When a person is trying to solve an old problem, one of the most dangerous times is when they’ve had some success — especially when they really haven’t changed their mindset or habits. They’ve lost some weight on a fad diet, so they head for the buffet. They’ve cut down on their alcohol for a few weeks, so they drop into the bar because they’ve “earned it.” They’ve been pretty good about spending money lately, so they splurge.
Soon they’re eating, drinking and spending more than ever. Old habits die hard.
Congress is composed of people just like the rest of us, and those people also are vulnerable to the hazards of success. We’re starting to see that on display regarding the federal budget deficit.
The good news is that annual deficits temporarily are falling. The Congressional Budget Office (CBO) is estimating that Congress will “only” overspend by $492 billion this fiscal year — much better than 2009’s $1.4 trillion deficit and the trillion-dollar deficits that followed.
Why the positive direction? The economy is improving, so the money is coming in. Also, those huge deficits were so alarming that even Congress and President Obama were inspired to raise taxes a little on the wealthy, let the payroll tax cut expire, and allow spending cuts to occur through the sequester.
Here’s the bad news. While this year’s annual deficit is smaller than it’s been, it’s still not a surplus, which means we’re still adding to the national debt – now $17.5 trillion, or more than $50,000 for every American. The deficits soon will start rising again, eventually hitting about $1 trillion again in 2022. Each year, the national debt will increase as a result.
Unfortunately, Congress and President Obama failed to use that string of trillion-dollar deficits as an opportunity to really address the country’s ingrained habits. There was a lot of talk but little action. They didn’t craft bipartisan solutions for Social Security’s and Medicare’s long-term problems. They didn’t significantly reduce military spending or question if the United States should remain the world’s policeman. They didn’t reform the convoluted, anti-growth tax code. They didn’t structurally reform how we govern ourselves.
Now that the sense of urgency is gone and we’re only overspending by $492 billion, what will happen next? We’re starting to get an idea.
The U.S. House of Representatives voted May 9 to make permanent what had been a “temporary” research and development tax credit that has been around since 1981 and extended many times. All of the members of Arkansas’ House delegation voted yes except Rep. Rick Crawford, who was attending to the death of his mother.
Now the House Ways and Means Committee is planning to vote on permanently extending and in some cases expanding more tax breaks. Those potential expansions would increase the national debt by about $80 billion over 10 years, according to the Committee for a Responsible Federal Budget.
The Senate was to vote on its own bill, perhaps this week after press time, that would extend the research and development tax credit two years and also renew about 50 temporary tax breaks that Congress also routinely extends, including breaks for racehorse owners and makers of Puerto Rican rum.
What’s wrong with all these tax breaks, besides the fact that they tend to reward only certain groups of the well-connected? In both the House and the Senate, Congress isn’t even trying to offset them with spending cuts.
That’s regrettable but not surprising. The immediate crisis has passed, we’re no longer running trillion-dollar deficits, so it’s time to reward ourselves with a trip to the buffet or bar.
Old habits die hard. We’ll worry about the debt when it feels like a crisis again — which it will, eventually.
(Follow Steve Brawner on Twitter @stevebrawner)