Republican Moderates and Conservative Democrats Urge Tougher Budget Rules

Why are we making such a big fuss about arcane budget rules?

Because they make an enormous difference in U.S. fiscal policy.

Without pay-as-you-go rules, Congress can pass huge tax cuts or spending increases -- without any offsetting tax increases or spending cuts -- with a simple majority vote, and no opportunity for opponents to "filibuster" or stall the process.

The budget was not supposed to be this way. But in recent years, Congress has actually used budget "reconciliation" rules -- which expedite the process and disallow stalling techniques -- to make the budget worse, by passing tax cuts and spending increases that are not "paid for."

The only way to slow down the process, and force Congress to make sure its initiatives are paid for, is to reestablish a "pay-as-you-go" rule. The pay-as-you-go rule requires bills that would increase the budget deficit to clear an extra procedural hurdle, and a supermajority vote.

With the budget deficit continuing to worsen, members of Congress on both sides of the aisle are clamoring for a return to pay-as-you-go.

Here is a link to a letter signed by 11 House Republicans and 11 House Democrats urging budget negotiators to re-establish the rule.

Links:
Moderate Republican/Conservative Democrat Letter to Budget Conferees (March 31, 2004)

Blue Dog Motion to Instruct Conferees (March 30, 2004)

Centrists.Org A "Duck The Issues" Budget -- Interpreting the Congressional Budget for 2005 (March 19, 2004)

Centrist Policy Network Blue Dog Conservative Democrats' Budget Enforcement Proposal (March 10, 2004)

Centrist Policy Network Republican Moderates' "Main Street" Budget Principles (March 10, 2004)

Blue Dog Motion to Instruct Conferees on Pay as You Go

Message from the conservative Democrats' Blue Dog Coaliton:

Rep. Mike Thompson is offering a motion on behalf of the Blue Dog Coalition which instructs conferees on the budget resolution to accept the strongest possible enforcement rules for all legislation in the House and the Senate which would increase the deficit.

Applying pay as you go rules to tax cuts does not prevent Congress from passing more tax cuts. All it says is that if we are going to reduce our revenues, we need to reduce our spending by the same amount.

Links:
Blue Dog Motion to Instruct Conferees

Centrists.Org A "Duck The Issues" Budget -- Interpreting the Congressional Budget for 2005 (March 19, 2004)

Centrist Policy Network Blue Dog Conservative Democrats' Budget Enforcement Proposal (March 10, 2004)

Centrist Policy Network Republican Moderates' "Main Street" Budget Principles (March 10, 2004)

For Kerry, A Positive Move on Corporate Taxes

During the early primaries, Senator Kerry's campaign spewed up some strong anti-corporate rhetoric. Now, with the Democratic nomination assured, the campaign may be signaling a change.

The international and corporate tax proposal announced today is a step in a more business-friendly direction. There are three major components:

1. A lowering of the corporate profits tax rate from 35 percent to 33.25 percent.
2. A one-year "amnesty" whereby companies who have parked profits overseas (to take advantage of lower tax rates) can repatriate funds and pay a temporary 10 percent tax.
3. A limitation on the ability to defer U.S. taxes on profits parked overseas.

On balance, Kerry's new proposal seems accommodating toward the private sector. Tax experts may debate the details in the coming weeks, but the overall tone seems much improved.

In net, these changes will not save corporate taxpayers money.

But this proposal meets the basic criteria of tax reform: broaden the base and lower the rate. It represents a market-based way to address worries about overseas investment and out-sourcing.

Too often, the political debate in Washington is starkly polarized: Republicans say big business is never wrong -- Democrats say it is never right.

The reality is in between, and public policy should reflect that.

Big companies aren't supposed to be angels. Their duty to shareholders is to make profits; their duty to the public is to operate efficiently and responsibly under the law.

That's why it's so generally so unhelpful when politicians issue blanket condemnations of particular industries. Kerry has criticized drug companies, HMOs, and energy companies.

But if these industries are so bad, what's the answer -- nationalizing them? We complain if gas prices go up, but does that mean we should have a government takeover of the oil companies? If Sen. Kerry doesn't like HMOs, does that mean he'd prefer we all had government-run health insurance? If drug companies behave badly, that's one thing. But is the solution to socialize research and development of medicines?

