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The Boehner Plan: Another Debt Commission Please!

Anthony Randazzo
July 27, 2011, 10:23am

The Congressional Budget Office has a score out for the plan from Republican Speaker of the House John Boehner. They estimate that his proposed cuts would knock $850 billion off the deficit over the next 10 years. In exchange, he proposed a staggered increase in the debt ceiling by as much as $2.5 trillion based on Congress forming a commission to find an extra $1.8 trillion in cuts. When was the last time a commission worked really well on something like this? There is no way it would be any different from the last six months of bickering on Capitol Hill. A much better approach would be to put the Simpson-Bowles proposal (an imperfect, but fair starting point) on the table and start negotiations from there.

Instead we have a weak plan from Speaker Boehner that doesn't even have his party's full support. And it is understandable given how disappointing the approach is when you break it down.

First, we're talking about cuts of as much as $2.5 trillion over the next 10 years in exchange for a less than two year increase in the debt ceiling. At our current pace we'll hit $2.5 trillion in 2013 at some point, where as the cuts are from fiscal year 2012 to 2021. That is unacceptable. (I had this same critique of the Reid plan.)

And while we are on the topic of weak fiscal responsibility, in March the CBO estimated the total deficit over the next 10 years would be $6.7 trillion. So the proposed $850 billion would cut just 12 percent of that! And this is the Republican plan. 

Second, when you hear about discretionary spending budget caps what is really being discussed are limits to future spending that is only projected based on past budgets. We haven't passed a federal budget in a while so projected spending is based on the historically high levels we have today, that even President Obama has said are temporary. The CBO estimates that the Boehner spending caps will mean $710 fewer outlays over the next 10 years. But while this is not a bad thing it is the equivalent of going from spending $10,000 a month on your credit card to $20,000, but then saying you'll cut back to about $15,000 a month in exchange for a higher credit limit. (Reid also got this same critique as well.)

Third, in contrast to the Reid plan, the Boehner plan excludes defense related discretionary spending from its budget caps. While I don't think it is fair to say "cutting money from what we would have spent under an old budget that factored in a large amount of military activity that in theory will go away over the next 10 years" is actually cutting down on the core issues of the deficit, at least there is an acknowledgement that we perhaps spend to much money blasting the tops off Central Asian mountains. Boehner ignores this all together. 

Fourth, by spending more on enforcement, the Boehner plan would see an estimated savings for the government of $2.5 billion on social security savings, and $1.4 billion in reduced Medicare and Medicaid fraud. Seriously? This is the best Boehner could come up with after six months of debating? This plan certainly has the past negotiations in mind and excludes ideas that would be impossible to get past the Senate. But my critique is not that this is all that was included in the proposal, but rather that the Republicans were so weak in making their case over the past months that this is what they were left with in terms of a compromise cornerstone. 

Fifth, Boehner's plan also lowers direct spending by just $4.6 billion over the next 10 years. It comes from provisions that would mean $21.6 billion in fewer student loans but $17 billion more in pell grants. While anything that gets the government out of the student loan business (which is only making college more expensive) is a good thing, this is a weak sauce approach if there ever was one. It is curious that after months of negotiations one of the few things the two sides could agree on is fewer student loans.

It is easy to see why many in the GOP don't like this plan. If you can call that sound of tin clattering on the sidewalk ahead of you a plan.

Click here for my comments on Reid's proposal.

Also see the CBO score on Boehner's plan and Reid's plan directly.


Anthony Randazzo is Director of Economic Research


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