http://www.businessweek.com/articles/2012-03-08/why-congress-wont-attack-the-budget

Politics & Policy

Why Congress Won't Attack the Budget


Things we want but never get ...

Illustration by Allan Sanders

Things we want but never get ...

Every budget season, members of Congress say this is the year they’ll make tough choices about government spending. Federal programs must be paid for and not just piled onto the deficit, they insist. Tell that to Wyoming Republican Senator Mike Enzi, who wants to add a whopping half a cent to the 18.4¢ federal tax on a gallon of gas to help keep the Highway Trust Fund from going bust as soon as October. His colleagues scorn the proposal, though, since it would be branded a tax increase.

If Enzi’s measure passed, you probably wouldn’t feel it at the pump. Gas prices can fluctuate a lot more than that in a given week. But you most certainly will feel it driving on crumbling roads if there isn’t enough money to fix them. Enzi has gotten nowhere with this argument. When the Senate Finance Committee took up a highway funding bill last month, he didn’t even put it to a vote. “It would have been 23-1,” Enzi says. “If you’re going to raise a tax—nobody’s really had much practice with that.”

Cities and states are often required to have balanced budgets. The federal government has no such strictures, and Enzi’s half-penny frustration tells the larger, costlier story of how dysfunctional the budget has become. Senate Democrats have already said they won’t introduce a new budget proposal this year, which means Congress will go a third consecutive year without a fiscal blueprint. House Republicans will push ahead this month with their own plan, though it will amount to little more than a debating point in the coming campaign. Even Paul Ryan, the Wisconsin Republican who chairs the Budget Committee, concedes: “We basically don’t have a budgeting process.”

At the end of this year the Bush-era tax cuts will expire, $1 trillion in automatic spending cuts will begin taking effect soon after, and the government again will scrape the debt ceiling. And still congressional leaders are punting on the tough choices they keep saying they have to make. When Congress finally agreed to extend the payroll tax break for the rest of this year, it didn’t bother trying to find the $90 billion in savings needed to defray the cost but simply tacked it onto the deficit. “The participants said, ‘We’ve come to an agreement—we’re going to have another helping of dessert,’ ” says former Congressional Budget Office Director Robert Reischauer.

President Obama shares in the blame. His budget proposal largely ignores the biggest drivers of future deficits, Medicare and Social Security. One consequence of this timid approach: a Medicare program estimated to cost $1 trillion annually by 2022. It’s little wonder that year after year Congress and the White House sidestep big, difficult challenges when they don’t have the will to take on far easier problems. Last year the Government Accountability Office found hundreds of redundant government programs costing taxpayers tens of billions of dollars. There are 80 federal economic development programs and 15 agencies in charge of administering food-related laws. Yet Senator Tom Coburn, an Oklahoma Republican who has tried to close some programs and combine others, has found few senators willing to join the cause. “They give it lip service and then don’t do anything,” he says. “There’s no good reason to have 47 job training programs. We’re stealing from our children every day.” Coburn says it should be a cinch to pass obvious cuts like these, “except we have no leadership to get that done.”

Photograph by Andrew Harrer/Bloomberg

It’s no secret that the U.S. Postal Service faces insolvency unless it can be made less expensive to run. Yet lawmakers have fought requests from Postmaster General Patrick Donahoe to cut Saturday delivery and close some post offices—80 percent of which lose money—for fear of angering constituents. Representative Dennis Ross, a Florida Republican, sponsored a bill that would largely take the decision out of Congress’s hands, creating a process like the one used to decide which military bases to shutter. Since October the measure has languished as he tries to scrounge up enough votes to get it passed. Ross says he doesn’t like the idea of closing post offices. “But the fact remains if it’s costing money, and the money isn’t there because postal rates have declined dramatically, something has to be done,” he says. “I think it would instill some sense of confidence in the American public that we can solve an issue.”

Enzi, meanwhile, holds out hope that eventually he’ll persuade his colleagues to back his minuscule gas tax. He says history is on his side. Since the Eisenhower administration there has been bipartisan acceptance that drivers should pay for roads through the gas tax. Instead, Republicans and Democrats have come up with a series of convoluted proposals to pay for the bill. Republicans want to use royalties the government receives from private drilling on federal lands, including the now off-limits Arctic National Wildlife Refuge. One Democratic fix would change the way corporations calculate how much they must sock away each year for their employees’ pensions. Democrats want to ease those requirements because it would reduce the tax breaks companies claim for those contributions, which would generate more revenue, which they say could then be used to pay for the highway bill.

Enzi is quietly urging colleagues to keep things simple and stick with the user-pays principle. He notes the U.S. Chamber of Commerce and Obama’s deficit commission have endorsed much bigger increases in the tax, as much as 15¢ per gallon. “It takes time to sell things around here,” he says. “If you talk about something reasonable, they’ll listen. If it sounds radical, they won’t. So I’m starting out reasonable.”

The bottom line: As party leaders in Congress hold the federal budget hostage to political gimmicks, members who propose actual fixes are shoved aside.

Faler is a reporter for Bloomberg News.

The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus