Vote Notes: 2019 Budget Markup
The House Budget Committee spent Wednesday and Thursday “marking up” the 2019 House Budget Resolution. These “markups” typically involve long days and multiple votes on amendments…but all of this is irrelevant when measured against the whole of the importance of a budget.
Think about it for a second. Well-run businesses operate on a budget. A functioning church operates on a budget. Each of the agencies of government operate on a budget. A well-run family operates on a budget.
Yet tragically, there has been no budget produced this year by the House or Senate, and it’s symptomatic of the degree to which government spending, the debt, and deficits are out of vogue in Washington these days.
I disagreed with many of the tenants of this budget just as I disagreed with many of the economic assumptions that went into making its numbers work. You may have caught my interactions with Mick Mulvaney, the Director of the Office of Management and Budget, just a few months back, as I raised questions about the validity of their optimistic economic assumptions.
But you still need some kind of roadmap to point at least directionally in where you want to go as a Congress, given that it is the Congress that controls the purse strings of our nation. I want to be clear, before I get into some of the nuts and bolts of the budget itself, that this was my reasoning in voting yes on the budget despite its many deficiencies.
In the broadest of strokes, the budget authorizes discretionary spending at $1.32 trillion this year. That number, over the next 10 years, would rise gradually but for all intents and purposes stay level. The largest categories of spending within what’s called discretionary spending are $647 billion for defense and $597 for non-defense. There are additional categories this year like Overseas Contingency Funding and emergency supplemental funding that bring that number up to the $1.32 trillion total.
This budget does not include the much bigger categories of aggregate federal spending which are on “automatic pilot” and not debated or budgeted by the Congress each year. These include Medicare, Medicaid, Social Security, and things like interest cost.
Here are a few highlights that I think worth your note outside of what you may have read on the budget in newspapers back home.
The budget does include $302 billion of reconciliation savings. What this means in English is that it would attempt to cut mandatory spending by that number, and that’s a big deal, given the way that Congress has gone to great lengths to avoid trimming the sail of mandatory spending. That’s the good news. The bad news is that I very much doubt that there’s any chance that those savings will make their way through the Senate, given the Senate has decided not to do a budget. On this point, Tom McClintock and I offered an amendment that would have made the mandatory savings much larger and binding. That amendment did not prevail because people wanted to do that which they perceived to be politically possible. My counterpoint in the debate that ensued was that we are lulling ourselves to sleep in allowing the American public to think that our budget can be viable without substantially addressing mandatory spending.
In the same vein, besides being misleading about how much the budget actually cuts from mandatory spending programs, it is also more than a bit optimistic in terms of its economic assumptions. It predicts an average economic growth rate over the next decade of 2.6% per year, which is 0.8% higher than the rate predicted by the Congressional Budget Office (CBO). While not as unrealistic as the 2.9% growth rate assumed in the President’s recent budget proposal, it is still an unprecedented prediction in terms of how far it is above CBO’s anticipated growth of 1.8%.
I realize that quibbling over such seemingly small numbers may seem shrill...but the compounding effect of even one-tenth of a percent of difference in economic output means trillions of dollars of difference over the 10-year budget window.
The math doesn’t quite add up to get us 2.6% growth per year over the next decade. For example, according to the Committee for a Responsible Federal Budget, if productivity and capital growth rates both returned to their post-WWII averages, we would likely see average economic growth over the next decade reach 2.4%, which is still short of 2.6%. To get the rest of the way there, growth in our labor force would have to go from decelerating to accelerating, which would be a remarkable shift in trend given the ongoing retirement of the “Baby Boomer” generation and falling labor force participation rates overall.
There are reasons to be optimistic about economic growth in America going forward, but these assumptions are very optimistic. In the six months since it passed, the Tax Cuts and Jobs Act has been remarkably successful in boosting our short-term economic growth. Indeed, the Congressional Budget Office predicts that the economy will grow 3% this year and 2.9% next year. Starting in 2020, however, demographics and the aging of the American population drive our productivity number unless we do remarkable things to change the economic climate in this country. It’s for this reason that the CBO, along with the Federal Reserve, Goldman Sachs, Moody’s, and nearly every private-sector economist with each of the big consulting firms all estimate an average economic growth rate over the next decade between 1.4% and 2% per year.
The bottom line is that I could go through a lot of numbers that would show where the budget is unrealistic in its cuts or in its assumptions, but it was important to at least produce some sort of budget this year rather than following the practice of the Senate in skipping this most basic function found in any well-run organization. Accordingly, I voted for the budget.