Of course, the public has a right to make sure corporate power isn't too concentrated, both for economic and political reasons.

However, we hope Kerry's strident anti-corporate rhetoric early in the campaign was an aberration, and a more balanced and thoughtful approach will be the rule.

Link:
Centrist Policy Network Kerry's Health Care Populism -- How Deep? (February 26, 2004)

A Better Budget -- The House "Blue Dog" Alternative

The "Blue Dog" coalition of conservative Democrats in the House has compiled a substitute budget that all fiscally responsible legislators should consider.

Unlike the Republican budgets, which extend only through 2009, the Blue Dog budget spans the full 10-year budget period traditionally used by Congress.

It is not a perfect budget -- no budget this year really solves all the problems associated with expiring tax cuts, the Alternative Minimum Tax (AMT), and entitlement costs.

However, the Blue Dog budget does the best job of "paying for" its initiatives and laying the budgetary groundwork for a "pay-as-you-go" ethic in Congress.

Here are some of the details:

1. Section-by-section summary
2. 10-year budget figures
3. Comparison of "discretionary" spending levels

Links:
Centrists.Org A "Duck The Issues" Budget -- Interpreting the Congressional Budget for 2005 (March 19, 2004)

Centrist Policy Network Blue Dog Conservative Democrats' Budget Enforcement Proposal (March 10, 2004)

Centrist Policy Network Republican Moderates' "Main Street" Budget Principles (March 10, 2004)

The Administration Finally Releases Some Medicare Drug Estimates

Last week, Medicare chief actuary Rick Foster released to Congressional staff a short memo explaining the differences between the Administration and Congressional Budget Office (CBO) estimates of the Medicare drug bill.

By now, everybody who follows politics knows that Mr. Foster's job was threatened last year to prevent his office from releasing its less favorable (more expensive) estimates.

Over the last two weeks, Mr. Foster has displayed a rare and difficult courage by answering questions frankly about his office's estimates and the political obstacles to presenting the results to Congress (and the public).

However, the cat's finally out of the bag, and the Administration's full estimates are gradually becoming available to the public.

The Medicare Actuary's estimate of the cost of the Medicare bill is now available as part of the new 2004 trustees report in a simple table, and the cost of Medicare Part D (the drug benefit) is now available in detailed tables.

Medicare's formal estimates of Part A (hospital) and Part B (physician and outpatient costs) are also available.

These detailed tables are not for the faint of heart. But finally, the academic community and the think tanks can start getting a closer look at why the Medicare actuaries assumed last year's drug bill would cost so much more.

The real scandal of last year's Medicare bill was the official reluctance -- from both the Congressional leadership and the White House -- to share analytic material with the public. It typifies the Bush Administration's disdain for open discussion of facts and alternative interpretations or theories.

These guys will politicize anything, even the most important (and expensive) changes to an entitlement program since 1973.

In this case, an alternative set of estimates and explanations stood in the way of a (supposed) landmark political victory for the Republican leadership: delivery of a long-awaited drug benefit and the endorsement of AARP, the largest seniors' group.

However, the public reaction has been mixed at best and unfavorable at worst. (One silver lining is that expectations for the drug benefit are now very low. As a result, seniors will probably really appreciate the "discount cards" being readied for introduction this summer. The cards are an interim benefit designed to help seniors get better drug prices as they await the larger drug benefit, which is not scheduled for implementation until 2006.)

We hope that the Administration and the Congressional leadership will in the future be more tolerant of full discussion of important policy decisions, including dissenting views. The people and their representatives in Congress deserve better than this Medicare mess.

Links:
Medicare Actuary's memo on differences between CBO and Administration estimates (dated February 5, 2004, released to Congressional staff on March 19, 2003)

Medicare Actuary's cost table for Medicare drug bill (released March 23, 2004 as part of the 2004 Medicare trustees report)

Medicare Actuary's detailed Part D (drug benefit) estimates (dated December 23, 2003, released to Congressional staff on March 19, 2004)

Medicare Actuary's detailed Part A (hospital) estimates (dated December 23, 2003, released to Congressional staff on March 19, 2004)

Medicare Actuary's detailed Part B (physician and outpatient) estimates (dated December 23, 2003, released to Congressional staff on March 19, 2004)

Medicare Actuary's cost table from June 11, 2003, which shows an estimate of $551 billion over 10 years for a drug benefit plan with roughly the same dimensions as the drug bill that was eventually enacted.

