Vote Notes: The Budget
To say that it is an usual year in Washington would indeed be an understatement. In that vein, yesterday, the House passed its budget resolution for 2018.
This could be recorded as unusual because when people normally think about a budget, they think about a budget. You sit down with your business partners, and you decide that you can spend so much in this area and so much in that area. Then, you indeed spend accordingly in those areas.
The opposite has happened this year. The House has finished the appropriations “spending” for the year...and now we’re passing a budget!
In layman’s terms, what this means is that this year’s budget has little to nothing to do with the normal budget process, and instead everything to do with setting up a vehicle for tax reform. It was for this reason - and this reason only - that I voted for the budget. Getting slightly more technical, what the budget does is it allows for a narrower margin in the passage of tax reform through the Senate. It means 50 + 1 for passage rather than what amounts to a 96% margin necessary for passage in the Senate. Even 50 + 1 doesn’t guarantee movement, but it decidedly tips the scales in greater favor of tax reform.
It’s important because it hasn’t happened in 30 years, and as assuredly as our computers are updated, so too should our tax system. Think about it - the world has become increasingly global in the way that we connect one to the other. Yet our tax system is woefully antiquated in this regard, and as a consequence, many corporations have found it more profitable to move overseas than to stay domiciled in the United States. So, tax reform is in many ways about simplicity for the individual, jobs and economic growth, and competitiveness in our tax structure. There are a whole host of other bells and whistles ranging from the estate tax, to the individual exclusion, to a territorial tax system rather than a global tax system for businesses...but all of those things will be debated over the weeks and months ahead.
The thing that will allow that debate to take place is oddly enough this budget. As I’ve already indicated, I think that that is its only redeeming feature. You could call it a budget, a train leaving the station, a vehicle or a variety of other things, but it was indeed about that one thing this year.
This is not to say that the budget and its considerations aren’t of the greatest importance going forward. To the point of being blue in the face, we are walking our way towards a financial crisis if we do nothing about government spending.
Much celebrated in this budget was the fact that it touched mandatory spending for the first time in over 10 years...but even this was largely a mirage. It proposed to cut $203 billion in mandatory spending over the next 10 years. That sounds good, until you consider the fact that our government will spend about $34 trillion over the same time period. That’s .0088% of spending! And even that could be back-ended to year 9 or 10...which means it’ll never happen.
Think about it yet another way. Our country will run a deficit of about $750 billion this year. If you annualized the mandatory spending cuts that are contemplated over the 10-year window, you’d be looking at $20 billion a year in cuts to mandatory spending. $20 billion in savings out of a $750 billion a year shortfall. Let me say that again...$20 billion in savings out of a $750 billion a year shortfall.
Are you kidding me?
That’s a 2% cut from the $750 billion addition to the national debt each year. You can’t dig your way out of a hole in this way, and it's for that reason that this budget indeed was not real from a budgetary standpoint. Sadly, the Progressive and Democratic budgets were even worse on the spending front. The Republican Study Committee budget was more robust in the way it attempted to trim the sails of spending, and I voted for it.
I’ll keep you posted, as things continue to develop.