House Republican leadership released their 2017 “Balanced Budget for a Stronger America” fiscal year budget proposal. It seeks to balance the budget in 10 years, in the form of a $29 billion surplus in 2026. The promises of no new taxes, Obamacare repeal, and to strengthen defense remain.
But the House Freedom Caucus is a “no” on this budget because of a lack of near-term spending cuts. That will kill it, along with hopes of resuming a normal appropriations process. There will still be a committee vote on on the resolution this week according to Budget Committee Chairman Tom Price (R-Georgia).
But there’s something important to note in this offering that could, possibly, bring the two sides back to the table.
Since the spending cuts are doubtful, and since the package recognizes net interest mounting under current law to an economy-ending $830 billion in 2026, the GOP can no longer ignore federal regulation’s drag on the economy—and in this case, finally hasn’t.
The new concurrent resolution makes a significant call for cutting red tape, for Congress to approve agency regulations lest they languish null and void, and a pitch for regulatory budgeting besides. In particular, Sec. 605. “Policy on Federal Regulatory Budgeting and Reform” calls for reforms to (pp. 94-103, near-verbatim):
- Promote economic growth, job creation, higher wages, and increased investment by eliminating unnecessary red tape and streamlining, simplifying and lowering the costs of Federal regulations; the adoption of least-cost regulatory alternatives to meet the objectives of Federal regulatory statutes;
- Protect the poor and lower-income households from the regressive effects of excessive regulation; and workers against the unnecessary elimination of jobs and loss or reduction of wages;
- Require an annual, congressional regulatory budget that establishes annual costs of regulations and allocates these costs amongst Federal regulatory agencies;
- Secure Congressional approval of all new major regulations before the regulations can become effective, ensuring that Congress can better prevent the imposition of unsound costly new regulations;
- Analyze all new major regulations on at least a decennial basis, to ensure that regulations operate as intended and impose no more costs than necessary;
- Mandate transparency and opportunities for hearings on disputed issues in high-cost major rulemaking;
- Eliminate the abuse of guidance to evade legal requirements applicable to the development and promulgation of new regulations.
While empathizing with the Freedom Caucus, this rather detailed regulatory reform emphasis in a fiscal budget document is a breakthrough. It has long been the case that talking spending cuts while ignoring regulation won’t work anymore.
You could balance the budget today like the Freedom Caucus wants, and still the bureaucracy’s weight leaves hiring a too-risky, fraught proposition. It’s hard to be an employer, and thankless.
Indeed, as rates rise from near-zero on a national debt topping $18 trillion and climbing, things will get extremely ugly, extremely fast. Regulatory liberalization is the necessary secret sauce no matter what.
So one hopes this explicit language can represent a real turning point or change for the way the entire government growth and overreach situation gets talked about, maybe one that can even restore the normal budget procedure this year.
But back to the bad news. The federal government’s dimensions are simply staggering. Even under the GOP plan, we return to the $4 trillion spending last seen in the “stimulus” days of non-shovel-ready waste by 2020. Obama already is back at that level with his 2017 budget proposal for $4.147 trillion discretionary, entitlement, and interest spending. (By contrast, the new House budget calls for $3.882 in 2017.)
It took nearly 200 years, from the Founders to Reagan, to get a $1 trillion budget; George W. Bush gave us our first $3 trillion budgets.
Obama wants to get us to $5.1 trillion by 2021, and $6.46 trillion by 2026. But even in the GOP’s 2026 year of balance, spending will be at least $5.14 trillion.
The deficit for the year that just passed was $438 billion. CBO projects a deficit over $1 trillion by 2022, and a shocking $1.4 trillion by 2026. This ceaseless deficit, the norm for generations except between 1998 and 2001, is what infuriates fiscal conservatives.
Stepping back, in the Obama world, we’re going to spend $52.6 trillion between 2017 and 2026. In the Republican budget, we’re going to spend $44.1 trillion. That’s still big money; government will still be too big.
I want to see the big cuts and more, and remain concerned Congress that hasn’t responded to voters already by defunding the leviathan as GOP voters demanded, and that their inclination is to make a show over more defense spending.
Certainly, other nations’ spending eats up a greater portion of their national output compared with the near-20 percent U.S. level. But in gross terms, ours is the biggest government on the planet — not a proud feature of the nation founded in freedom and individual liberty.
Only six other nations top $1 trillion in annual government revenues, and none but the United States and recently China collect more than $2 trillion.
But until this budget, the Congress has downplayed the greater (to me, at least) problem of federal regulation of the economy, of red tape. Obviously Congress must address autopilot entitlement spending and waste. But it can ease the effort by cutting red tape and getting the economy healthier. The nation thrives when Americans help themselves, their families, and provide for their own secure retirements and health care rather than turning to opportunistic politicians. Regulation hobbles self-reliance and growth.
There exists a substitutability between regulating and deficit spending. If a constrained big-government politician can’t do one, he’ll do the other, so both need attention. The new budget proposal captures that duality ways rarely seen–and, I hope, provides the vision by which the leadership and the conservatives can come to agreement on some grand unification that reduces the entire Washington footprint, not just half.
The House has already passed important measures like boosting regulatory transparency, a regulatory repeal commission, and congressional approval of rules before they can be effective. The Senate has held back. But it’s time to collect some Obama vetoes on commonsense reforms as trophies.
Spending must be cut more than what Republican leadership proposes. But we must legislate upon the reality that the federal reach extends well beyond the taxes, deficits and borrowing that have utterly dominated policy discussion. Regulations also cost hundreds of billions.
Cutting regulations makes the economy healthier, and will make cutting the budget easier too. Recognizing the Freedom Caucus’ frustration, maybe a far broader liberalization effort can draw the Tea Party and leadership together on both the fiscal budget–and the regulatory one.
Originally posted to Forbes.