Debicella’s Radically Wrong Approach to Budgeting

With the primaries behind us and Labor Day approaching, it’s time to move on to the Main Event: November 2nd. On that day, voters in the seventeen towns of Connecticut’s Fourth District will decide whether Jim Himes or Dan Debicella have better ideas and better represent us. A lot will depend on exactly which voters show up to vote. But those that do need to understand two things about Dan Debicella: He is one of the most partisan members of the state’s legislature where he has backed some very extreme measures, and in this campaign he has offered some bizarre proposals, which are impossible to implement.

In a previous post, I critiqued (debunked? exposed?) his proposal to repeal the unspent stimulus and replace it with a tax cut. Two problems:

1. There isn’t much unspent stimulus money left to repeal, yet his proposal costs $350 billion.
2. And the tax cut proposal, while very expensive (and deficit financed, see 1. above) has little stimulative effect and is likely to produce significantly higher long-term deficits (according to the CBO).

Does anyone else remember that the Bush administration tried a tax rebate stimulus in 2008? Checks went out in March and April of 2008. Let’s see the private-sector job growth we experienced since (note: this is private-sector jobs only, since Republicans never seem to think public employees have real jobs):

Oh boy. Let’s do that Bush idea again.  Even the highest-ranked Republican member of the House Budget Committee, Rep. Paul Ryan (R, WI) dismisses Debicella’s idea. When asked “So do Republicans have any demand-side solutions, even if they’re just tax cuts? Is there talk of a payroll tax holiday, or anything similar?” he said “Temporary stuff doesn’t work. These short-term stimulative things like [tax] rebates don’t work.”  If there’s a Debicella vs. Ryan debate, I will get my popcorn ready.

I could go on and on about the successes of the stimulus and the foolishness of repeal (just ask my wife – thank heaven she puts up with me). But I’ve more or less done that already. Heck, even our town’s staunchly Republican state representative, John Hetherington, agrees.

Now I want to go on and on about Debicella’s other big idea: capping federal spending at 20% of GDP. Debicella’s proposal is to “take [spending decisions] out of the politicians’ hands and create a federal spending cap that would allow the federal government to be no more than 20% of GDP.” He then proposes to “let it grow at inflation plus population growth” Debicella suggests that this would be a magic budget bullet because “you are not allowed to spend more… it’ll force politicians of both parties, all the incumbents, to make trade-offs so they can’t just pass out pork spending.”

This is ridiculous on its face. I can’t believe he said it. Congress would “not be allowed” to authorize a spending bill? Allowed? My questions are:

• Whose hands should the spending decisions be in? Because Article I of the US Constitution is pretty clear on this.
• Is Debicella proposing a Constitutional Amendment? If it’s just a public law, there are big problems (spelled out below).
• What is the enforcement mechanism? Who pays a fine or goes to jail?
• When do you calculate GDP? Because it’s now typically done on a quarterly basis after the fact, while a great deal of the spending is approved about a year ahead of time. You don’t know GDP until after the spending has taken place. So if projections are off by a bit, it could trigger the enforcement and send someone to jail (the president who signed the spending bill into law? The chair of the appropriations committee? All 435 reps? Just those who voted yes?), unless there is no penalty.
• Is there a single economist anywhere on the planet who thinks that, as a general policy, it’s wise to “allow” government to spend more as the economy grows and not “allow” it to spend at the same levels when the economy retracts?  I mean one person with any credentials who has argued that government spending should mimic the trends in the GDP for some reason.  Maybe they’re out there, but I doubt it. It’s exactly the opposite of responsible.
• If the incremental increases are tied to inflation and population growth, when are these calculated and how? You have the same problem — spending is approved in advance; the inflation rate is only known afterward. Population growth is estimated by the Census bureau in years ending in anything but a zero.  Can you imagine the conspiracy theorists attacking the Census bureau even more than they do now?  Also, for what it’s worth, the Fed has as much (or more) authority as any other entity to effect inflation. Does this vest spending authority in the Fed now? Again, that pesky Constitution seems to get in the way if the answer is “yes.”

If Debicella is proposing a Constitutional Amendment, does he really think 2/3 of each chamber and the legislatures of 38 states will agree (those same state legislatures that received stimulus aid of $314 billion in 2009 and at least $90 billion in 2010)? I think I can list thirteen states that would say no.

Assuming he’s not proposing a Constitutional Amendment, Debicella is not the first person to suggest that the government limit spending by enacting a public law. Remember Section 7 of Public Law #95-435? Yeah, me neither. Passed in 1978, it states “beginning with fiscal year 1981, the total budget outlays of the Federal Government shall not exceed its receipts.” See, wasn’t that easy?!? But it has no sanction, no penalty, and has clearly been ignored by Presidents since, with the exception of Bill Clinton (the other three were Republicans, by the way, none of whom ever produced a balanced budget). Making something a public law with no penalty is not a serious proposal to solve a pressing problem. It is a gimmick — as is the law already on the books “mandating” a balanced budget.

I concede that Debicella is not proposing to balance the budget. He is talking only about the spending side. So the existence of the 1978 law is not the same idea, but I think its existence and complete futility are instructive. What sanction does Debicella propose? Again, who goes to jail or pays a fine if spending reaches 20.00001% of GDP in a year (or is it quarterly)? And what happens when GDP is revised, given new data? Since spending is approved a year or so before it takes place, what happens if there’s an economic downturn after that?

I assume Debicella is talking about all spending, the sum across the approved budget and all subsequent appropriations in the fiscal year. So, for example, during the Bush presidency, the costs of the wars in Iraq and Afghanistan were not in the budget. Those costs were paid though supplemental appropriations. There are significant supplemental appropriations. With GDP and the inflation rate fluctuating and subject to revision (and population growth unknown, simply estimated), would Congress be “allowed” to act and appropriate money — you know, do its job?

I will give Debicella the benefit of the doubt and guess that he would not object to true emergency spending that exceeded his impossible-to-calculate-or-impose-and-probably-unconstitutional cap. As one recent example, five years ago this week Congress provided $10.5 billion as emergency spending for relief following Hurricane Katrina. That sort of thing is clearly emergency spending. Other cases are not so clear. Will Congress avoid the temptation to label every supplemental appropriation “emergency” spending once the Debicella-Solution-to-Everything-by-Doing-Nothing plan is in place? Even without such a “mandatory” cap on spending, this year’s Supplemental Appropriations bill included $60 billion in “emergency” spending. Some of that was related to natural disasters. But over $13 billion went to Veterans’ Affairs “for disability compensation to Vietnam veterans” when the VA chose to “expand the number of illnesses presumed to be related to exposure to Agent Orange.” Is that an emergency?

My point is: there are literally thousands (tens of thousands? could it hit a hundred thousand?) of specific appropriations, some in the budget, others done though supplementals. Does Debicella really think that an arbitrary “mandatory” spending law with no enforcement mechanism and no penalty for anyone will affect a single one of these appropriations? Does he really think his toothless proposal will “force” elected representatives and senators to make “trade-offs” that result in a balanced budget and low taxes for everyone (hooray!)? If he does, he is dangerously näive.

Or does it just feel good to say there is a magic trick that will fundamentally alter the primary job of the most powerful legislature the world has ever seen? I ask anyone considering a vote for this guy: does it feel good to pretend this is a real policy? Because it isn’t. Both of Debicella’s proposals — on stimulus and on the very nature of budgeting — are radically wrong for this nation.

Be Sociable, Share!

•