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No Psaki, the Cost of BBB Isn’t ‘Fake’ — Because Washington Always Lies about Spending

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No Psaki, the Cost of BBB Isn’t ‘Fake’ — Because Washington Always Lies about Spending

New York Post December 15, 2021
EconomicsBudget

White House press secretary Jen Psaki tried to discredit the Congressional Budget Office's scathing report on President Joe Biden's spending as "a fake CBO score."

The House-passed Build Back Better legislation has always relied on gimmicks to hide its true cost.

Lawmakers attempted to squeeze $5 trillion in 10-year benefits into a $2.4 trillion score by using fake expiration dates, such as assuming that the expanded child tax credit ends after one year, health insurance expansions end after 4 years, and child care and pre-school subsidies end after 6 years.

By matching the fake $2.4 trillion score with $2.2 trillion in new taxes and health offsets, President Biden claims that Build Back Better is paid for (which is false even under the original CBO score).

Last Friday, CBO confirmed in a letter to Congressional Republicans that removing the expiration dates and making the new provisions permanent would raise the 10-year shortfall to $2.8 trillion — making Build Back Better the most expensive permanent expansion of government in five decades.

Senator Joe Manchin (D-WV) — whose vote is surely needed to pass BBB — has condemned the “shell games, budget gimmicks that make the real cost of the so-called $1.75 trillion bill estimated to be almost twice that amount, if the full time is run out, if you extended it permanently.”

The Democratic blowback was fierce. White House Press Secretary Jen Psaki called the letter “a fake CBO score that is not based on the actual bill that anybody is voting on.” House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer both pledged that any future extensions of BBB would be paid for in new taxes or spending cuts, with Schumer calling the CBO report a “fake score based on mistruths.”

Recent history, though, shows that such future offsets are extraordinarily unlikely. Instead, Democrats are playing one of the oldest budget games in Washington: Hook taxpayers on a “temporary” benefit and then count on future lawmakers not daring to take away an existing benefit from voters, even if no new offsets can be found.

Look no further than last week. The day before CBO released the permanent score of Build Back Better, Sen. Schumer, Rep. Pelosi, and Congressional Democrats voted to delay or cancel the $80 billion in automatic spending cuts that had been required to offset a portion of the American Rescue Plan that had been signed in March. Canceling these automatic cuts has become so routine that most of the media did not even cover it.

In fact, this practice goes back for decades. The 2001 tax cuts were enacted under reconciliation rules that required expirations after 10 years. A bipartisan majority later made the law permanent for nearly all taxpayers without offsets.

Also, for nearly two decades, each December would see Congress cancel a group of automatic Medicare provider cuts and small tax increases — until in 2015, when they dropped the charade and made the cancellations permanent.

In 2009, President Obama signed the “PAYGO” law to ensure that all tax cuts and entitlement expansions be fully offset, or face automatic sequestration savings later. Yet Congress has subsequently canceled every PAYGO sequestration, in a matter so routine that the law is not even discussed in most legislative negotiations.

We can keep going. The 2011 Budget Control Act capped future discretionary spending increases and required modest automatic entitlement cuts. Those caps were gradually raised beginning the following year, and by 2020 Congressional spenders were busting the caps by $168 billion annually and canceling the automatic entitlement cuts.

Current law limits highway and transit spending levels to dedicated revenues such as from the gas tax. Congress regularly breaks these spending limits, which has led to $230 billion in general fund bailouts of the highway and transit trust funds since 2008, including a $90 billion bailout buried quietly in the recent infrastructure bill.

Much of the family provisions of the 2017 tax cuts are set to expire at the end of 2025, but neither party has indicated any interest in allowing the tax cuts to expire for non-wealthy taxpayers.

Four broad trends emerge from these examples:

  • First, that automatic savings or policy expirations scheduled for the future are almost always cancelled.
  • Second, these cancellations occur regardless of whether offsets are identified, with the more expensive extensions never paid for.
  • Third, these cancellation votes are almost always bipartisan — even when the original law had been partisan — because neither party wants to remove an existing benefit.
  • Fourth, these cancellation votes are so routine and non-controversial that the press rarely even covers them.

So when the White House and Congressional leaders claim that they would allow the expiration of new benefits related to the child tax credit, earned income tax credit, health insurance, child care, and pre-school unless lawmakers can come up with $3 trillion in new taxes or spending cuts, they are taking us for fools.

After all, if $3 trillion in additional savings were politically feasible, then Congress would have included them in the current BBB legislation in order to make permanent the new benefits. Instead, lawmakers tell us that additional new taxes that could not pass the laugh test today will suddenly become feasible next year when the benefit expirations begin.

Then again, President Biden has also bizarrely claimed that BBB would “cost zero dollars,” which suggests he may again invent new accounting to hide these future costs.

The White House has made clear that it intends for all of BBB’s new benefits to be permanent, at a cost of $5 trillion over the decade. Yet the House has identified only $2 trillion in pay-fors, and that figure is likely to fall once the Senate marks up the bill. Counting on lawmakers to enact new middle-class benefits and then allow those benefits to quickly expire flies in the face of history and basic politics.

Voters should expect Build Back Better to ultimately add $3 trillion in debt over the decade, and that’s not “fake.”

This piece originally appeared at the New York Post

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Brian M. Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter here.

Photo by Drew Angerer/Getty Images

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