Centrist Policy Network Medicare, Tax Cuts, and the Era of BS Budgeting (February 8, 2004)

Centrist Policy Network Medicare and Rx Drug Resource Page

Draft "Blue Dog" Democrats' Budget Enforcement Proposal

03/09/2004

1. Stop digging the hole deeper -- Reinstate budget enforcement rules

Reinstate paygo rules for all legislation which would increase the deficit.

• Reinstate PAYGO rules require that any legislation dealing with mandatory spending or revenues that would increase the deficit be paid for with offsetting changes in mandatory spending or revenues.

• A separate vote would be required in the House to waive the PAYGO requirements (instead of including a waiver of paygo rules as part of an omnibus tax bill)

• The bill would prevent budget gimmicks intended to circumvent PAYGO rules by prohibiting spending or tax legislation that delays costs outside of the five year window and prohibiting the use of “directed scorekeeping” in which legislation directs CBO to use certain assumptions to provide a more favorable budget estimate.

Establish discretionary spending limits

• Set discretionary spending limits for three years at the levels contained in the President’s budget. The cap would be on total discretionary spending, with flexibility to shift funds within the cap.

• Discretionary spending limits would be adjusted to reflect costs of highway reauthorization legislation if the increased costs are fully offset

• A separate vote would be required in the House to increase spending above the discretionary spending limits (instead of including an increase in spending limits as part of an omnibus appropriations bill)

• Establish criteria for emergency spending and require the President and appropriations committee to provide justifications for emergency spending based on the criteria. Allow for a separate vote to strike the emergency designation in a spending bill

2. Comparing reality to promises for enacted legislation

Establish a “trigger” mechanism to monitor costs of Medicare prescription drug bill

• Establish targets for spending on Medicare prescription drug benefit and Medicare Advantage program enacted last year. The targets would be equal to the CBO estimate of outlays for the prescription drug legislation when it was passed by Congress.

• If Medicare actuaries determine that the targets have been exceeded in any fiscal year, the Secretary of Human Services would be directed to negotiate lower prices for prescription drugs provided to seniors under Medicare plans and report to Congress and the President on any savings achieved.

• If the savings negotiated by the Secretary are not sufficient to reduce total costs to the budget targets. The President would be required to submit to Congress legislation to address the increased cost of the Medicare Part D or Medicare Advantage program.

• The President’s proposal could include additional measures to reduce the costs of prescription drugs, changes in payments to insurance companies, other changes in the prescription drug benefit, reductions in other spending or increased revenues to offset the increased costs, or simply affirmatively approving the increased spending without offsets.

• Congress would consider and vote on the President’s proposal and other alternatives on a fast track basis. Congress could reject the President’s proposal and make no changes to the program, but would have to vote up or down on the proposal.

Establish a revenue “trigger” based on revenue projections when tax cuts were enacted

• Establish revenue targets equal to total revenues projected in the budget resolution adopted by Congress in 2003.

• If total revenues fall below the targets by more than a di minimus amount, the President would be required to propose legislation to offset the revenue shortfall through spending reductions or increased revenues or explicitly authorize an increase in the debt limit by the amount of the shortfall. Congress would consider and vote on the President’s proposal on a fast track basis.

• The reductions in the top two marginal income tax rates would be suspended unless the President proposes and Congress enacts legislation achieving savings equal to the amount revenues fell below the target.

Establish a process for reviewing existing programs

• Establish a Federal Agency Sunset Commission to review and evaluate the efficiency and public need for each agency using specified criteria and recommend whether each agency should be abolished or reorganized

• Requires the abolishment of any agency or program within one year of the Commission's review, unless the agency is reauthorized by Congress.

3. Consider long-term impact of budget legislation

Address long term liabilities

• Require the budget resolution to include information on the 75 year liabilities of Social Security, Medicare, other government retirement programs and interest on the debt in present value terms under current policies.

