Editorial: Empty Budget Gesture

Friday, May 11, 2018

If President Donald Trump, or anyone else for that matter, wants to make a small but meaningful election-year dent in the federal budget deficit, estimated to hit $804 billion in the current fiscal year — and $1 trillion by 2020 — there are plenty of ways to do it.

Here’s just one simple idea: restore the federal estate tax to what it was before Trump and a Republican Congress gutted it as part of their deficit-expanding tax cut last year. That is to say, individual estates worth $5.5 million or less would be exempt, instead of $11 million under the GOP plan.

This would raise an average of $8.3 billion a year over the next decade. The only people affected would be a tiny sliver of wealthy Americans.

Here’s what the president is actually doing: He is asking Congress to approve a $15.4 billion package of budgetary “rescissions.” As exercises in fiscal discipline go, this is a pretty hollow one. Basically, the president would eliminate legal spending authority that had mostly never been used in the first place.

For example, the plan “rescinds” $4.3 billion for an Energy Department advanced technology vehicle loan program that hasn’t lent any money since 2011. There is some value in cleaning up government accounts this way, to prevent future budget gimmicks, but no effect on current outlays; the White House’s own submission to Congress notes the package results in only $3 billion of actual spending cuts.

The backstory here is that many Republicans on the Hill are embarrassed by the massive $1.3 trillion omnibus appropriations deal their leaders cut with the Democrats back in March, which hiked spending $300 billion over previously planned levels, with no way to pay for it except more borrowing. Trump’s proposal gives them something to vote for that at least seems like a budget cut, yet without actually requiring their constituents to accept fewer services or benefits.

This means, of course, that Democratic reactions to the cuts are also a bit overwrought. It is not quite the full-scale renegotiation of the omnibus appropriations bill that Democrats had rightly resisted. Some $7 billion of Trump’s rescissions affect the Children’s Health Insurance Program (CHIP); that includes $1.9 billion in reserve funding for CHIP, which creates a risk in case of a sudden surge in need for the program (though the White House says it has set aside some money for that eventuality). For the most part, though, the CHIP rescission is leftover unused spending authority, too, so the program is unlikely to be affected in the short run. The Congressional Budget Office forecasts no impact on the number of individuals with insurance coverage.

Congress has 45 days to approve Trump’s rescissions. If a majority of either chamber votes against the package, or if either chamber simply takes no action, the rescissions lapse and the money goes back into the budgetary limbo whence it came. (The usual 60-vote rule does not apply.) We are therefore a month and a half away from a nearly empty gesture at deficit control, or no gesture at all.

The Washington Post