Senator Rand Paul (R-KY) says he can’t support the “Big, Beautiful Bill” as reported out of the House. His criticism is on point – soaring federal debt. Unfortunately, and it pains me to say this of such a consistently commendable senator, Paul’s command of the big picture suffers for his flawed finer points.
First, Paul opposes raising the debt limit by $4 trillion. Keep in mind the debt limit has yet to limit any growth in the publicly held debt, which is why it now stands at $29 trillion and thus appropriately gives Paul heartburn.
Congress raises the debt limit to reflect debt that will be issued under the spending and tax legislation Congress has already or is about to pass. Want to slow the rate of indebtedness? Cut spending. Medically speaking, complaining about the debt limit increase is to complain about symptoms while ignoring causes. Worse, suppose the debt limit increases by only $2 trillion, about the minimum under any conceivable budget outcome this year. What happens?
Congress raises the debt limit again next year. If it’s a one-year respite and no other policies change, then it will likely be up another $2 trillion. Without changes in policy, Congress would then over the next decade raise the debt limit by $20 trillion. Did fighting over the debt limit today change the amount of debt issued over the decade? Not. One. Blessed. Dollar. Senator Paul is rightfully concerned about rising debt, arguing he wants “to see the $5 trillion in new debt removed from the bill.” According to the much-critiqued CBO score, the bill would increase the debt by $2.4 trillion. Where did the $5 trillion figure come from?
We can only guess, but using round figures CBO shows spending falling by $1.3 trillion and revenues falling by $3.7 trillion. Add’em up and you get $5 trillion. But you don’t add them up. You net them as CBO did to get a suggested net debt increase of…$2.4 trillion.
And now the great perversity — what CBO scores as a cut in revenue is mostly the prevention of a tax hike – the $4.7 trillion tax hike avoided by extending the 2017 Trump tax cuts.
That sentence may make your hair hurt, so let’s unpack it. CBO assumes spending programs continue even when, by law, they expire. Suppose a new program increases Medicare outlays by $100 billion for the next two years and then stops. In its initial scoring, CBO would show that program costing $200 billion. But when formulating its next budget projections, CBO would assume that program continues indefinitely. Reasonable. The two-year limit on the program was a budget gimmick to disguise the program’s cost, with every expectation of Congress extending the program.
In contrast, when tax provisions expire, in the budget baseline CBO assumes those provisions really go away. Thus, even though extending the 2017 Trump tax cuts would continue current law and so prevent a massive tax hike, CBO shows the extension as a new tax cut generating a big increase in the debt. Republicans can only blame themselves for this scoring perversity. They have often controlled the House and Senate in recent years yet did nothing to clean house at either CBO or the other budget scoring miscreant, the Joint Tax Committee. It appears they intend to continue to do nothing in this matter.
We should all wish Senator Paul and the other Republicans fighting to cut spending success, but they won’t make much headway with flawed arguments. Amendments, senators; well-argued amendments; winning amendments; that’s how you cut spending, that’s how you put a brake on rising federal debt.
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.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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