More About Robert Greenstein

Robert Greenstein

Greenstein is the founder and President of the Center on Budget and Policy Priorities. You can follow him on Twitter @GreensteinCBPP.

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While Government Remains Shut Down, Republicans Propose Another Committee — And One That’s Not Supposed to Discuss Revenues

October 8, 2013 at 4:28 pm

Critical government services have been shut down for over a week, federal employees and contractors are going without pay, and the nation is fast approaching a potentially catastrophic default on its obligations.  But instead of addressing these problems, the House Republican leadership now wants to appoint a committee (termed a “working group”) to recommend ways of reducing the deficit — without raising any revenues.  The proposal — which the House will vote on later today — is deeply disappointing.

Not only does the legislation do nothing to reopen the government or avoid default, delaying badly needed action on these fronts while the working group talks.  It doesn’t even set up meaningful deficit reduction discussions — unlike the 2011 supercommittee, its focus is to include only spending cuts and not revenues.

The bill directs the working group to recommend “reforms in direct spending programs” — in other words, budget cuts in Medicare, Social Security, Medicaid, SNAP (food stamps) and other such programs — without recommendations to rein in even a single unproductive tax break used by special interests or corporations with well-connected lobbyists or to consider any other revenue-raising measures.

The working group could, for example, propose trimming Social Security’s cost-of-living adjustments or increasing Medicare’s premiums and co-payments, but not an increase in the amount of earnings subject to the Social Security payroll tax.  That is hardly a recipe for a fair and balanced deficit-reduction plan.

In short, this is yet another measure through which House Republicans seek to look reasonable and to deflect criticism, while failing to move off their unbalanced agenda or lift their ransom demands.

Moreover, we have been down the “committee” road before, and it led to a dead end.  The Budget Control Act of 2011 established the so-called supercommittee to identify more than $1 trillion in deficit-reduction measures.  The supercommittee failed to agree, however, and meat-axe sequestration cuts in both defense and non-defense discretionary spending took effect as a result.

And, it should be noted the House and Senate both passed budgets back last spring, creating an opportunity for a discussion on budget priorities.  Despite efforts by Senate Democrats to initiate a conference to negotiate a budget agreement, Republicans have rejected these overtures.  If there is now a desire to negotiate, creating a new process with a new working group is not the answer; it’s only a diversion from the task at hand.

The appropriate step now is not another diversionary tactic, but for the House to pass a clean continuing resolution and an increase in the debt ceiling.  And this bill isn’t just unhelpful — it could actually harm the economy because it would push off action on the shutdown and the debt limit while the working group talked.

Finally, it would affirm that it’s acceptable to hold the economy hostage over demands that a faction of one political party cannot otherwise win.

History Isn’t Repeating Itself — This Shutdown Is Different

October 8, 2013 at 9:12 am

Former Reagan Administration official Joseph Morris argues that there’s nothing unusual about policymakers using a government shutdown to work out policy differences.  In an October 2 Washington Post column, he claims the Reagan years prove it and, therefore, people should stop criticizing House Republicans for shutting down the government to extract changes in health reform.

But the evidence that Morris cites undercuts his arguments.  This time indeed is different, and it’s far more dangerous to the economy and the functioning of American democracy itself, as the New York Times’ Thomas Friedman wrote last week.  The only precedent for this shutdown is the long, harmful, and ultimately unsuccessful 1995-96 episode, in which House Republicans tried to force President Clinton to sign into law parts of House Speaker Newt Gingrich’s “Contract with America.”

Morris points to several occasions in the 1980s when the President and Congress didn’t reach agreement in time on appropriations bills or a continuing resolution (CR) and, consequently, the government shut down.

But as Morris acknowledges, those shutdowns occurred largely because of disagreements over the funding levels for the CR or appropriations bills themselves, and the shutdowns were short.  Prolonged shutdowns did not occur because lawmakers in one chamber, already satisfied with the funding levels in a CR, sought to extract highly controversial changes on other policies unrelated to CR funding levels — like health reform.  The brief shutdowns Morris cites were not exercises in hostage-taking.  They were mostly disagreements — quickly resolved — on the levels at which the CRs should operate.

In the current shutdown, by contrast, Congressional Democrats have agreed to accept in toto the CR funding levels that Republicans seek — continuing the 2013 funding levels, and thereby accepting (for the term of the CR) the 2014 sequestration level for non-defense discretionary programs while placing defense funding above this year’s sequestration level.  Although House Democratic leaders said in September they wouldn’t support these CR funding levels, Senate Democrats then accepted them, and last week, House Democrats announced they’d accept them in a CR as well.

That’s unlike Morris’ Reagan-era episodes.  He misses the basic point — if we legitimize action by hardline Congressional factions to shut down the government indefinitely if they don’t get dramatic policy concessions they can’t otherwise win, that will likely become a regular feature of Congressional politics and our political system will become still more dysfunctional.

