Republican House Leadership Aims For More Tax Cuts, Not Deficit Reduction

Just before Christmas, the House Republican leadership announced new procedural rules to govern tax and spending legislation when it takes control. They confirmed big time two of the lessons Washington Post blogger Ezra Klein found in last month’s tax cut deal.

  • No one really cares about the deficit.
  • The Republicans really, really, really care about tax cuts for rich people.

As the Center on Budget and Policy Priorities explains, the new House procedural rules pave the way for more tax cuts — and possibly big increases in the deficit.

I say “possibly,” as CBPP doesn’t, because the Republicans may well use the potential deficit increases to justify even more drastic spending cuts than they’ve already promised.

These spending cuts would almost certainly focus on programs that benefit moderate and low-income people because large spending areas, e.g., defense and security, would probably be exempt, as they are in the spending pledge for next fiscal year.

One rule embodies something Senate Minority Leader Mitch McConnell said awhile ago. The deficit “isn’t because we are taxing too little…. [I]t’s because we’re spending too much.”

Incoming House Majority Leader John Boehner obviously agrees, since instead of the existing “pay as you go rule,” the House will operate under a “cut as you go rule.”

Under the so-called PAYGO rule, any spending increase had to be offset by a spending cut, a revenue increase or a combination of both. Henceforward, spending increases will have to be offset only by spending reductions. And tax cuts will require no offset at all.

This rule will inevitably erode a wide range of federal programs their costs rise, even if they’re not expanded.

Consider Section 8 housing choice vouchers, for example. They cover rental costs over 30% of the voucher holders’ incomes. Rents go up. So vouchers cost the federal government more. This is why President Obama’s proposed budgets would have provided just about enough to renew all existing vouchers, even though the proposed funding levels were higher.

Another new rule changes the reconciliation process. Basically, this process creates a bundle of budget-related measures, which are then subject to a single up-or-down vote, with limited opportunities for amendment.

In the good old days, before the Bush administration and the Republican Congressional majority decided to push through their tax cuts, the process could be used only for legislation that reduced the deficit.

Going forward, the House can use the reconciliation process to fast-track deficit-increasing packages, so long as they’re tax cuts. The process can’t be used for legislation that results in even a minimal net spending increase.

At this point, the reconciliation rule may not make much difference. The Senate still has a deficit reduction-only rule. And the process is more important there because reconciliation packages can’t be filibustered. But the new rule still shows which way the wind is blowing.

Lest there be any doubt, another new rule authorizes the Chairman of the Budget Committee to ignore rules for enforcing budget cost limits when dealing with measures to extend or make permanent all the Bush-era tax cuts — including, of course, the top tax brackets and the egregious estate tax giveaway.

Budget discipline could also be waived for a hefty new tax cut for small businesses — or rather for individuals who file tax forms indicating business income. Howard Gleckman at the Tax Policy Center explains the difference.

If past is prologue, the tax break in the offing would benefit a lot of high-earning filers we generally don’t think of as small businesses, e.g., doctors, lawyers, partners in investment firms, movie stars, major league athletes and owners of large local retail chains.

New York Times columnist/blogger Paul Krugman says the new House rules show that Republicans who claim to be deficit hawks are “frauds” — that their “self-styled … deficit hawkery is just a stick to beat down social programs.”

Strong words, but hard to disagree, I think.

One Response to Republican House Leadership Aims For More Tax Cuts, Not Deficit Reduction

  1. […] in Congress are dead set against tax increases of any sort. Indeed, on the House side, new rules pave the way for more tax cuts — and without offsets to keep the deficit from […]

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