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June 9, 2010

Our View: Spending bill short on fiscal discipline

The Free Press

MANKATO — The public concern about the rising federal deficit was apparently not paramount last week as the U.S. House of Representatives approved expanding the deficit by $54 billion.

The House passed a $114 billion bill to extend unemployment benefits and continue some tax breaks for businesses. To their credit, the House scaled back the original spending in the bill from $192 billion and the deficit increase from an initial $134 billion.

The budget watchdog group Concord Coalition said it was mostly the more conservative “Blue Dog” Democrats who demanded the bill’s cost be lower and more of it be offset by cuts other places. Part of the offset in cost came from closing corporate and investment tax loopholes.

While it’s difficult to argue against extending unemployment benefits and business tax cuts in a recession, this kind of “extender” spending is usually subject to the PAYGO rules of Congress. Those rules call for any new spending be offset by spending cuts or revenue increases elsewhere in the budget so as not to increase the federal deficit. Those rules appear to have been only partially applied.

Minnesota Democrats Tim Walz, Collin Peterson, James Oberstar and Keith Ellison voted in favor of the bill, while all Republican members of the state’s Congressional delegation voted against. Part of the problem with this bill was that it also included the so-called “doc fix” to correct deficiencies in Medicare payments to doctors that Congress has been trying to fix.

Concord Coalition Executive Director Robert Bixby notes that some of the reductions in spending from the first proposal related to timing shifts rather than policy changes. Unemployment benefits were extended for a shorter period of time for a “savings” of $8 billion. Bixby notes another provision on Medicare payments to doctors sunsetted after 19 months, thereby “saving” $40 billion.

Concord also criticized the move noting that Congress routinely calls these bills “extenders,” making one think they will expire in one year. But, as has been the practice, Congress routinely passes these extenders year after year.

Fortunately, the  Senate will be taking up the bill and have a chance to make it completely deficit neutral. That may be an unlikely prospect given the politics of the moment. Nobody wants to be against extending unemployment benefits. And apparently some unions issued some not so subtle threats to members if they voted against the spending and unemployment benefits.

But House and Senate members should heed the call, more and more, that people do not want Congress to expand the federal deficit. Congress has got to start making tough choices, sometimes very tough. Congress must begin to address the structural deficit issue.

In the long run, we’ll all be more prosperous if we can impose fiscal discipline on our spending and keep our budget balanced.

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