Beware of budget gimmicks in push deals

>> Senators fashioning a pair of colossal bills that would deliver more than $4 trillion for infrastructure, health care, environment and other initiatives insist they will fully pay for both plans. Will they?

In a Washington ritual as reliable as panicbuying when light snow is forecast, both parties have long relied on toothless budget gimmicks to help finance their priorities. The contrivances let lawmakers claim they are being fiscally responsible while inflicting little pain on voters and contributors with tax increases or spending cuts.

Here’s how they may do it again:

The price tag

For political and procedural reasons, Congress’ Democratic leaders are slicing President Joe Biden’s domestic spending agenda into two bills. One is bipartisan effort providing about $1 trillion for roads, broadband and other public works projects. Bargainers hope to clinch a final deal and unveil this coming week.

The other bill would aim $3.5 trillion at expanding Medicare coverage, slowing climate change and providing free prekindergarten and community college. This expansive package, which would also fatten tax credits for children and health care and help immigrants become citizens, is a Democrats-only push expected to take months and draw unanimous Republican opposition.

With Washington already projected to spend $63 trillion over the coming decade, an additional $4 trillion would be just a 6% boost. Even so, finding $4 trillion in tax increases or spending cuts to pay its costs would be prohibitively painful for politicians.

Getting real

Some of the savings proposals are legitimate.

To pay for much of the $3.5 trillion package, Democrats led by Senate Finance Committee Chairman Ron Wyden, D-Ore., want to increase taxes on the wealthy, big corporations and companies earning income abroad.

Raising more would be tough. Lawmakers are boxed in between Biden’s pledge to not raise taxes on people earning less than $400,000 annually and GOP opposition to unraveling President Donald Trump’s big 2017 tax cut. “It’s the perfect storm for not doing anything real on the revenue side,” said William Hoagland, a former top Republican Senate aide.

Also real are proposals to beef up the IRS budget so it can collect more unpaid taxes and, perhaps, to claim the bills themselves would generate more government revenue by stimulating economic activity.

But either could go too far.

Picking the umpires

No one doubts that a more muscular IRS would pry more taxes out of scofflaws. Bolstering programs that help people stay healthy, get educated and move goods more efficiently undoubtedly help the economy hum.

The question, though, is exactly how much federal revenue those two ideas would yield. Government agencies and outside analysts have widely divergent views, especially for forecasting legislation’s impact on economic growth.

Lawmakers eager to claim they have fully financed their proposals could gravitate to the highest plausible numbers they can find, to critics’ chagrin.

“In basketball, you don’t get to choose your own ref,” said Marc Goldwein, senior policy director at the nonpartisan Committee for a Responsible Federal Budget.

Dueling IRS numbers

The Congressional Budget Office, lawmakers’ nonpartisan accountant, estimated last year that Congress could collect $61 billion more in taxes over the next decade by giving the IRS an additional $20 billion. Others are more generous, which could help Democrats eager to finance their $3.5 trillion proposal.

The Penn Wharton Budget Model, a nonpartisan research group, projected that Biden’s proposed $79 billion boost for the IRS would produce $480 billion more revenue. The Treasury Department pegged the revenue increase under Biden’s plan at $779 billion.

Unreliable friend

Documents show the bipartisan infrastructure proposal and Democrats’ separate $3.5 trillion measure may both claim savings from long-term economic growth the bills would supposedly spur.

That concept is called dynamic scoring, and Republicans have long embraced it to paint their tax cuts as cost-free. That’s not happened.

“The tax cuts will pay for themselves,” Steven Mnuchin, Trump’s Treasury secretary, said repeatedly about the 2017 tax law. Instead, The CBO estimated that even including increased economic activity, that measure will drive up federal deficits by $1.9 trillion over a decade.

Democrats have long mocked dynamic scoring as a Republican ruse for claiming savings that may never materialize to hide the true cost of their taxcutting agenda.