Leaders in Congress continue to talk about balancing the budget, but are increasing deficits at the same time. Legislation repealing the estate tax is the latest example.
The ink had barely dried on President Obama’s signature enacting the ‘doc fix’ adding $141 billion to deficits in the next decade, which would increase the national debt by $1,400 per U.S. household, when the House of Representatives passed a repeal of the estate tax. That bill would cost $269 billion over ten years, adding $2,560 per household to the debt. The House also approved of making the state and local sales tax deduction permanent, with a price tag of $42 billion over ten years ($405 per household).
This occurs as the House and Senate are said to be finalizing a budget blueprint that aims to balance the federal budget within a decade. Our Maya MacGuineas noted the conflict in a statement through the Committee for a Responsible Federal Budget.
With record-high national debt levels currently at $13 trillion and growing, it's hard to make the case that adding further to the debt is a good idea. This failure to pay for this legislation is completely at odds with rhetoric about fiscal responsibility and balanced budgets.
Between the $140 billon SGR ‘doc fix’ Congress just passed, and the $310 billion cost of these bills, there is clearly a disturbing trend.
Not only would these bills add to the debt, they conflict with the recently passed House budget resolution, which balances the budget in the next decade. If these bills pass, the budget would no longer balance – the $33 billion surplus in 2025 would instead be a $20 billion deficit. It is impossible to take a budget resolution seriously if lawmakers pass a balanced budget and then bust that budget plan before it is even finalized.
Bringing our debt under control will require tough choices and changes to all parts of the budget, including entitlement reforms, spending constraints, and new revenues. If Congress is unwilling to make these needed changes at this time, the very least it should do is agree not to make the debt worse.
As we illustrated in our recent Tax Day resources, the tax code is ripe for change. However, tax reform should be done in a comprehensive manner that reduces deficits, not increases them.