Cue the Lalo Schifrin music, as Jim McTague‘s latest “D.C. Current” column in Barron’s focuses on the prospects for a balanced federal budget.
Tom Cruise, step aside. Republicans are about to challenge the popular Mission Impossible franchise by demonstrating that they can govern not just the country, but also their own members. The edge-of-your-seat excitement begins this week, when committees in the GOP-controlled House and Senate unveil their respective plans to balance the federal budget in 10 years. This year’s budget proposals must not only pass muster with the fiscally conservative Tea Party, but also pass the laugh test with budget mathematicians, who are on high alert for gimmicks and hallucinatory revenue projections.
Senate Budget Committee Chairman Michael Enzi of Wyoming has an ambitious timetable for moving his version of the legislation. This week, he plans to mark it up immediately after introduction and have a full Senate vote by March 23. He needs 51 votes for passage. Then, differences in the Senate and House bills will be resolved in a conference committee, setting the stage for a final vote in both legislative chambers by April 15. This schedule rests on the assumption that House Budget Committee Chairman Tom Price of Georgia can move his legislation at a similarly brisk clip.
Balancing the budget in 10 years is viewed by many experts as political showboating. In testimony before Enzi’s committee last week, Maya MacGuineas, president of the nonpartisan Committee for a Responsible Federal Budget, estimated that Congress must produce $5.5 trillion in spending cuts and revenue increases to balance the budget by 2025—unrealistic, given that the resulting austerity could sabotage the economic recovery. “All of the advantages of a balanced budget do not mean we need to balance our budget immediately,” she said. “The smartest policies we could implement would be those where savings grow gradually and compound over time and are conducive to economic growth.”
BOTH CHAMBERS PROBABLY WILL USE last year’s Paul Ryan budget proposal as a starting point. Ryan called for the repeal of Obamacare. He also called for a simplified corporate and individual income-tax system that reduces rates but raises revenue by closing loopholes, and for reductions in regulations that retard economic growth. And he suggested means-testing for Social Security and Medicare and toughening the eligibility requirements for food stamps.
