Eternal Vigilance

I was fortunate enough to be invited to a breakfast with House Budget Committee Chairman Paul Ryan (R-WI) earlier this week.  You may have seen some stories on that conversation, primarily in the Wall Street Journal, whose David Wessel and Gerald F. Seib organized the event.  (A transcript is available to those with Wall Street Journal access in two parts, here and here.)  A couple of takeaways for me:

Image found here.

Some press reports, including an editorial in the Washington Post, had suggested that House Republicans had foresworn the old “Boehner Rule” – which dictated that there be $1 of spending cuts for every $1 increase in the debt limit.  The Post said that this change was highly meritorious, because there could be serious consequences if the debt limit were subject to such uncertainty.  However, Chairman Ryan made clear that the Boehner Rule is alive and well, even though it may temporarily be suspended.  Chairman Ryan saw two potential ways forward – that is, toward significant deficit reduction, in fact a balanced budget in ten years.  One would be bipartisan cooperation, which he did not rule out but saw as unlikely.  The second was the use of rolling “fiscal cliffs,” including the expiration of continuing resolutions for annual appropriations, deadlines for sequesters, and applications of the Boehner Rule for short-term increases in the debt limit.

Second, Chairman Ryan rejected the notion of a budget bargain this year that would include revenue increases.  (That was part of the reason why he conceded that bipartisan cooperation was unlikely – given that Democrats want revenue increases to go along with any future spending restraint.)  Chairman Ryan’s concern is that, if you give the other side additional revenue, they will just run out and spend it – thereby accomplishing no deficit reduction.

This concern – which I have heard from Democrats as well as Republicans – is worth some thought.  And in fact, the concern can be expressed in a more general way.  Members of Congress and other decision-makers in Washington often reject policy ideas on the ground that they do not guarantee success.  So Chairman Ryan believes that the Congress and the Administration will pocket a tax increase but not follow through on spending cuts enacted into law.  (This blog has held forth on that concern here.)  A Democratic budget hawk once complained to me that the Congress might in future years renege on annual appropriations caps enacted now.  So this concern is bipartisan.

The problem is that there is, and can be, no guarantee of any budget commitment.  The Congress writes the law, which means that the Congress can change the law.  That is the reason behind the adage that no Congress can bind a future Congress.  But the situation actually is worse than that:  No Congress can bind itself.  A law passed by the Congress today can be repealed tomorrow.

So anyone who is waiting for a foolproof, risk-proof solution to our budget problems is going to be waiting for a long time.  There is no such thing.  And anyone who refuses to act until such an airtight solution arrives never will act, and our situation only will get worse.

Concerned policymakers on both sides must accept the painful reality that any budget action will be imperfect, and will be without guarantee.  Progress requires a leap of faith, and a commitment to eternal vigilance.

That reality is painful to Democrats today who fear that a “balanced” budget deal – defined for present purposes as including both tax increases and spending cuts – will face the repeal of the tax increases tomorrow, and to Republicans who fear that the same budget deal will see its spending cuts repealed tomorrow.  In truth, both groups are imposing an impossible standard, and will be paralyzed into inaction if they do not relent.  A deficit-reduction bill that is 100 percent spending cuts can be repealed next month, or next year.  And a bill that changes entitlement laws and is estimated to cut projected spending by however many billions of dollars might be overwhelmed by changes in the economy, and entitlement spending may actually be much higher than anticipated.

In sum, policymakers today must rely on policymakers in the next Congress, and the Congress after that, and so on – not because it necessarily is the right thing to do, but because today’s policymakers have no choice.  A dose of reality is needed.  And soon.

Chairman Ryan’s presentation raises several other important points about our budget situation today.  I’ll revisit his remarks next week.

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