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Heritage
Foundation
Morning
Bell: What Will the Fiscal
Cliff Deal Look Like?
By Amy Payne
December 14, 2012
This
week, President Obama and
House Speaker John Boehner (R-OH) have been trading secret offers on
the fiscal
cliff. Last night, they met for nearly an hour, and emerged with zipped
lips
about what progress—if any—they made on averting tax hikes across the
board and
automatic, deep budget cuts that would devastate America’s defenses.
While
action is necessary to avoid
the “cliff,” that is all they should do at this late date. Patrick
Louis
Knudsen, Heritage’s Grover M. Hermann Fellow in Federal Budgetary
Affairs,
warns against a “grand bargain” involving tax hikes in the short amount
of time
available:
[H]istory
shows that broad
bipartisan compromises between the White House and Congress have
typically just
yielded higher taxes, while the promised spending restraint (except in
national
defense) and deficit reduction have failed to materialize.
In
fact, Knudsen says, “Such agreements
tend to produce higher taxes and higher spending with little or no
deficit
reduction.”
Knudsen’s
educational retrospective
on budget deals is a sobering reminder that even President Ronald
Reagan agreed
to tax hikes when he became embroiled in congressional budget
“summits.” Though
these tax hikes were in the name of reducing the deficit, the deficit
actually
increased because the deals leaned toward spending increases, not
spending
reductions.
The
“spend now, save later”
approach is one of the ways that budget deals hide their true costs.
And as
details start to emerge—whenever they do—about the deal that President
Obama
and Speaker Boehner are putting together, it will be vital to examine
the
budgeting gimmicks they are using.
To
hide the true cost of budget
deals, leaders in Washington get away with things that we could never
do in our
household budgets.
For
example, imagine you are
planning your family budget for the new year. You decide, “I’m not
going to
take a $2,000 vacation. So that means I just saved $2,000! Now, I think
I’ll
spend my savings on new furniture.”
What
happened? You spent $2,000.
Where did it come from? Your regular budget—not some magical pot of
extra
“savings” money that you somehow accessed…
Read
the rest of the article at the
Heritage Foundation
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