Republicans in Congress have been eager to position themselves as the fiscally responsible counterweight to what they consider budget-busting and inflation-increasing overspending from the Biden administration. But just two weeks into their new majority, House Republicans have shown their true colors, and it’s more likely than not that they will make our nation’s fiscal problems even worse.
The first bill passed by the new majority would repeal $71 billion in new funding for taxpayer services and enforcement by the Internal Revenue Service (IRS) that Democrats passed last Congress. But an official score from the nonpartisan Congressional Budget Office found that this bill would also reduce revenue collections by $186 billion over the next decade because it would undermine the agency’s ability to make wealthy tax cheats pay what they owe.As a result, the first act by the new House majority would actually increase deficits by roughly $114 billion.
Changes to the House rules suggest this is likely to be only the beginning of Republicans’ push for more red ink. House rules under the Democrats included a “PAYGO” requirement that all measures to reduce revenue or increase spending be fully offset over each of the next six-year and 11-year periods. Republicans voted on Monday to replace the PAYGO rule with a “CUTGO” rule, which instead would require that increases in mandatory spending (the part of the budget not annually appropriated each year by Congress and includes major entitlement programs such as Social Security and Medicare) be offset with cuts to mandatory spending of equal or greater magnitude.
This move would pave the way for Republicans to pursue trillions of dollars in deficit-financed tax cuts like they did the last time they had unified control of the House, Senate and presidency. It also creates a gaping loophole in any claim that they would restrict the growth of government because Congress frequently routes spending through the tax code in the form of tax credits and deductions that are functionally the same as direct spending programs that serve the same purpose.
None of this is to suggest that Democrats in the Biden era are paragons of fiscal discipline. House PAYGO rules were frequently waived. Overspending early in the administration likely added roughly 3 percentage points to inflation, according to independent estimates from the Brookings Institution, Johns Hopkins University and the San Francisco Federal Reserve. The sprawling Build Back Better blueprint pursued by the administration for much of the last Congress was loaded with budget gimmicks that would have made the problem even worse if it had become law.
But Republicans offer no serious vision for deficit reduction and inflation control, either. Instead, concessions extracted by the far-right Freedom Caucus from Kevin McCarthy during his grueling week-long slog to the Speakership at the start of this Congress focus on cuts to discretionary spending, which comprises less than a third of the federal budget. Moreover, about half of that is spending on national defense that most of the Republican conference in both the House and Senate oppose cutting.
The Freedom Caucus has threatened not to support any increase in or suspension of the federal debt limit unless it’s paired with such cuts. As part of his concessions, McCarthy gave these far-right members the tools to prevent him from even bringing the debt limit up for a vote in the House. Importantly, the debt limit doesn’t prevent Congress from spending more money that it raises in revenue; it merely limits the Treasury’s ability to repay the debts it incurs covering the difference. Even the threat of defaulting on our debt for the first time in American history could cause interest rates, and thus the annual cost of servicing our debts, to rise — ironically increasing the level of spending that conservatives profess to loathe.
There needs to be a real conversation about fiscal discipline in the 118th Congress. On our current course, annual interest payments on the national debt are projected to exceed total spending on national defense by 2030 and eclipse Social Security as the single-largest line-item in the federal budget by 2050. Getting our fiscal house in order would not only reduce the burden on future taxpayers but could also help the Federal Reserve rein in rising prices today.
Unfortunately, their early moves suggest that doesn’t appear to be a conversation House Republicans are interested in having any time soon. If anything, they’ll make it worse.
Ben Ritz is the director of the Progressive Policy Institute’s Center for Funding America’s Future.