office of Management and Budget did send lawmakers a page of potential spending cuts, totaling about $59 billion, to offset hurricane relief aid back in November. The agency proposed slashing $3.9 billion from student financial aid and $1 billion from infrastructure programs, among others.
Since then, the White House budget office has sent that menu of offsets back to Capitol Hill a few times, according to an OMB staffer. But lawmakers have ignored it, choosing instead to designate the $130 billion in disaster aid as emergency funding — adding to the deficit.
https://www.politico.com/story/2018/02/02/spending-deal-deficit-hawks-congress-384968
