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POLITICS

Budget reform and the debt limit

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Politics,Beltway Confidential,Philip Klein

As I argued in my column this week, my position is that Republicans should raise the debt limit and focus on a long-term strategy to formulate and articulate an agenda so that they can win elections and then implement that agenda. Today, the Republican House leadership seems to be taking a step in that direction, announcing plans to hold a vote on a three-month debt limit increase attached to a condition that Senate Democrats pass their first budget in four years or go without pay. If Republicans can’t achieve actual entitlement reform given the current political dynamic, it would be helpful to at least move to a more responsible budgeting process.

A key reason why it is an untenable position for Republicans to refuse to raise the debt ceiling is that there is no proposal on the table that creates an immediate balanced budget, let alone one that has actually passed the House. Taking into account the “fiscal cliff” deal, the federal government is expected to collect about $2.6 trillion in fiscal year 2013. Rep. Paul Ryan’s budget called for $3.53 trillion in new spending, the Republican Study Committee’s “Cut, Cap and Balance” plan had $3.46 trillion in outlays, and even Sen. Rand Paul’s budget would spend $3.1 trillion. Conservatives can talk all they want about Republicans refusing to raise the debt limit to force Obama into a balanced budget, but it isn’t a credible position when virtually every Republican in Congress last year voted in favor of adding to our debt.

This, however, could be the basis of a new principle in budgeting – that Congress agrees to raise the debt limit by the amount its budget adds to the debt in the upcoming fiscal year. A rough outline of the process could work as follows. The president releases a budget proposal and both chambers of Congress pass their own budgets. Then, both chambers haggle over the details until they agree on a spending number. Once they do, then Congress raises the debt limit by the amount that the Congressional Budget Office projects that spending will add to the debt during the upcoming fiscal year. There could be a provision allowing for automatic adjustments to the debt limit if, for instance, revenue comes in much lower than projected due to unforeseen circumstances — such as a major economic shock or a terrorist attack. But any changes in policy during the year that added to the debt beyond the amount that was budgeted for would require another debt limit increase.

This would have advantages for both sides. For years, Republicans have been pushing for an end to the current irresponsible budget process, in which the House passes a budget, the Senate refuses to, and then they have to set spending levels by fighting over short-term continuing resolutions every few months. This would give Democrats an incentive to want to agree to an annual budget. It would also be a way of forcing Congress to live within its budget to avoid further debt limit votes.

For Democrats, this principle would kill two birds with one stone. By agreeing to an annual budget, they wouldn’t have to worry about constant government shutdown fights every few months. And once they agreed to a budget, it would also take care of the debt limit issue.

Under this scenario, Congress would still maintain the power of the purse, but it would be also be giving the executive branch the tools to pay off the bills it runs up.

To be clear, this wouldn’t resolve the underlying conflict between Republicans who want to cut spending and Democrats who want to raise taxes. But each year, the House and Senate ultimately have to agree on spending levels anyway in the form of a series of short-term measures. This would be an attempt to govern in a more orderly way.

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