• Establish a point of order against any legislation which would increase the long term liabilities of Social Security, Medicare, other government retirement programs and interest on the debt by more than a certain percentage

Republican "Main Street" Budget Principles

Republican Main Street Partnership Principles for FY 2005 Budget (3/4/2004)

Dealing with the current budgetary problems requires a multi-tiered approach that focuses not only on discretionary spending, but also mandatory spending as well. Additionally, structural reforms to the budget process must also be incorporated into any budget resolution.

The following is a list of principles around which Republican Main Street Partnership believes the FY 2005 Budget Resolution must be built.

1. Congress must hold the line on FY 2005 discretionary spending. Congress needs to review all categories of discretionary spending and potential cuts and/or freezes must be distributed equitably. Everything must be on the table.

2. Congress should improve upon the President's plan to reduce the budget deficit. The President has promised to cut the deficit in half in five years. Congress can and should do better.

3. Any Budget Resolution must include the reinstatement of PAYGO rules for both discretionary spending and tax cuts. PAYGO rules are vital to ensuring fiscal discipline.

4. Tax cuts should only be extended temporarily and limited to those that are due to expire in 2004. The marriage penalty, child tax credit and the 10% bracket provisions should be temporarily extended (e.g. two years) before they expire at the end of 2004. We simply can't afford permanent and across-the-board extensions at this time.

5. Congress must initiate an ongoing review of long-term federal spending. Every part of the discretionary budget needs to be examined and evaluated. Programs and projects that have outlived their usefulness or simply are no longer affordable given the current circumstances need to be identified and funding for them eliminated or greatly reduced.

6. The unfettered growth of federal entitlement programs must be addressed. Congress has to get serious about reforming mandatory spending programs to reflect the current and long-term demographic realities. We need a systematic review of entitlement programs under a BRAC-type of procedure.

"Independent Nation" by John P. Avlon

While Congress gets more partisan and polarized -- in part due to redistricting practices that effectively allow legislators to choose their voters (instead of the other way around) -- the spirit of American independent politics is alive and well, according to author and columnist John Avlon.

His new book is entitled Independent Nation -- How the Vital Center is Changing American Politics. It contains a collection of essays on how politicians from either side of the aisle addressed the essential centrism of the U.S. political environment, sometimes successfully, sometimes not.

Here is an excerpt from the introduction:

Some readers will note that I've chosen to use the word "Centrist" instead of "moderate" to describe those whose principled political philosophy causes them to stand between the extremes. This is, of course, not an accident. "Moderate" carries with it an unfortunate connotation of inactivity, a noncommittal defense of the status quo. "Centrist" is a decidedly more vigorous word, implying decisiveness and momentum. That is appropriate, because Centrists do not simply seek a safe middle ground between extreme political movements; they are problem solvers who combine the best ideas from both political parties to move society toward responsible reform -- meeting the challenges of a changing world while remaining true to fundamental American principles.

One of the great problems for Centrists in the past was that they felt politically homeless, adrift without a coherent sense of their political heritage. I hope that this collection of biographical sketches can serve as a hymn rooted in history to the spirit of reason, reconciliation, and balance that Centrism can bring to American politics, so that we do not lurch to the left or right, but move forward as our Founding Fathers intended -- as one independent nation.

Avlon is a columnist for the New York Sun and served as Chief Speechwriter and Deputy Communications Director for Mayor Rudolph Giuliani.

Links:
John P. Avlon Independent Nation -- How the Vital Center is Changing American Politics (February 2004) Random House (note, this is a commercial link to the publisher's website)

Centrists.Org Centrist Policy "Manifesto" (revised January 11, 2004)

New Survey Spotlights Swing Voters

The Pew Research Center has released a survey that pegs the number of "swing" voters -- those not pre-committed to either President Bush or Senator Kerry -- at about 29 percent of the electorate. This is a considerably higher figure than most political pundits usually cite.

According to the survey, most of the swing voters are independents -- the rest are drawn about evenly from the Democratic and Republican party. They tend to support President Bush on the war in Iraq, but have doubts about Bush's handling of the economy.

Link:
Pew Research Center Three-in-Ten Voters Open to Persuasion -- Swing Voters Criticize Bush on Economy, Support Him on Iraq (released March 3, 2004)