In a trenchant analysis, the Center for American Progress’ Scott Lilly highlights other deficiencies in arguments like Morris’.  He explains that prior shutdowns other than the Clinton-Gingrich confrontation in 1995-96 were extremely brief and often occurred over weekends or holidays.  A Congressional Research Service analysis shows that every one of the 1980s shutdowns that Morris cites lasted only one to three days, and in the majority of those cases, at least one of the days came on a weekend.

That’s why, as we’ve previously said, the current situation is different and is fraught with peril.  And it’s why Friedman, the Washington Post’s Dana Milbank, ourselves, and other observers have emphasized that the President is right not to negotiate or make concessions in return for re-opening the government or raising the debt limit.  We should not reward and enshrine hostage-taking and extortionate tactics as a basic part of American politics.

“Emerging” House Republican Offer Could Spell More Trouble on Shutdown, Default

October 7, 2013 at 3:42 pm

The nation may be in for more trouble on the government shutdown and debt limit than many commentators realize — if Robert Costa’s recent National Review piece accurately reflects House Republicans’ thinking on their next steps.  In “The Emerging Offer,” Costa describes the “offer” that House Republican leaders are assembling, which suggests that what House Republicans will portray as a reasonable, middle-ground compromise is anything but.

The offer largely represents yet another effort to push — as ransom for President Obama and Congress to pay in exchange for House Republican agreement to reopen the government and raise the debt limit — a set of highly unbalanced policies that are favored by one end of the political spectrum.  The offer, Costa reports, will likely include:

  • A mechanism for “revenue-neutral” tax reform.
  • Cuts in Social Security and various other benefits through the “chained CPI.”
  • Medicare changes affecting beneficiaries.
  • Other entitlement program cuts.
  • Repeal of the medical device tax, which helps finance an expansion of insurance coverage under health reform.

So, Republicans get lots of budget cuts, a repeal of the medical device tax, and revenue-neutral tax reform that devotes all savings from politically achievable curbs on tax deductions, credits, and other preferences (known as “tax expenditures”) solely to lowering tax rates, with none for deficit reduction?  As we’ve explained, this would effectively take any revenue contribution to deficit reduction off the table for years to come, virtually ensuring that future deficit reduction must come entirely from budget cuts.

And for … what?  In return for all of these concessions, and for enshrining the use of threats of massive harm to the government and the economy as a legitimate political tool, House Republicans would agree to let the government do its job — to resume normal operations and pay its bills on time.

And if the President and congressional Democrats do not accept this deeply unbalanced package, then what?  Do House Republicans keep the government shut down and even let the government default later this month?

As our readers know, we believe that policymakers should consider the chained CPI (with protections for low-income or very old Americans), increases in Medicare premiums for affluent beneficiaries, and various other entitlement changes — but only as part of a larger deficit-reduction package in which Republicans agree to substantial revenue increases from curbs on ineffective or low-priority tax expenditures, address sequestration, and set adequate domestic discretionary funding levels.  But the formulation that Costa reports is very different.  It should be unacceptable for two basic reasons.

First, the President and Congress should make no concessions in return for re-opening the government or raising the debt limit, or else hostage-taking — in which congressional factions threaten to shut down the government or default (or actually force one or the other) — will become a regular feature of the American political landscape.  That’s a prescription for a great nation’s decline.

Second, carefully designed savings in entitlement programs and well-designed increases in revenues must go hand in hand.

Adding to concerns about the “offer,” I suspect that House Republicans will craft their framework for “revenue-neutral” tax reform so that, in fact, it opens the door to substantial revenue losses that would worsen deficits in future decades.  We’ve explained that corporate tax reform that’s revenue neutral in the first ten years would likely lose substantial revenue in subsequent decades.  (Key reductions in corporate tax expenditures now under discussion would raise much less money after the first ten years than in the initial decade; as a result, the White House has called for corporate tax reform that’s deficit neutral in subsequent decades as well as in the first ten years so it doesn’t swell long-term deficits.)

In addition, it’s widely understood that the tax-reform package that House Ways and Means Committee chair Dave Camp is assembling will use timing gimmicks on the individual side of tax reform as well in order to make revenue measures that would lose money on an ongoing basis appear revenue neutral in the initial ten years.  One way to do that, for example, is to change the tax treatment of various types of retirement savings so that taxpayers pay, in the first decade, tens of billions of dollars in taxes they are now scheduled to pay in future decades.  Such timing gimmicks can make a tax-cut package look revenue neutral in the first ten years while creating a big revenue hole after that, deepening our longer-term fiscal challenges.

Observers will need to look carefully at the tax-reform instructions or framework, if and when House Republicans unveil the offer that Costa writes about.  They will need to see whether it includes measures to assure real revenue neutrality over time or, instead, requires neutrality only in the initial decade and fails to bar the widespread use of timing gimmicks that would swell deficits in future decades.

