Yes, it's absurd, but it's time we stopped letting the absurdity get in the way of results

The Senate budget is strictly procedural; the House needs to pass it to make tax reform possible

By —— Bio and Archives--October 23, 2017

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Paul Ryan, Mitch McConnell, Budgets, Tax Reform

One of the things I do is help organizations replace illogical, unproductive systems with sensible ones that allow them to actually be productive. Or in some cases, I help organizations that are constantly in a state of chaos because they have no organizational system at all. Often you’ll find that a company has plenty of earnest, talented people but the things they’re forced to do by established, existing procedures make it impossible for them to be productive.

I bring that up because I’ve been thinking about what I could do if given a chance to straighten out the U.S. Senate, where idiotic rules make it almost impossible to pass anything good. And on the rare occasion you can pass something good, what you have to do to make it happen will strike those on the outside as completely absurd, because it is.

For that reason, I can understand why a lot of people don’t like the budget resolution the Senate passed last week. It’s a 10-year resolution that does little about cutting spending or reforming entitlements, and if we were really going to spend the next 10 years not addressing these issues, that would be awful.

But here’s what most people, and apparently even some senators, don’t understand: The budget resolution is meaningless, every bit as much as the 10-year budget resolution passed by the House. That one does include spending cuts. It also balances the budget, on paper anyway. But neither resolution reflects what’s really going to happen over the course of the next 10 years. These 10-year budget resolutions never do, or it wouldn’t be necessary to keep passing new ones every year.

So why pass either one? Because of Senate rules, and specifically because Senate rules don’t permit the passage of the Trump tax reform proposal on a simple majority vote unless there is first a 10-year budget resolution in place. In other words, the Senate budget resolution was passed strictly as a box-checking thing in order to clear a procedural hurdle for a piece of legislation that will actually matter. It won’t really be the federal budget for the next 10 years, but what it does is authorize tax cuts that can total $1.5 trillion over the course of that period.

That’s why the Wall Street Journal is arguing that House Republicans ought to simply pass the Senate budget resolution as is, since the only thing that really matters here is clearing the way for the tax cut:

The budget resolution passed by the Senate on Thursday has to be reconciled with a markedly different version passed by the House, where Republicans say negotiations on a unified measure could take up to two weeks.

The House budget resolution calls for a revenue-neutral tax bill and would combine tax cuts with $203 billion in spending cuts to mandatory programs, including food assistance for the poor.

As far as spending cuts go, the Senate version only instructs the Energy and Natural Resources Committee to save at least $1 billion over the next decade.

That difference could set up a possible conflict between Republicans in the Senate and House as they negotiate a final budget blueprint.

Overhauling the complex U.S. tax code has defied Washington since 1986.


Continued below...

Republicans are getting caught up in the idea that tax cuts have to be “paid for”

Part of the problem here is that House Republicans are getting caught up in the idea that tax cuts have to be “paid for” with dollar-for-dollar spending cuts. As much as they will tell you they believe in dynamic scoring, this reveals that there’s a little Keynesian is each of them.

Tax cuts are the right thing to do because they spur growth, which will spur more revenue to the Treasury. Spending cuts are the right thing to do because government is too big and spends too much. But when you insist the one must go hand-in-hand with the other, then you really don’t seem to understand the dynamic value of tax reform to wealth creation and growth. Revenues to the Treasury just about always come in at around 18 percent of GDP regardless of tax rates, so the key is to get GDP growing faster. Cutting rates and simplifying the code offer the most efficient way to do this, and it would be the right thing to do even if you didn’t cut a dollar of spending.

Having said that, of course you should cut spending, and lots of it. But that is both a different political challenge and a different fiscal priority. I’m all for doing both, but I’m not for refusing to do the one unless you can also do the other. That’s a classic case of an organization setting itself up for failure, because you insist on trying to do too many things at once and the effort collapses under its own weight.

The question you have to answer is this: If you cut taxes but didn’t cut spending, was the tax cut worth doing? The answer is easy. Of course it is. The reformed tax code will spur faster growth and make it easier to sustain that spending you should have cut, but didn’t.

I say all this to make the point that passing a 10-year Senate budget resolution that doesn’t really address what should happen with the budget seems absurd - and it is absurd - but given the more important priority it allows you to achieve, it makes more sense to do it than not to do it and miss the opportunity to deal with the tax code. The House, Senate and White House should absolutely follow up success in cutting taxes with a unified Republican plan that also cuts spending and reduces the size of the government.


You really want us to pass a horrible budget resolution that doesn’t even mean anything?

This is usually where the purists ask me, “Do you honestly believe they’re going to do that?” I have no idea one way or the other. I’m simply telling you what should happen. I hope they do. I realize they may not. But even if they don’t come back and do that later, the country will be better off if they pass this tax cut now. Refusing to let that happen because you also wanted something else and didn’t get it is a recipe for continued economic stagnation.

That’s why the best thing the House can do this week is to pass the Senate budget resolution, eliminating the potential for further problems over that issue and clearing the way for the tax cut.

You really want us to pass a horrible budget resolution that doesn’t even mean anything?

Yep. Because that’s how absurd the United States Senate has become. Oh, by the way, if the Senate ever decides to fix itself, It will cost a lot less than the ethanol subsidies they just saved.


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Dan Calabrese -- Bio and Archives | Comments

Dan Calabrese’s column is distributed by HermanCain.com, which can be found at HermanCain

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