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The Consequences of Implementing a ‘Current Policy’ Budget Baseline

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Changing the budget reconciliation process to use a “current policy” baseline, rather than the traditional “current law” baseline, as proposed by some Republicans in Congress could result in serious fiscal irresponsibility. This alteration may permit both parties to bypass critical budgetary constraints, leading to a substantial and enduring increase in the national debt. The budget reconciliation process allows Congress to modify certain parts of the budget with a simple majority vote in the Senate. This process includes the Byrd Rule, established 35 years ago under the Budget Act to prevent long-term fiscal harm to the U.S. The debate centers on the comparison between proposed policy changes and the “before” picture. The baseline contrast must consider whether this year’s policies will continue indefinitely under “current policy” or if it should reflect the automatic changes scheduled to occur under “current law.” Although it may seem minor, this debate significantly influences fiscal policymaking by determining how trillions of dollars in the budget are handled under established rules. The rationale for the current policy baseline being more “fair” than the current law baseline in terms of how spending and taxes are treated is weak and insufficient justification for a major shift in budgetary processes. Since discretionary spending cannot be altered through the budget reconciliation process, argued changes in the baseline are irrelevant, as these parts of the budget are controlled through the appropriation process. Moreover, the majority of programs eligible for alteration through reconciliation are already permanent under the law, making their estimates identical in both the current law and current policy baseline. The few programs subject to reconciliation that are not permanent were designated in a bipartisan law change in 1985 and represent a minute portion of total spending. The argument that the budgetary treatment of tax provisions affecting trillions in revenue should change due to this discrepancy is unwarranted. Rather than altering the entire baseline projection, amending the 1985 act is a more appropriate course for addressing this concern. The expiration dates under the law serve specific policy reasons, such as temporary relief during natural disasters or pandemics. Assuming these policies will continue indefinitely under a budget baseline is illogical, especially when extensions may lead to additional costs, disregarding the initial intent of making them affordable. While critically analyzing the rationale behind the current policy baseline is essential, its implementation could obscure the significant growth in the national debt. The proposed alteration could enable any future Congress, irrespective of party, to create new programs or cut taxes that appear to have minimal effects on deficits initially, only to be permanently extended later without consequences due to their inclusion in the baseline. This two-step process risks adding trillions in permanent deficits, undermining the Byrd Rule’s effectiveness. Lawmakers should remember that enabling such changes could result in long-term fiscal repercussions. The best approach to making policies permanent within budget rules is to find ways to fund them adequately. Lawmakers have various spending and revenue offsets available to implement their reforms responsibly. The idea of changing the baseline threatens foundational budget process rules and should be opposed by all fiscally responsible members of Congress. As the nation faces growing debt levels, adhering to established budget rules and regulations is crucial to ensure sound fiscal governance. By setting an example of fiscal responsibility, Republicans can demonstrate their commitment to making real and sustainable fiscal choices. Letting go of the budgetary discipline established by the Budget Act and the Byrd Rule could lead to regrettable consequences given the current and projected debt levels.

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