Capitol Hill Democrats Call Economic Focus, Not Balance Deadline, Best Budget Message

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By Jonathan Nicholson

May 11 — In the recently ended battle over the budget resolution on Capitol Hill, Democrats didn't offer a deadline for getting the budget to balance. Instead, they say, focusing on the economy and the impact of the Republicans' balance target is politically and practically smarter.

The distinction may be a key one as both parties seek to lay the political groundwork for 2016, where agendas are likely to be set even more on the presidential campaign trail than within the halls of the U.S. Capitol. In turn, the winning 2016 presidential candidate will have a chance to set the agenda for a broader budget debate, albeit in the spring of 2017.

Republicans made the distinction between their plan—which aims for a small surplus of abut $32 billion in 2024 through large spending cuts and an assumption of faster economic growth—and the Democrats' lack of a balance target a major part of their political messaging during the budget debate. The Senate passed the Republican budget on a 51-48 vote May 5.

“In seven years, President Obama has never proposed a budget that balances. For a span of four years, Senate Democrats didn’t pass a budget at all. Now, four months into the new Congress, Republican majorities in the House and Senate worked together to pass the first joint 10-year balanced budget in 14 years,” House Speaker John Boehner (R-Ohio) said after the Senate vote.

Notably, two of the Republican Party's presidential aspirants voted against the budget resolution—Sens. Ted Cruz (R-Texas) and Rand Paul (R-Ky.)—and Republican congressional leaders show few signs of trying to put in place the actual policy changes needed to bring the largely nonbinding fiscal blueprint to fruition.

Contrast to 1990s 

The current atmosphere stands in sharp contrast to the mid-1990s, when over the course of several years, and despite a politically brutal pair of government shutdowns in 1995 and 1996, Democrats and Republicans eventually settled on a common goal of getting the budget into balance over five years in 1997.

That process was made easier by the groundwork laid in two previous budget moves, the 1990s Andrews Air Force Base accord and the 1993 Clinton budget, as well as by a robust economy throwing off healthy capital gains tax revenues. The fiscal pendulum was swinging so far toward balance anyway in 1997 the budget deal included sweeteners for both parties: tax cuts and the children's health insurance program.

No one thinks the budget is in a similar situation now, though, especially as the Baby Boom generation's retirement boosts the costs of Medicare and Social Security. That explains in part why the White House and Democratic plans do not include a balance deadline.

Instead, both Obama's fiscal 2016 budget, as well as a budget plan put together by Rep. Chris Van Hollen (D-Md.) as an alternative to the original House Republican budget, aimed at stabilizing the federal debt in relation to the size of the economy and keeping the annual deficit below about 3 percent of the economy as well.

The Obama budget, according to the Congressional Budget Office, would post its lowest annual deficit in 2016, about 2.0 percent of gross domestic product (GDP) or $380 billion, actually $20 billion lower than the final Republican budget plan. The Obama budget also would see the debt as a percentage of GDP fall slightly to 72.0 percent in 2020 before beginning to rise again.

The Van Hollen plan took a similar tack. Its lowest annual deficit was in 2016, at 2.0 percent of GDP, while the debt-to-GDP measure fell slightly each year to 70.2 percent in 2025 from 74.2 percent in 2015.

‘Budget Should Serve Your Objectives.'

Most Senate Democrats interviewed by Bloomberg BNA said they felt the deficit- and debt-to-GDP goals were sufficient, even if they were not as clear cut as the Republican goal.

“I think our bumper sticker is fund national defense and fund American priorities,” Sen. Tim Kaine (D-Va.) said. “The budget should serve your objectives, rather than having to slash all your objectives to serve your budget.”

“Now, they're not really balancing, with all the gimmicks, but they're saying their top priority is balance,” he said. “Our top priority is fund national defense and the priorities that make for a strong nation and have a budget that serves that. That's the difference.”

Kaine said, when he served as governor of Virginia, the state used similar debt-ratio metrics in its budgeting.

“That's how Virginia was a AAA state. We managed to ratios,” he said.

“If a budget debate is about a bumper sticker, then we've lost our way, because I think there's much more to the story.” said Sen. Richard Durbin (D-Ill.), the Democratic whip. “I think in a few sentences we can make clear the Republican budget advantages the wealthy in America at the expense of working families. That, I think, is a message that resonates.”

“I'd say that the American people certainly want us to be fiscally responsible, but they also want a growing economy and the Republican recipe for austerity, I'm afraid, is going to cut off research, education and infrastructure investment.” he said. “That doesn't help our economy or create jobs.”

‘Everyone's Picking and Choosing.'

Sen. Joe Manchin (D-W. Va.) was more critical, but said both parties need to put spending and revenues up for debate, not simply one or the other.

“Even if we balanced the budget, it's going to be many years before we can have it at 65 percent, debt-to-GDP. You can't say that's our justification, we just want to manage it,” he said.

Manchin said he wants an evenhanded approach to getting to balance and managing the debt.

“They're not willing to do that. Everyone's picking and choosing. They want to pick whatever's the least offensive to them and their constituents,” he said.

Earl Pomeroy, a former Democratic representative from North Dakota who is now a senior counsel at the law firm Alston & Bird LLP, said Democrats were not more aggressive because the Republican plan would be so politically difficult to implement. Pomeroy was a member of the anti-deficit Blue Dog Coalition of House Democrats until he lost his election in 2010.

Pomeroy also said Democrats have credibility on balancing the budget because of the 1990s.

“There's some history about who's delivered balanced budgets,” he said.

To contact the reporter on this story: Jonathan Nicholson in Washington at jnicholson@bna.com

To contact the editor responsible for this story: Heather Rothman in Washington at hrothman@bna.com