All in all, what’s very troubling is that House Republican leaders, with the shutdown continuing and default drawing ever closer, are thinking that somehow they can present this “emerging offer” as something that passes for major progress and a reasonable offer.

Don’t Reward the Politics of Blackmail, or We’ll See More Shutdowns

October 1, 2013 at 2:56 pm

More than the fate of health reform (and whether millions of uninsured Americans get health coverage) is at stake in the battle over the government shutdown.  How well — or poorly — our democracy functions is increasingly on the line.

The shutdown battle is not over the funding levels at which the government will operate under a continuing resolution (CR) for fiscal year 2014.  President Obama and Senate Democrats have agreed to accept the Republican position that the CR maintain the fiscal 2013 funding levels, which reflect the sequestration budget cuts.

No, the shutdown is clearly, even nakedly, over a minority of members in one chamber of Congress (the House) trying to use a shutdown to extract, essentially as ransom, an otherwise unachievable legislative goal — to defund, delay, or otherwise unravel health reform.  (It’s a minority of one chamber because if House Speaker John Boehner allowed an up-or-down House vote on the Senate’s clean CR last night, it likely would have passed.)

Thus, the President and the rest of Congress must not give any concessions to hard-line House Republicans in return for ending the shutdown.  The reason is simple:  if they make concessions, then threats of government shutdowns will likely become a regular feature of our political landscape, and more shutdowns will likely occur in coming years.  The President and Congress will have rewarded the tactics of using a shutdown as a form of blackmail, paving the way for its use on a more regular basis.

Few things are more important than the effective functioning of our government.  We’re now at what could be a pivotal, even an historic, moment — one that will go a long way to determine whether shutting down the government, and even defaulting on the national debt, are acceptable ways for a militant, fiercely ideological minority to get its way.  For the sake of our democracy, we need to make sure that doesn’t happen.

Don’t Be Fooled: This Year’s Debt Limit Fight Is Frighteningly Different

September 20, 2013 at 10:13 am

Update, September 26: Although described as a “debt prioritization” measure, the provision in the continuing resolution that the House approved on September 20 really isn’t.  It would actually allow the Treasury to borrow funds that would not count toward the debt limit to pay interest and Social Security benefits.  While that would still leave the Treasury short of funds to pay other government obligations, it would not — contrary to what we originally wrote — leave less cash available for these purposes.  Our conclusion, however, remains: by appearing to make default legitimate and manageable, the proposal would heighten the risk that a default will actually occur.


This fall’s debate over raising the debt limit to avert a government default may seem like just another in a long line of battles by some lawmakers to attach unrelated items to this must-pass legislation — see, for instance, Glenn Kessler’s “Fact Checker” item in yesterday’s Washington Post — but that perspective misses a fundamental point.

Yes, Congress on occasion in recent decades has attached both fiscal and non-fiscal items to debt limit legislation.  But, on all of those occasions, the parties in question generally agreed that defaulting on the debt was not the desired outcome if they didn’t get their way.  They sought to attach their proposals to what they probably regarded as must-pass legislation — sometimes they succeeded, sometimes they failed — and Congress then raised the debt limit to avoid a default.

To be sure, the very same thing could ultimately happen this year.  But, increasingly, this year’s unfolding drama seems fundamentally different — all too many House Republicans are threatening to withhold their votes to raise the debt limit at all unless the legislation includes a delay or repeal of health reform — even if that means that the United States defaults, sending the economy into a tailspin.  This tactic isn’t just about trying to attach favored legislative items to a bill that’s certain to pass anyway; it’s about holding the debt limit bill hostage and actually defaulting unless Congress adds policy changes that otherwise cannot be enacted on their own.

In fact, House Republicans now seem to be preparing for a default.  They have proposed, as part of a short-term continuing resolution for fiscal year 2014 that they will consider today, to direct the Treasury to pay bondholders and Social Security recipients first if the government defaults.

Paying bondholders and Social Security recipients first won’t change the fact that the government has defaulted, and it would actually make things even worse for everyone else who’s owed money by the government — for instance, soldiers and veterans, doctors and hospitals that treat Medicare patients, state and local governments, and low-income Americans who receive Supplementary Security Income, SNAP (food stamps), and unemployment benefits.  But, the “prioritization” process seems designed to make default more palatable for the politicians doing the hostage taking.

But here’s the bottom line:

We should never get to the point of default — or even consider getting to it.  We should not legitimize the idea of a default.  We should consider the possibility beyond the pale. The potential costs to the economy, to U.S. and global markets, and to America’s standing in the world are simply too great.

Ideally, policymakers would abolish the debt limit, eliminating all risk that the government won’t pay its bills on time.  The United States is virtually the only major industrialized nation with such an arcane requirement.  But, failing that, Congress should raise the debt limit in a timely way and for an extended period of time.

What it should not do is hold the debt limit hostage to some Members’ desires to get their way at all costs, even if that means a default.