Experts Push Back on Current Policy Switch

As Congress continues to discuss a compromise budget resolution between the House and Senate, setting the stage for reconciliation, the choice of baseline for the eventual reconciliation bill is one of the most significant decisions. The current law baseline is prescribed in law and has been used for past reconciliation bills, including the Tax Cuts and Jobs Act (TCJA). As we’ve described in our recent analysis, switching to a current policy baseline to ignore the cost of extending TCJA would be a clear gimmick that could explode the debt. A current policy baseline generally assumes that policies currently in place continue regardless of scheduled expirations or phase-outs. Experts and lawmakers are speaking out against this gimmick, explaining the dangerous precedent it would set, and how it would hide trillions in costs from the public.

Experts Agree...Switching to a Current Policy Baseline is a Gimmick:

Ways & Means Chair Jason Smith (R-MO): “There’s members of my conference that believe what the Senate is trying to do with the current policy baseline is a budget gimmick just so that they don’t have to do spending cuts.”

Rep. David Schweikert (R-AZ): Calls the current policy baseline “intellectual and economic fraud.”

Rep. Chip Roy (R-TX): On the push to use current policy baseline, said “This is fairy dust, and they’re full of crap. And I’m gonna call them out on it."

Senate Budget Ranking Member Jeff Merkley (D-OR): “The Republicans need to realize that ‘magic math’ does not exist. Tax cuts cost money, even if Republicans say they don’t, and the Treasury would still need to borrow trillions of dollars that would explode the deficit. Refusing to measure something doesn’t mean it goes away. The earth is still warming even if you get rid of thermometers.”

Former House Majority Leader Eric Cantor (R-VA): When asked about the current policy baseline and magic accounting, said “This has been an age old discussion…You’ll have some real budget hawks in the House…that will really, really make this an issue. Because…you [can’t] hide this from being a real issue…”

Maya MacGuineas, Committee for a Responsible Federal Budget: “Try as one might to hide the deficit impact of a policy by messing with the baseline, you can’t fool the Treasury markets, which will have to absorb trillions more in government borrowing.”

Marc Goldwein, Committee for a Responsible Federal Budget: “Adopting a current policy baseline for reconciliation would mean ~$4 trillion more ten-year borrowing today. But it could set the stage for tens of trillions of more borrowing in the future.”

G. William Hoagland, Bipartisan Policy Center: “I would caution my friends, my Republican friends and senators up there, be careful about this. Someday you may be in the minority.”

Romina Boccia, Cato Institute: “A current policy baseline is one blatant attempt at avoiding commonsense Medicaid reforms that even President Obama supported at one point.”

Romina Boccia, Cato Institute: “If Congress raises the debt ceiling now, there goes any commitment for deficit-neutral tax reform. Expect a current policy baseline in the budget resolution next year with a promise that DOGE will cut spending later. Will ‘later’ ever come? Don’t hold your breath…”

Romina Boccia, Cato Institute: “Changing to a current policy baseline now is like an alcoholic bringing just enough cash to the bar for one drink, downing ten, putting it all on the credit card, and claiming that was your plan all along.”

Donald Schneider, former Chief Economist for House Ways & Means Committee: “Three ways to make TCJA permanent. 1) Significantly dial up the spending cuts. 2) reform TCJA to make it less expensive 3) current policy baseline. Senators should say which approach they plan to take and if 3, the procedure should be pretty well locked down.”

George Callas, Arnold Ventures: “Maybe if we just apply a current policy baseline to interest rates it’ll mean interest rates aren’t actually going up.”

George Callas, Arnold Ventures: “They’re not advocates of using a current policy baseline. They’re advocates of using a current law baseline on the front end to reduce the original cost of enactment and then current policy baseline on the back end to eliminate the cost of extension. Imagine enacting a tax cut of $1B/year for 2 years, and claiming it only costs $2B because it expires after two years. Then, two years later, enacting different tax cuts of $1B/year on permanent basis ($10B over 10 yrs) and claiming it's fully paid for because Congress isn't extending the 2-year tax cut and so under current policy it's a $1B/year ($10B over 10 yrs) offset. How can something you originally claimed only cost $2B become a $10B offset? That's the rule they're proposing, but no spending program or tax cut has ever been treated that way, for obvious reasons.”

Oren Cass, Financial Times Opinion: “The embarrassing dishonesty of this [current policy argument] should be self-evident. The only reason Congress finds itself dealing with expiring tax cuts in the first place is that these same tax cheats wanted to use the fact of expiration to make their last cuts appear less costly. The only reason they were allowed to pass the TCJA in 2017 was because under current law it would not affect the deficit in the long term. Keeping the TCJA rates for the long term was never proposed, nor could it have been approved.”

Andrew Lautz, Bipartisan Policy Center: “Current policy baseline for TCJA extension may make things easier…but it doesn’t change that deficits are about $4 trillion higher under a current policy baseline than a current law baseline.”

David Kamin, Professor at NYU Law School: “The problem with a current policy baseline for judging deficit effects of continuing the tax cuts is inconsistency. When 2017 tax cuts were enacted, they didn't use current policy then. But, now, want to. As a result, costs just disappear.”

Andrew Moylan, Arnold Ventures: Current policy is like "telling yourself sweet little lies about how much deficit impact you’re going to have. It’s like telling your bathroom scale that certain calories don’t count.”

Kent Smetters, Professor at University of Pennsylvania: "If I have a subscription for eight years to Sports Illustrated, and then I tell my wife, Well, I'm gonna renew it for another 10 years, but it's not gonna cost us anything, because I already have one. It's kind of a weird accounting to do that, but that's essentially what they're going to try to do."

Jessica Riedl, Manhattan Institute: “Congress can play whatever budget games it wants to evade its budget rules. But the deficit still skyrockets, the interest costs still bury taxpayers, and the bond market still eventually cries uncle. The laws of economics and math cannot be overruled in reconciliation.”

Alex Brill, American Enterprise Institute: Is someone who supports current policy "intentionally misremembering how federal budget estimates work, or is he simply trying to prime lawmakers to ignore five decades of budgetary conventions and build support for larger future deficits?”