Daily Report for Executives provides in-depth coverage of unfolding legislative, regulatory, and judicial news from the nation’s capital, the states, and around the world. This daily news service...
The Senate Republican budget expected to be adopted late Oct. 19 has been trumpeted as allowing for tax cuts and still balancing the budget in a decade. But the way Republicans say they get to that balance leaves out Social Security, which will more than offset their projected surplus.
The accounting move, which tracks with the way the budget resolution is written but departs from the way the question of budget deficit or surplus is usually calculated, has led critics to accuse the budget writers of gimmickry in pursuit of a plan that will ease passage of a tax cut bill later in the year.
A spokesman for the Senate Budget Committee said the focus on so-called “on-budget” balance—government operations excluding Social Security and the U.S. Postal Service—was appropriate given the format of the budget resolution. However, he said the projected deficits in Social Security underscore the need to have a “bipartisan discussion” about its future.
In their budget (H. Con. Res. 71, as amended), Senate Republicans have touted their projection of a $79 billion surplus in 2026 and a $197 billion surplus in 2027, despite instructing the Finance Committee to increase the deficit by as much as $1.5 trillion over 10 years through its tax overhaul effort. But those figures reflect both the “on-budget” accounts only and rely on hundreds of billions of dollars in anticipated deficit reduction from faster economic growth, otherwise known as dynamic scoring.
The claims of how much faster the economy would grow remain under dispute by economists and budget analysts. But even if all the growth projected to get to the $197 billion on-budget surplus in 2027 did occur, it would not be enough to keep the government from showing an overall deficit because of Social Security.
The nonpartisan Congressional Budget Office in June projected that the Social Security and postal service part of the budget would show a $351 billion deficit in 2027. Including that, the advertised $197 billion surplus would become a $154 billion deficit.
Another CBO analysis is even more pessimistic. Requested by Sen. Mike Enzi (R-Wyo.), chairman of the Senate Budget Committee, the analysis looked at the general revenue and spending path set out in the budget, without taking into account the policies assumed within it. That report projected a $424 billion deficit, even including some reduced borrowing costs from lower deficits in the 10-year window, in 2027. Without that feedback effect, the overall deficit would be $485 billion, the CBO said.
That would be only about $100 billion less than 2016’s $585.6 billion shortfall, though well below projected deficits under current law.
“There’s degrees of gimmickry and magnitude. This is huge,” said Bill Hoagland, senior vice president of the Bipartisan Policy Center. Prior to joining BPC, Hoagland was a long-time Republican budget aide in the Senate.
Hoagland said the unified budget, including both the on- and off-budget portions, was how most people determined the question of whether a budget was balanced or not. “They think unified, I think,” he said.
Hoagland said he doubted that even the on-budget surplus Republicans claimed with dynamic scoring would occur, given assumptions in the budget on health-care spending cuts and military spending.
Ed Lorenzen, senior adviser for the bipartisan Committee for a Responsible Federal Budget and a former House Democratic budget aide, echoed Hoagland’s concerns. “The resolution reported by the Budget Committee and the committee report do not provide enough details to determine the exact amount the deficit would be under the budget. It is clear that the budget would result in a unified deficit in 2027,” he said in an email.
Lorenzen also took issue with the Senate Budget Committee’s report on its budget resolution, which, unlike its House counterpart, did not break out the unified—combined on- and off-budget—totals.
“I can’t remember a previous instance in which the committee report and other materials accompanying the budget did not include information on off-budget numbers and unified budget totals. That information provides a more complete picture of impact of a budget on deficit and debt as well as the impact of policies assumed in the budget on off-budget accounts,” he said.
Joe Brenckle, communications director for Senate Budget Committee Republicans, told Bloomberg Government the focus on budget figures excluding Social Security was in keeping with the resolution’s format.
“Budget resolutions and their enforcement have always primarily been focused on on-budget accounts. Under the Congressional Budget Act, off-budget accounts are omitted from most aggregate levels in the resolution and expressly excluded from surplus and deficit calculations,” he said in an email.
However, he said Social Security’s projected deficits need to be examined. “Off-budget deficits continue to climb. Under CBO’s last outlook report, there is more than $1.5 trillion in off-budget deficits over the next 10 years. This reality and Social Security’s looming insolvency make it that much more important to have a separate bipartisan discussion about securing Social Security for future generations,” he said.
To contact the reporter on this story: Jonathan Nicholson in Washington at email@example.com
To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)