The Bush Administration Budget Clown Show Continues

We need PAYGO. We need super-PAYGO with standby tax increases and spending sequesters. We need it now.

Alex Tabarrok has intelligent things to say:

Marginal Revolution: No surprise: In February I wrote, "My prediction is that it will be easier to add $540 billion in Medicare spending than it will be to cut $5 billion in farm subsidies."

Today, the Washington Post reports:

Farm Subsidies May Not Face Limits...The Bush administration has signaled that it will not pressure Congress to enact limits on government payments to big farmers this year...The subsidy cuts and other proposed changes in the farm program were hailed by budget cutters, environmentalists and foreign governments when they were included in the administration's budget proposals in February. They have run into heavy resistance in some parts of the Farm Belt. Southern cotton and rice growers in the GOP's political base would be hit particularly hard.

And how is this for a laugh?

Reducing agricultural spending by $5.4 billion is [was? AT] a key part of the administration's plan to cut the federal defict in half. So far, however, the the Senate Budget Committee has agree to cuts amounting to just $2.8 billion.

The Federal deficit is currently over 400 billion.

Last fall people who then worked for the Bush administration grew quite snarky when I opined that only the foolish or those economical with the truth credited Bush promises to cut the deficit in half...

Comments

[big al]

The growers of rice also use subsidized water.

[Frank Emesis]

bush is clearly the worst president ever. he doesnt even pretend to hide giving away the government.

[bakho]

The Bush presidency is built on patronage politics. Never mind if the policies are not sustainable or even make sense. Never mind if the policies are bad for the nation as a whole. If policies benefit favored individuals or if policies reflect the ideology of core constituents, Bush will pander to them.

The Bush view of the future of the US can be found in the "Left Behind" books.

[chris]

I thought the budget deficit was running at over $600 bil a year but that number is prettified a bit by raiding the S. S. surplus. Shouldn't we just set ourselves on the $600 + number?

[Mark-NC]

Correction:

The current Federal budget is over $400 Billion AFTER they steal over $100 Billion from Social Security to make things look better.

[Elaine Supkis]

The IMF is demanding Bush balance the budget, not "cut the deficit in half" meaning it would be over $300 billion out of whack.

Then Congress cut more taxes on the rich.

We are really exploring the bottom of a barrel here, it is full of monkeys bent on destroying us.

[economaniac]

Bush never suggested actually CUTTING the deficit in order to cut it in half. His "plan" to accomplish that feat started by projecting a 30% larger deficit which while never realized was magically reduced by 20% and then presumed stealing another $120 billion from social security in 2010... oh yes and counted on Congress rejecting all the administration tax and spending proposals. It was nonetheless a real "plan" which is playing out exactly as promised.

I don't understand why everyone thinks Bush lies when he pretty much just tells us what he's doing and calls it something different.

[Movie Guy]

Perhaps Super-PAYGO could include a legal provision to withhold 20% of Congressional salaries and disallow further raises each time Congress fails to pass a balanced budget.

Or would that fall under Super-Super-PAYGO?

[Tom DC/VA]

Two comments:

1) PAYGO is pointless by now. The revenue and expenditure sides of the budget are so fundamentally out of whack - the unified budget deficit is ~4% of GDP and the general fund deficit is ~6% of GDP - that $5.4B here and there just won't make much of a difference. Only serious tax increases will be able to close that gap.

2) PAYGO is bad policy because it promotes endless fiddling with the tax code. If Congress feels the country needs a new government program or increased spending on an old program, it should change tax rates - and not adjust the tax code - to raise the increment of revenue needed. The tax code should be reviewed and revised on its own terms, so as to ensure fairness and applicability to current business practices and economic conditions. Constant fiddling with the tax code is bad economic policy because it causes uncertainty in business plans, because it encourages non-productive activity by accountants and tax lawyers, and because encourages businesses to "invest" in lobbyists instead plant and product because a change in the tax code often is a much quicker route to windfall profits than the hard work of providing a good product or service.

I gather the author of this blog has fond memories of when he was involved with PAYGO and it "worked", but that zeitgeist has long since passed. Since there is no chance that a reasonably sane policy (if flawed and ill-suited for the scale of the problem) like PAYGO will be implemented, why advocate it? Instead, the groundwork should be laid for an honest budgetary policy that the Democrats can implement when the come to power by advocating what that good budgetary policy is in the abstract.

[liberal]

Tom DC/VA wrote, "1) PAYGO is pointless by now. The revenue and expenditure sides of the budget are so fundamentally out of whack - the unified budget deficit is ~4% of GDP and the general fund deficit is ~6% of GDP - that $5.4B here and there just won't make much of a difference. Only serious tax increases will be able to close that gap."

But under true, literal PAYGO, tax increase *would* occur. Why? Because of all the sunset provisions stuck into Bush-era tax cuts. Getting rid of a sunset provision is a change in law, hence is a tax cut, and would be corraled by (a true) PAYGO.

"2) PAYGO is bad policy because it promotes endless fiddling with the tax code. If Congress feels the country needs a new government program or increased spending on an old program, it should change tax rates - and not adjust the tax code - to raise the increment of revenue needed."

This doesn't take into account actual structure of the Budget Enforcement Act (of 1990). PAYGO applied to taxes and mandatory spending (roughly, entitlement spending)---the province of authorization committees.

Many government programs that come into existence comprise "discretionary spending"---spending in annual appropriations that were controlled (somewhat) by the non-PAYGO part of the BEA, the discretionary spending caps.