Lawmakers are debating how to retool their $6 trillion wish list for their reconciliation package into a $2 trillion package. To reach this more manageable — though still massive — goal, they should prioritize, target and economize, rather than play games as some are trying to do.
First, let’s keep in mind that a $1 trillion, let alone a $2 trillion price tag, is already astronomically large. This is more than we spent to create the Affordable Care Act (ACA) and more than we’ll spend on the entire Earned Income Tax Credit (EITC). It comes on the heels of borrowing $6 trillion to fight COVID-19 and at a time when our debt is continuing to climb. And $1 trillion or more can absolutely accomplish a great deal in making important investments in families, health care and climate change. There is no need to play games to achieve the far-reaching legislation supporters are hoping for.
Second, the games they are looking to play are gimmicky nonsense that should not become a normal part of an already broken budget process. To bring costs down, some are suggesting lawmakers simply enact policies for fewer years when they fully intend for them to be permanent. Arbitrary sunsets don’t make the package smaller, they make it shorter.
This approach has a number of weaknesses. It is dangerous from a fiscal perspective because future reauthorization is unlikely to be paid for. As we have seen in the past, lawmakers routinely argue that once something is in place they shouldn’t have to pay to extend it, conveniently forgetting the reason it was supposed to expire is they weren’t willing to pay for it in the first place. This is exactly what happened with the Bush-era tax cuts, which were extended in full in 2010 and then mostly made permanent in 2013. The 2017 tax cuts have large portions that are set to expire in 2025, which Democrats rightly criticized (as did we) at the time of passage.
Moreover, this approach creates a huge amount of uncertainty for those who depend on the programs. Families trying to make decisions about jobs, schools and housing are harmed by not knowing if benefits that are there one year will disappear the next, and this stands in the way of those benefits being as helpful as they should be.
We aren’t talking small dollars here. Rumors suggest legislators are considering a one-year expansion of the Child Tax Credit, a three-year expansion of the Affordable Care Act and — based on the House bill — a six-year child care program. These are exactly the kinds of programs that families need to be permanent if they are going to have their intended effects. Yet, making them permanent could cost $1.5 trillion or more — that’s a lot of money to try to hide through fake expirations that lawmakers don’t intend to occur.
Rather than play games, policymakers should focus resources on their best use. They should identify the policies that are most important, target them where they can do the most good, and identify efficiencies and reforms to keep costs down. They shouldn’t spend a dollar more than what they’re willing to raise in new revenue or other spending reductions. Pretending that a Congress that won’t pay for more than one year of a policy today will suddenly be willing to do so next year doesn’t pass the credibility test.
The first step is to prioritize. Focusing resources on family tax credits, affordable preschool, health insurance for those in need and climate and infrastructure means avoiding spending on lower priorities. Policymakers should not waste precious resources on a hugely regressive SALT deduction cap repeal, unnecessary dental benefits for seniors, or a child care plan that may not work as intended (though they could include separate funding for child care).
The next step is better targeting — focusing on households with lower incomes through means testing, progressive benefit designs and reimbursement formulas and phase-outs for higher-income families. With scarce resources, there is no reason to send hundreds of billions of dollars in benefits to high earners that don’t need them.
Lawmakers could also deliver on their goals for less by identifying priorities and efficiencies within programs. For example, they could address the overlap between the child and child care tax credits, use the Social Security benefit formula to deliver paid family leave and require premiums to help cover Medicare dental and hearing benefits. They could also defray the cost of an ACA expansion by restoring health cost-sharing reduction payments removed by the Trump administration and the cost of a Medicare expansion by preventing additional payments to private Medicare Advantage plans that already offer these benefits.
The package can be fully paid for in a variety of ways, including by reversing rate cuts from the 2017 tax cuts, reducing the tax gap so people pay the taxes they already owe, raising new revenue such as through a carbon tax, reducing prescription drug and health care costs, and/or cutting some of the more than $60 trillion we plan on spending over the next decade.
Policymakers will need to choose what to keep, what to shrink, what to better target, what to set aside, and how to pay for it all. They shouldn’t rely on games, gimmicks and ticking time bombs.
Maya MacGuineas is president of the bipartisan Committee for a Responsible Federal Budget.