The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
The Senate should make Build Back Better, better. As it currently stands, the House version of the bill would add too much to the debt, create tremendous uncertainty around the expiration of many of the policies, and fall short of the President’s promise that it would be fully paid for. While the House deserves some credit for scaling back costs and putting forward real offsets, the gimmicks need to be dropped and more needs to be done to ensure the legislation is responsible and does not damage the fiscal health of the country.
Step one is to fully pay for the bill as written. Rather than criticizing the CBO score, lawmakers should identify at least $160 billion of additional revenue, spending cuts, or modifications of the bill to ensure it does not add to the debt. The President was right to make this promise, and Congress should abide by it. There are a number of existing proposals, such as those to improve income reporting, address stepped-up basis of capital gains, or reduce excessive Medicare costs, that could help fill in the gap. An additional benefit of fully paying for the bill is that it would help reduce inflationary pressures potentially caused by the bill. Given the current high rate of inflation, policymakers should avoid high upfront borrowing that could exacerbate an already troubling situation.
Second, the Senate should abandon arbitrary sunsets and expirations in the bill. Policies that are intended to be permanent should be made permanent in the bill and should be fully paid for. Build Back Better expands the Child Tax Credit and Earned Income Tax Credit for one year, makes expansions to the Affordable Care Act through 2025, and creates new child care and pre-K programs for six years. These and other expirations not only create tremendous uncertainty, but also tremendous pressure for future extensions. If all expiring provisions were made permanent, Build Back Better’s gross cost would nearly double from $2.4 trillion to $4.8 trillion. And deficit financing these extensions would mean $2.8 trillion of borrowing over the next decade.
Finally, senators should do more to scale back and target spending and tax breaks within Build Back Better. To ensure the bill is fully paid for without arbitrary sunsets or inflationary pressures, the Senate should decide which parts of the House bill to keep, which to remove, which to scale back, and which to better target based on need. Some policies, like SALT cap relief – which delivers a costly tax cut to very high earners – have no place in Build Back Better. Other policies, such as the expanded Child Tax Credit, could be targeted better based on need. The Senate should also make some tougher choices over which initiatives to prioritize and which to drop.
The Build Back Better Act would make a number of important investments, and the House deserves credit for identifying enough offsets to cover most of its costs on paper. But the current bill relies far too heavily on gimmicks, costs too much relative to its offsets, and creates too many risks to the economy and budget.
The “fully paid for” promise regarding this hodgepodge of goodies for some is just another rob Peter to pay Paul exercise.
The spending in the bill will become permanent over time and the deficit will go higher as well. It is too far along to stop now but it should be the last of these grandiose giveaways allowed.
Could you imagine if each bill that required borrowing had to go to voters like a local bond issues? On the interpretative statement the could could put the personal tax bill that each voter will have to pay. Nothing would pass and I am sure that is why it is not done.